Trans-Balkan pipeline stalls

The company chosen to construct the Burgas-Alexandroupolis oil pipeline has been left without its head - Sergei Vinnichenko last week stepped down as president of Trans Balkan Pipeline BV. According to unofficial reports, his departure was down to difficulties with the project. But Transneft and officials reassured that the pipeline would be finished on time.

A source familiar with the situation says that Vinnichenko decided to resign over delays in the project implementation. "No one is responsible for it or helps with its realization," the source said. One of the headaches, he said, was the company's Dutch registration, where under local legislation boards of directors have to meet and the management must spend no fewer than 180 days a year. "If we had registered ourselves in Cyprus, we would have avoided such problems," he said.

Oil pumped by the Caspian Pipeline Consortium (CPC) from Kazakhstan's Tengiz to Novorossiisk is expected to become one of the sources to fill the new line. The CPC pipeline is planned to be expanded from 32 million tons to 67 million tons. The first stage of expansion, up to 50 million tons, must be completed by the spring of 2012, Vladimir Razdukhov, CPC director-general, said at the end of May. The Russian authorities plan to construct the Burgas-Alexandroupolis pipeline and expand CPC capacities in parallel. No feasibility studies yet exist for the project, although Transneft vice-president Mikhail Barkov said they will be completed by the end of the year. "In the next two weeks we will know if the old studies prepared in 2000 are of use," the top manager explained, adding that the company would start construction at the beginning of 2009. A Ministry of Energy source also said that by the time CPC was expanded the Trans-Balkan pipeline project would be finished.

"The Kashagan field in Kazakhstan will not be opened until 2013-14 and for that reason there is no urgent need as yet to expand the CPC and build the Burgas-Alexandroupolis pipeline now," said RusEnergy analyst Mikhail Krutikhin. He added that the alternative Samsun-Ceyhan pipeline project, announced a year ago and planned to bypass the Turkish straits, has made no progress either. Burgas-Alexandroupolis interests Russia from a geopolitical standpoint, but is meant above all for Kazakh oil, said Konstantin Simonov, of the Center for Current Politics. In his view, the second branch of the Baltic Pipeline System is Russia's current priority.

Source: Kommersant (What the Russian papers say, RIAgency Novosti) - June 19, 2008