The event went off without a hitch, despite the violent break-up of a peaceful protest at the weekend in Azerbaijan’s capital, Baku, in which several demonstrators were arrested and detained by authorities.

Azeri officials said the rally had not been permitted and was timed too close to the pipeline inauguration.

Gathered in Baku, on the western shore of the Caspian Sea, the leaders of Turkey, Azerbaijan, Georgia and Kazakhstan were joined by energy company representatives and an envoy of the US President George W Bush.

“The United States consistently supported the BTC (Baku-Tbilisi-Ceyhan pipeline) because we believe in the project’s ability to bolster global energy security,” US Energy Secretary Samuel Bodman said, reading out a letter by President Bush.

“The pipeline opens up massive new fields in the Capsian Sea to world markets, enhancing the security of supply for decades to come. And it does so in a way that avoids the transit of tankers through (Turkey’s) narrow and congested Bosphorous (Straits),” British Petroleum (BP) chief executive, John Browne, told the assembled dignitaries.

BP holds a leading 30 percent stake in the consortium running the pipeline, which includes 10 other regional and international enterprises.

The 1,770-kilometre-long pipeline has been 10 years in the making, and strategically allows Caspian oil to reach Western markets without passing through either Russia or Iran.

Analysts consider the US$4 billion (A$5.2b) pipeline to be as much a product of geopolitical manoeuvring as economic imperatives, shifting alliances among the former Soviet states in the Caucasus and Central Asia.

“The BTC pipeline will reinforce the sovereignty and prosperity of Azerbaijan and Georgia,” US State Department spokesman Richard Boucher.

“BTC will further integrate Azerbaijan and Georgia into the international free market economy and promote their development, while advancing our shared goal of developing multiple oil and gas export routes.”

Kazakhstan has also expressed interest in the project, with President Nursultan Nazarbayev signing a declaration committing part of his nation’s vast oil reserves to the pipe link.

The move will take the BTC’s life expectancy beyond 2010.

When the pipeline is fully-operational by the end of the year, it will be capable of pumping one million barrels of oil daily to Turkey’s Mediterranean coastline.