AI
Monday, July 26, 2004 9:46:22 AM
Russia Backs Balkan Oil Project
CT, here it is. We didn't have to wait long for this one.
see also:
#msg-3600699
-Am
Bulgaria's Regional Development Minister Valentin Tserovski secured Russia’s support for the construction of the Burgas-Alexandroupolis pipeline, a three-way venture involving also Greece. Photo by Novinite.com archive
Business: 26 July 2004, Monday.
Russia declared its support for the construction of the Burgas-Alexandroupolis pipeline by endorsing provisions through which it will join the project.
The agreement has been reached during the visit of Bulgaria's Regional Development Minister Valentin Tserovski to Russia and will be finalized during the upcoming visit of Russia's Prime Minister Mihail Fradkov.
Tserovski assured that financing and oil for the pipeline has been secured.
Russia's backing of the main provisions makes redundant its endorsement of the trilateral agreement, which it refrained from signing last year.
The Burgas-Alexandroupolis pipeline is a three-way venture involving also Greece. Bulgaria, Greece and Russia have an equal participation in the project. The Bulgarian section is 166 kilometers and will run via seven municipalities in Southeastern Bulgaria.
Last year Bulgaria and Greece signed a memorandum on technical cooperation in the study and design of the Burgas-Alexandroupolis oil pipeline.
http://www.novinite.com/view_news.php?id=37408
No Bosporus, Please:
Four projects to bypass the Turkish straits spring to life, simultaneously
© Ivan Gribanov
RusEnergy.com
The start-up of the Caspian Pipeline Consortium (CPC) pipeline has revived projects to bypass the Turkish straits, which connect the Black Sea and Mediterranean Sea. Investors are pinning their highest hopes on pipelines coming out from the Bulgarian port of Burgas. In the next two or three months Russia, Bulgaria and Greece plan to sign a memorandum of mutual understanding on the Burgas-Alexandroupolis pipeline project. Western companies active in Kazakhstan are reportedly more interested in the Burgas-Vlore pipeline project. The rivalry between both projects could result in a new export route, which would facilitate shipments of Caspian oil to the world's markets, though at a slightly more costly rate.
Outrunning Rivals
As Kazakhstan and Azerbaijan see it, by 2015 foreign customers should be receiving 100-120 million tons of oil annually from the Caspian Basin. These shipments are to supplement the Russian export oil flow through ports on the Black Sea coast, which will amount to no less than 50 million tons. Even under the most optimal arrangements, Bosporus is incapable of letting through more than 70-80 million tons of oil a year. The commissioning of the CPC pipeline has put export shipments in danger of being disrupted. That is why several bypass projects have been immediately reactivated.
At present there are four projects to solve the problem: Baku-Tbilisi-Ceyhan, Burgas-Alexandroupolis, Burgas-Vlore and Odessa-Brody-Gdansk. And simultaneously all of them have become the scene of events, reflecting their initiators' desire to outrun rivals. The fifth project, a pipeline from Romania's Constance to Trieste, faded out five years ago.
The feasibility study of the Baku-Tbilisi-Ceyhan route is expected to be completed in June. In March or April a memorandum on the Burgas-Alexandroupolis project is to be signed by Russia, Bulgaria and Greece. Ukraine maintains that in March it will start pumping oil into the Odessa-Brody pipeline, which should reach Gdansk in the future. And, finally, Burgas-Vlore initiators announced that they managed to draw ExxonMobil and ChevronTexaco corporations into the ranks of their supporters.
It cannot be ruled out that only one out of these four projects will survive under the present conditions of slowing oil demand growth on the world markets. A solid political backing at the intergovernmental level is, of course, needed to win this competition. But what is more important is the decision of oil companies to use a particular route and guarantee its financing on the basis of predetermined pumping volumes.
Spotlight on Burgas
The bitterest rivalry might rage between the two routes from Burgas. Last Friday Edward Ferguson, president and CEO of the Albanian-Macedonian-Bulgarian Oil corporation (AMBO), which initiated the Burgas-Vlore project as far back as 1996, told Reuters in Sofia that ExxonMobil and ChevronTexaco corporations were considering participation in the project.
Spokespersons for these corporations said that Ferguson was over-optimistic but admitted that they had contacted AMBO regarding this issue. Meanwhile, the possibility of their true interest in the project looks real. Both corporations are not only producing oil in Kazakhstan but they are also among the owners of the CPC pipeline, which brings oil to the Black Sea shore for further exporting. The problem of bypassing the Turkish straits is especially acute for them.
As Ferguson insists, talks with these corporations are dealing with the route options. The 898-kilometer pipeline with a design throughput capacity of 35 million tons of oil a year should pass through Bulgaria, Macedonia and Albania. AMBO expects to take upon itself financing $1.13 billion in construction works. The governments of the three countries will provide political support only.
Russian Involvement
Ferguson believes that the AMBO project will in no way interfere with constructing the Burgas-Alexandroupolis pipeline. 'In that case a decision will be made by the governments of Russia, Bulgaria and Greece with the backing of Russian firms. But here all is in the hands of Western companies supported by the U.S. and Europe,' he says.
Meanwhile, the project of constructing a pipeline to Alexandroupolis, estimated at about $500 -$600 million, has started moving forward as well. As Russia's Deputy Energy Minister Vladimir Stanev told RusEnergy.com, the signing of a memorandum of understanding on this project by the governments of the Russian Federation, Bulgaria and Greece is expected to take place in one and a half or two months. 'This is not an agreement to construct it, as of now, but, at any rate, it is quite an important step forward,' he added.
The Burgas-Alexandroupolis project to construct a 256-320-kilometer pipeline with a throughput capacity of 35 million tons of oil a year is hardly making progress although recently both politicians and businessmen have begun mentioning it again. Last July Russia's president Vladimir Putin expressed his support of the project and a little later a similar position for the Kazakh government was declared by its Foreign Minister Yerlan Idrysov. Then, in December last year LUKOIL head Vagit Alekperov suggested laying a 150-kilometer branch pipe from the planned route to a Greek refinery in Salonika.
Omnipresent Separatists
The extent of Western companies' interest in constructing a pipeline to Vlore still needs to be checked by practical steps. Besides, the attractiveness of the AMBO project is being undermined by political friction between Macedonia and Albania. The route is supposed to cross the area of recent military operations by the Macedonian army against Albanian separatists.
On the contrary, the Greek route is safe and "politically correct." According to media reports, its implementation has been hindered by the outstanding problem of future share allotment. Bulgaria has been pressing for a 50% share but Greece has been ready to give Sofia no more than 20%. However, as Stanev told RusEnergy.com, this and other questions are not being discussed at this stage and all three parties have already agreed in principle on political support for the project.
It is safe to assume that, at a minimum, trans-Balkan pipelines will be built, regardless of the circumstances, by the time the oil flow from the Caspian Region jams the passing capacity of Bosporus. The transit through Burgas, which might be cheaper than the Baku-Tbilisi-Ceyhan pipe, is casting doubt on the commercial value of the American-Turkish project. In any case, Caspian oilmen will be free to make their own choice.
Politics and Business
On the other hand, the Baku-Ceyhan project is enjoying considerable political support from the U.S. and Turkey, whose politicians do not hide their gargantuan aim, which is to remove at least some portion of the Caspian oil flow from Russia's control. Nevertheless, the project's fate is not finally determined yet, although its initiators have already invested over $130 million in preparatory works. They have already been rescheduled several times for later dates. For example, last spring bosses of the Azerbaijan State Oil Company (ASOC) were planning to commission the pipeline at the end of 2004 but today they are already revising the date to mid-2005.
After the detailed feasibility study is finished, then, judging by the latest schedule, no less than 32 months will be needed for practical work in the field. However, before builders can start doing their job the project initiators will have to secure sources of financing. And that means that they will need to provide potential creditors with official guarantees of pumping volumes.
These guarantees are one of the project's most vulnerable spots. Whatever calculation method is applied, by 2005 the Azerbaijani projects of recovering oil along with condensate will be delivering between 15 and 17 million tons of oil a year at the most. It is too little to fill up the pipe, which will have an annual pumping capacity of 50 million tons. Even under the best of circumstances Azerbaijan could not reach this level until 2015. It is obvious that Kazakhstan will also fail to start full-scale production in the north Caspian. No one can rule out the possibility that the U.S. administration will have to pull all available levers to ensure the project's financing with an unusually long payback period.
Vigilant Rivals
So far there are no guarantees of oil pumping for the most advanced project of the four. That is, the already built Odessa-Brody pipeline that Ukraine plans to extend to the Polish cities of Plock and Gdansk. However, the pipeline's readiness still does not mean that it will indeed work. Ukrainian authorities earlier said that filling up the pipe with technological oil will begin February 27, but so far they have no money to purchase oil in the needed volumes and now the date has been moved back to March.
As matters stand now, the Odessa-Brody pipeline has targeted markets where an abundance of supply is exists without it. Up till the present, practically none of its potential clients and suppliers has expressed an officially fixed desire to use the route. Kazakhstan, the owner of the largest oil volumes to pass via the Black Sea, has already refused to work on this transportation option.
The project, which has been implemented by Ukrainians at their own risk, with no pumping guarantees whatsoever, will not be saved even by its extension to Gdansk. (Incidentally, it is too early to talk about its feasibility.) Supertankers do not sail the Baltic Sea because of the meandering Danish straits, which can hardly be used by tankers with a deadweight of 150,000 tons.
Taking all this into account, routes through Burgas look more promising. If oil is shipped to Alexandroupolis on the Greek Aegean coast or to Albania's Vlore on the Adriatic coast, exporters will be able to load supertankers there. And in this respect these ports are as good as the Turkish Yumurtalik terminal near the city of Ceyhan in the Mediterranean. The severer the rivalry, the better the chance that the Caspian oil will not be jammed in the Bosporus.
http://www.rusenergy.com/eng/caspian/a01032002.htm
CT, here it is. We didn't have to wait long for this one.
see also:
#msg-3600699
-Am
Bulgaria's Regional Development Minister Valentin Tserovski secured Russia’s support for the construction of the Burgas-Alexandroupolis pipeline, a three-way venture involving also Greece. Photo by Novinite.com archive
Business: 26 July 2004, Monday.
Russia declared its support for the construction of the Burgas-Alexandroupolis pipeline by endorsing provisions through which it will join the project.
The agreement has been reached during the visit of Bulgaria's Regional Development Minister Valentin Tserovski to Russia and will be finalized during the upcoming visit of Russia's Prime Minister Mihail Fradkov.
Tserovski assured that financing and oil for the pipeline has been secured.
Russia's backing of the main provisions makes redundant its endorsement of the trilateral agreement, which it refrained from signing last year.
The Burgas-Alexandroupolis pipeline is a three-way venture involving also Greece. Bulgaria, Greece and Russia have an equal participation in the project. The Bulgarian section is 166 kilometers and will run via seven municipalities in Southeastern Bulgaria.
Last year Bulgaria and Greece signed a memorandum on technical cooperation in the study and design of the Burgas-Alexandroupolis oil pipeline.
http://www.novinite.com/view_news.php?id=37408
No Bosporus, Please:
Four projects to bypass the Turkish straits spring to life, simultaneously
© Ivan Gribanov
RusEnergy.com
The start-up of the Caspian Pipeline Consortium (CPC) pipeline has revived projects to bypass the Turkish straits, which connect the Black Sea and Mediterranean Sea. Investors are pinning their highest hopes on pipelines coming out from the Bulgarian port of Burgas. In the next two or three months Russia, Bulgaria and Greece plan to sign a memorandum of mutual understanding on the Burgas-Alexandroupolis pipeline project. Western companies active in Kazakhstan are reportedly more interested in the Burgas-Vlore pipeline project. The rivalry between both projects could result in a new export route, which would facilitate shipments of Caspian oil to the world's markets, though at a slightly more costly rate.
Outrunning Rivals
As Kazakhstan and Azerbaijan see it, by 2015 foreign customers should be receiving 100-120 million tons of oil annually from the Caspian Basin. These shipments are to supplement the Russian export oil flow through ports on the Black Sea coast, which will amount to no less than 50 million tons. Even under the most optimal arrangements, Bosporus is incapable of letting through more than 70-80 million tons of oil a year. The commissioning of the CPC pipeline has put export shipments in danger of being disrupted. That is why several bypass projects have been immediately reactivated.
At present there are four projects to solve the problem: Baku-Tbilisi-Ceyhan, Burgas-Alexandroupolis, Burgas-Vlore and Odessa-Brody-Gdansk. And simultaneously all of them have become the scene of events, reflecting their initiators' desire to outrun rivals. The fifth project, a pipeline from Romania's Constance to Trieste, faded out five years ago.
The feasibility study of the Baku-Tbilisi-Ceyhan route is expected to be completed in June. In March or April a memorandum on the Burgas-Alexandroupolis project is to be signed by Russia, Bulgaria and Greece. Ukraine maintains that in March it will start pumping oil into the Odessa-Brody pipeline, which should reach Gdansk in the future. And, finally, Burgas-Vlore initiators announced that they managed to draw ExxonMobil and ChevronTexaco corporations into the ranks of their supporters.
It cannot be ruled out that only one out of these four projects will survive under the present conditions of slowing oil demand growth on the world markets. A solid political backing at the intergovernmental level is, of course, needed to win this competition. But what is more important is the decision of oil companies to use a particular route and guarantee its financing on the basis of predetermined pumping volumes.
Spotlight on Burgas
The bitterest rivalry might rage between the two routes from Burgas. Last Friday Edward Ferguson, president and CEO of the Albanian-Macedonian-Bulgarian Oil corporation (AMBO), which initiated the Burgas-Vlore project as far back as 1996, told Reuters in Sofia that ExxonMobil and ChevronTexaco corporations were considering participation in the project.
Spokespersons for these corporations said that Ferguson was over-optimistic but admitted that they had contacted AMBO regarding this issue. Meanwhile, the possibility of their true interest in the project looks real. Both corporations are not only producing oil in Kazakhstan but they are also among the owners of the CPC pipeline, which brings oil to the Black Sea shore for further exporting. The problem of bypassing the Turkish straits is especially acute for them.
As Ferguson insists, talks with these corporations are dealing with the route options. The 898-kilometer pipeline with a design throughput capacity of 35 million tons of oil a year should pass through Bulgaria, Macedonia and Albania. AMBO expects to take upon itself financing $1.13 billion in construction works. The governments of the three countries will provide political support only.
Russian Involvement
Ferguson believes that the AMBO project will in no way interfere with constructing the Burgas-Alexandroupolis pipeline. 'In that case a decision will be made by the governments of Russia, Bulgaria and Greece with the backing of Russian firms. But here all is in the hands of Western companies supported by the U.S. and Europe,' he says.
Meanwhile, the project of constructing a pipeline to Alexandroupolis, estimated at about $500 -$600 million, has started moving forward as well. As Russia's Deputy Energy Minister Vladimir Stanev told RusEnergy.com, the signing of a memorandum of understanding on this project by the governments of the Russian Federation, Bulgaria and Greece is expected to take place in one and a half or two months. 'This is not an agreement to construct it, as of now, but, at any rate, it is quite an important step forward,' he added.
The Burgas-Alexandroupolis project to construct a 256-320-kilometer pipeline with a throughput capacity of 35 million tons of oil a year is hardly making progress although recently both politicians and businessmen have begun mentioning it again. Last July Russia's president Vladimir Putin expressed his support of the project and a little later a similar position for the Kazakh government was declared by its Foreign Minister Yerlan Idrysov. Then, in December last year LUKOIL head Vagit Alekperov suggested laying a 150-kilometer branch pipe from the planned route to a Greek refinery in Salonika.
Omnipresent Separatists
The extent of Western companies' interest in constructing a pipeline to Vlore still needs to be checked by practical steps. Besides, the attractiveness of the AMBO project is being undermined by political friction between Macedonia and Albania. The route is supposed to cross the area of recent military operations by the Macedonian army against Albanian separatists.
On the contrary, the Greek route is safe and "politically correct." According to media reports, its implementation has been hindered by the outstanding problem of future share allotment. Bulgaria has been pressing for a 50% share but Greece has been ready to give Sofia no more than 20%. However, as Stanev told RusEnergy.com, this and other questions are not being discussed at this stage and all three parties have already agreed in principle on political support for the project.
It is safe to assume that, at a minimum, trans-Balkan pipelines will be built, regardless of the circumstances, by the time the oil flow from the Caspian Region jams the passing capacity of Bosporus. The transit through Burgas, which might be cheaper than the Baku-Tbilisi-Ceyhan pipe, is casting doubt on the commercial value of the American-Turkish project. In any case, Caspian oilmen will be free to make their own choice.
Politics and Business
On the other hand, the Baku-Ceyhan project is enjoying considerable political support from the U.S. and Turkey, whose politicians do not hide their gargantuan aim, which is to remove at least some portion of the Caspian oil flow from Russia's control. Nevertheless, the project's fate is not finally determined yet, although its initiators have already invested over $130 million in preparatory works. They have already been rescheduled several times for later dates. For example, last spring bosses of the Azerbaijan State Oil Company (ASOC) were planning to commission the pipeline at the end of 2004 but today they are already revising the date to mid-2005.
After the detailed feasibility study is finished, then, judging by the latest schedule, no less than 32 months will be needed for practical work in the field. However, before builders can start doing their job the project initiators will have to secure sources of financing. And that means that they will need to provide potential creditors with official guarantees of pumping volumes.
These guarantees are one of the project's most vulnerable spots. Whatever calculation method is applied, by 2005 the Azerbaijani projects of recovering oil along with condensate will be delivering between 15 and 17 million tons of oil a year at the most. It is too little to fill up the pipe, which will have an annual pumping capacity of 50 million tons. Even under the best of circumstances Azerbaijan could not reach this level until 2015. It is obvious that Kazakhstan will also fail to start full-scale production in the north Caspian. No one can rule out the possibility that the U.S. administration will have to pull all available levers to ensure the project's financing with an unusually long payback period.
Vigilant Rivals
So far there are no guarantees of oil pumping for the most advanced project of the four. That is, the already built Odessa-Brody pipeline that Ukraine plans to extend to the Polish cities of Plock and Gdansk. However, the pipeline's readiness still does not mean that it will indeed work. Ukrainian authorities earlier said that filling up the pipe with technological oil will begin February 27, but so far they have no money to purchase oil in the needed volumes and now the date has been moved back to March.
As matters stand now, the Odessa-Brody pipeline has targeted markets where an abundance of supply is exists without it. Up till the present, practically none of its potential clients and suppliers has expressed an officially fixed desire to use the route. Kazakhstan, the owner of the largest oil volumes to pass via the Black Sea, has already refused to work on this transportation option.
The project, which has been implemented by Ukrainians at their own risk, with no pumping guarantees whatsoever, will not be saved even by its extension to Gdansk. (Incidentally, it is too early to talk about its feasibility.) Supertankers do not sail the Baltic Sea because of the meandering Danish straits, which can hardly be used by tankers with a deadweight of 150,000 tons.
Taking all this into account, routes through Burgas look more promising. If oil is shipped to Alexandroupolis on the Greek Aegean coast or to Albania's Vlore on the Adriatic coast, exporters will be able to load supertankers there. And in this respect these ports are as good as the Turkish Yumurtalik terminal near the city of Ceyhan in the Mediterranean. The severer the rivalry, the better the chance that the Caspian oil will not be jammed in the Bosporus.
http://www.rusenergy.com/eng/caspian/a01032002.htm
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