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| New Trans-Balkan Oil Pipelines |
| Three projects to transport Caspian sea energy reserves |
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Besar Likmeta (besarl)  |
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Published 2006-10-13 19:45 (KST) |
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Since the collapse of the Soviet Union, oil companies have shifted vast amounts of capital in developing the oil and gas reserves of the Caspian Sea region. The total oil reserve of the region, estimated at above 200 billion barrels, exceeds that of Western Europe and the United States and puts it in second place after the Middle East.
With significant rises in the price of crude oil in recent times, and hungry energy markets, two trans-Balkan pipeline projects are competing to bring Caspian oil to the West, aiming to avoid its troublesome and costly voyage through the Bosphorous straits.
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| The Caucasus, the mountainous range in the east of the Caspian Sea, is among the earliest known producers of oil and petroleum products in the world. References to oil found in the region are as old as the Bible. Even Marco Polo, the 13th century Venetian traveler alluded in his accounts to a small export trade in oil soaked sand from the region.
Bringing the energy reserves of the Caspian to Western consumers has its own set of challenges.
Reliable means of transport for the oil and gas reserves of the Caspian region has been a major challenge for the companies that have invested billions of dollars for their development. Traditionally the transportation of the energy reserves of the region has been done by a tanker service throughout the Bosphorous straits. However, the geographic characteristics of the straits have made increased traffic less financially feasible.
Because the straits pass through the Turkish city of Istanbul, an accident could be a major threat to the environment and its 11 million inhabitants. After the 1994, Exxon-Valdez accident in Alaska, the Turkish government set in place a series of measures to regulate oil and gas transport through the straits that have translated in costly delays for shippers. Tanker delays because of heavy traffic in the straits are costing oil companies more than $1-billion a year.
Transporting this vast reserve through the Black Sea and the Balkan Peninsula through pipelines, is believed to be one of the answers to increased European and U.S. demand for oil and gas.
Starting their voyage from the port of Bourgas in Bulgaria, the pipelines are projected to pass through several Balkan states with the final destination being easily accessible ports in the Adriatic and the Aegean Sea.
The projects were first proposed in the early 90s; however conflict and instability in the region have thwarted their development. With the political situation in the Balkans improving and record-high oil prices, the projects have received renewed support, both from governments and from corporate entities.
The Bourgas-Alexandroupolis pipeline is a joint project of the Russian, Bulgarian and Greek governments. The pipeline which aims to transit Russian oil through Bulgaria to Greece is projected to be 175-miles long and is expected to cost around $1 billion. Russia, Greece and Bulgaria signed the intra-governmental agreement for the construction of the pipeline on Sept. 4.
The deal signed ended 14 years of transit fee disagreements that stalled the project. Energy analysts have commonly seen the Bourgas-Alexandroupolis pipeline as a viable way to pump cheaper Russian crude to the Mediterranean region
Russian energy exports account for a quarter of the energy used in Western Europe. Holding a key position as an energy powerhouse Russia has shown in the past that it could lever considerable political muscle through its energy resources. The Bourgas-Alexandroupolis project would significantly increase its penetration in the Western European market.
The rival Albania-Macedonia-Bulgaria pipeline or as it often called the AMBO route aims to connect Bourgas with the Adriatic port of Vlora, in Albania, transiting through Macedonia. The project is projected to cost around $1.3 billion.
On Dec. 28, 2004 the Prime Ministers of Albania, Bulgaria and Macedonia signed a declaration of political support for the project which was followed by an intra-ministerial memorandum with the AMBO Corp. The pipeline now is in front end of the engineering and design stage.
According to a paper published by the U.S. Trade and Development Agency in 2004 AMBO could be a feasible investment, because the oil drilled from the Caspian Sea "will quickly surpass the safe capacity of the Bosphorus as a shipping lane".
The agency believes that AMBO will "provide a consistent source of crude oil to American refineries," "provide American companies with a key role in developing the vital east-west corridor," "advance the privatization aspirations of the U.S. government in the region" and "facilitate rapid integration" of the Balkans "with Western Europe"
A brainchild of former Brown and Root executive Ted Ferguson, the project has received consistent support from the Bush administration.
"The United States Government has supported AMBO since its inception over a decade ago. The project has also been considered a component of the Corridor VIII transportation corridor that the USG has encouraged in the region since the mid-1990s," said Matthew Bryza, Deputy Assistant U.S. Secretary of State for European and Eurasian Affairs in a Web chat with journalists in June.
Though geopolitical interests of both Russian and American governments are inherited in the pipelines, strategic development of the projects will be probably driven by market forces, which in the end will determine the future of the projects.
"AMBO is a Bosporus-Bypass pipeline. Its primary competitor is a proposal to run a pipeline from Burgas, Bulgaria to Alexandropolis, Greece. USG policy on Bosporus-Bypass crude oil pipelines is clear -- commercial interests, not governments, should make the ultimate decision as to which Bosporus-Bypass pipeline should be the one that is constructed," Bryza said.
With financial feasibility and investor interests rising, these pipelines could transform the Balkans into the Western thoroughfare for the Caspian energy reserves.
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©2006 OhmyNews
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