Russian oil pipeline monopoly Transneft will freeze the construction of the troubled Burgas-Alexandroupolis project, which has been largely obstructed by Bulgaria's government in the past 2 years.
Transneft will not abandon the Burgas–Alexandroupolis oil pipeline project - despite its partner Bulgaria's failure to provide financing - but will freeze the construction this fall, Transneft Vice President Mikhail Barkov said on Friday night, as quoted by RIA Novosti.
"We are not giving up Burgas–Alexandroupolis. The project is interesting and approved by the European Union. We will not abandon the project, but in October or November we will freeze it and put it to sleep," said Barkov.
The construction of the Trans-Balkan oil pipeline, designed to link the Black Sea port of Burgas to Alexandroupolis on the Aegean Sea, has long been hampered by the position of Bulgaria, which has threatened to abandon the project over environmental risks. Most of the pipeline was planned to run through Bulgarian territory.
Grigory Birg, an analyst from Investcafe, told RIA Novosti that the Transneft's statement did not mean that the project was frozen. Bulgaria did not fulfill its obligations under the contract and when the Balkan country implements its terms, the project will be re-started.
Transneft has repeatedly complained that Bulgaria was failing to finance its part of the project. Media has said the project was likely to be suspended while Transneft only said it would minimize its spending on the pipeline.
The Russian "freeze" of the oil pipeline project comes after in late August 2011 the Bulgarian government granted Trans-Balkan Pipeline, a Bulgarian-Greek-Russian project company, another extension on the environmental assessment of Burgas-Alexandroupolis.
Bulgaria's Environment Ministry gave TBP until September 30, 2011, to submit anew its environment assessment impact study on the troubled oil pipeline project.
The new extension means that the deadline for the final decision of the Bulgarian Environment Ministry and the Cabinet as a whole on the fate of the Burgas-Alexandroupolis pipeline will be pushed further, till the end of October 2011. TPP had requested the extension in mid July, a government spokesperson said Monday.
The new delay on the final decision of the BA pipeline's fate came after in June 2011 Bulgarian Environment Minister Nona Karadzhova had declared that she gave Trans-Balkan Pipeline a final chance – a two-month extension – in order to fix the environmental impact flaws in its project.
Shortly after that the Bulgarian government approved a contribution to the Bulgarian state company for the construction of the vastly troubled pipeline, which was at the bare minimum for keeping alive operation of the company, which holds on behalf of Bulgaria a share of 24.5% in the Trans-Balkan Pipeline company, a joint venture of Bulgaria, Greece, and Russia.
In June 2011, the Bulgarian government delayed further the controversial project for the Burgas-Alexandroupolis oil pipeline, returning its environmental assessment report for the second time to the Trans-Balkan Pipeline company, prompting Transneft President Nikolai Tokarev to describe the actions of the Bulgarian government as an insult.
The 300-km pipeline, planned to link the Black Sea port of Burgas to Alexandroupolis on the Aegean Sea, is designed to transport 35 million tons of oil a year, with a possible expansion to 50 million tons, to ease the tanker traffic burden in the Bosphorus and the Dardanelles straits.
Transneft does not rule out finding a route bypassing Bulgaria to deliver Russian oil through Greece to the Mediterranean, Tokarev said.
Bulgaria's Environment Minister Nona Karadzhova announced in June the Ministry had once again refused to accept the report of the project company Trans-Balkan Pipeline (TPP) on the construction of the troubled Bulgarian-Greek-Russian oil pipeline, and has returned it to TPP giving it two more months to complete it and fix certain deficiencies.
This was the second such move on part of the Bulgarian Environment Ministry after it had already given Trans-Balkan Pipeline two months to fix its report at the very end of March.
While the initial environmental report of the project company provided for using an offloading monobuoy offloading technology at the pipeline's starting point at the Bulgarian Port of Burgas, the re-submitted version of the document added a second option – unloading the oil directly at the port.
According to Bulgaria's Environment Minister, however, Trans-Balkan Pipeline has not provided sufficient information about the second technology. The public discussion of the company's environmental report in Bulgaria will start only after the document is completed.
Interestingly, the newly adopted approach about oil unloading in Burgas is the opposite of the one which was initially adopted, and was defended by TBP executives as being safest in environmental terms.
In a statement released on May 23, the TBP company announced that a revised Environmental and Social Impact Assessment Report (ESIA) for the Burgas-Alexandroupolis crude oil pipeline project was submitted to the Ministry of Environment and Water of the Republic of Bulgaria on May 19, 2011.
TBP says it has reconsidered the earlier concept of 2009 that favored SPMs (Single Point Mooring - offshore unloading facilities) and is instead giving preference to an improved Jetty solution for unloading in the Burgas bay area.
According to the company, which is a joint venture of the governments of Bulgaria, Greece, and Russia, the so called monobuoy offloading technology, or SPM option was originally favored because SPMs can be placed beyond the Natura 2000 areas in the outer bay area of Bulgaria's Gulf of Burgas.
"After a series of consultations with the Bulgarian environmental and other competent authorities the original Jetty design was elaborated in more detail and further improved. Also, comprehensive impact mitigation measures have been defined. As a result, TBP has concluded that the risks for Natura 2000 area are within an acceptable level since adequate control measures will be put in place," Trans-Balkan Pipeline explained in May 2011.
It points out that an important benefit of the Jetty solution is that the facilities are located close to the Port of Rosenets - an industrial area - which would allow for bundling with the existing oil transportation infrastructure.
In an interview for Novinite.com (Sofia News Agency) in June 2010, Plamen Rusev, back then head of the Bulgarian section of the TBP company, defended the monobuoy unloading technology as being the safest one, and criticized the Bulgarian authorities and local NGOs for insisting on the port offloading of oil saying it harbored much graver dangers. The interview can be READ HERE.
At present, Bulgaria has technically frozen the project for the Burgas-Alexandroupolis oil pipeline.
Ever since the center-right government of Bulgarian Prime Minister Boyko Borisov took office in the summer of 2009, it has been balking at the construction of the Burgas-Alexandroupolis oil pipeline, which had been promoted vigorously by the formed Socialist-led Stanishev Cabinet and the Socialist President of Bulgaria, Georgi Parvanov. It has also been met with staunch resistance along Bulgaria's southern Black Sea coast over environmental concerns.
On April 7, 2011, Russian Energy Minister Sergey Shmatko renewed calls for Bulgaria to take measures in order to push ahead the project for the construction of the Burgas-Alexandroupolis oil pipeline.
Back then, Bulgarian Economy Minister Traikov retorted that Bulgaria has always observed its international contracts, and that at the moment his country is examining the environment impact assessment of the BA pipeline.
The new Russian push for the Burgas-Alexandroupolis oil pipeline came a week after Bulgaria's Environment Ministry gave the Trans-Balkan Pipeline company two more months to complete its report on the environmental impact of the Burgas-Alexandroupolis oil pipeline.
The original environmental impact report of the proposed Burgas-Alexandroupolis oil pipeline was tabled to the Bulgarian government in late February, and the Cabinet was supposed to make a decision on whether the pipeline will be built or not by March 31.