Pipelines at odds?

The geopolitical game in the Balkans for the carriage of Russian oil is heating up after Tuesday’s signing by Bulgaria, the Former Yugoslav Republic of Macedonia (FYROM) and Albania of a memorandum for a long-delayed trans-Balkan oil pipeline linking the Bulgarian port of Burgas in the Black Sea with the Albanian port of Vlore in the Adriatic. Athens, which supports and promotes another planned pipeline, from Burgas to the Greek port of Alexandroupolis, said yesterday the two projects cannot possibly compete with each other. Development Minister Dimitris Sioufas also disputed the trans-Balkan project’s budget. «It is impossible that, when the Burgas-Alexandroupolis pipeline has a budget of over 700 million euros at 2001 prices, the other pipeline, which is three times as long and passes through difficult areas, should be calculated at $1.2 billion» (890 million euros), Sioufas said. He appeared confident that the Burgas-Alexandroupolis project has a number of advantages over the 912-km-long trans-Balkan pipeline, stating that the latter will have to offer particularly low prices to attract companies for oil carriage. In this comparison, he added, the Burgas-Alexandroupolis pipeline has the cost advantage as it is under 300 km in length. He went on to note that such projects must primarily offer security of supply to their users, and the project ending at Alexandroupolis will have the strategic advantage of crossing two EU countries (Bulgaria joins in 2007). The Burgas-Alexandroupolis pipeline is a joint project by Greece, Bulgaria and Russia. The three countries initialed a memorandum for it last month in Athens but have yet to sign the official agreement, originally planned for this month, as Moscow requested a postponement. Both projects are intended to carry mainly Russian crude oil to the West, bypassing the busy Bosporus Straits in Turkey. A US-based company, Albanian, Macedonian (FYROM) and Bulgarian Oil Corp (AMBO), had been pushing unsuccessfully for the Burgas-Vlore pipeline for almost a decade, due to its high cost and its passage through the high mountains of central Balkans. The AMBO project has now been resurrected, funded by US private investors and the US state Exim Bank. Private bodies also show great interest in AMBO shares, to secure estimated returns of about 80 percent. AMBO chairman Ted Ferguson said construction will begin in 2005 and will last three to four years. Interestingly, the trans-Balkan pipeline was given the green light just as Russia has also begun negotiations with Turkey for another project carrying oil to the Aegean Sea through the eastern Thrace region of Turkey, from Kiyikoy to Ibrikbaba. The latter, however, would mean too much dependence on one country, Turkey, a point that does not help either Russia or the large oil companies to fund the project. The fact that Russia put off signing the Athens agreement, along with the virtually parallel top-level discussions with Turkey for the alternative trans-Thracean pipeline and the political consensus in Bulgaria for another alternative, the Burgas-Vlore project, do not help the development of the Greek plan for Russian oil carriage.