BP's backing makes it more likely that the pipeline, costing about $3bn, will now be built from the Caspian port of Baku in Azerbaijan through Georgia to the Turkish port of Ceyhan. The BBC's Adrian Foreman reports.

It's not quite got the reserves of the Middle East, but the Caspian Sea has enough proven oil and gas reserves to more than match what was found in the North Sea 30 years ago.

The difficulty is, how to get it to the West. There's a new pipeline through Russia, but it won't have enough capacity by itself.

In any case, to reach Western markets, the oil would have to go by supertanker through the Bosphorus Straits in Turkey, where existing congestion has already led to warnings of an accident waiting to happen.

One alternative, a pipeline to the Turkish Mediterranean coast, was enthusiastically embraced by the new American administration.

And that seems to have tipped the balance. BP, a leading player in Caspian oil, has stopped questioning the costs, and is now spending $150m on feasibility studies.

It says it has agreement from governments and bankers in principle. But it warns it won't know if the pipeline will actually be built until after the feasibility studies are finished.

No agreement on oil owners

David Woodward, local BP head, said: "That's where we're moving to next - 12 months of detailed engineering and, at the end of that, the middle of next year, we'll know whether the capital costs of the pipeline, the number of investors who are interested in it, the external financiers, are going to be prepared to put money forward to allow us to construct the pipeline."

Despite the new optimism however, nothing in this region can be entirely certain.

The five countries surrounding the Caspian still haven't agreed together on which reserves belong to whom.

BP will be hoping the current bilateral agreements do not come unstuck to make the pipeline a pipe-dream.