Bulgarian MPs Snub Civic Petition to Renounce Oil Pipeline Contract

Business » ENERGY | April 20, 2011, Wednesday // 19:37
Bulgaria: Bulgarian MPs Snub Civic Petition to Renounce Oil Pipeline Contract The Burgas-Alexnadroupolis oil pipeline (proposed - in green) has met with vigorous opposition by the locals in the Burgas District.

Bulgarian Parliament's Law Committee has ruled against the civic petition urging the government to terminate unilaterally the agreement for the construction of the Burgas-Alexandroupolis oil pipeline.

The petition in question was tabled on July 15, 2010, by several NGOs opposing the construction of the BA oil pipeline, an intergovernmental project of Russia, Bulgaria, and Greece for the transport of Russian and Caspian oil from the Black Sea to the Mediterranean by circumventing the Bosphorus Straits.

The initiative committee that collected signatures in favor of the petition urging the Borisov Cabinet to renounce the international agreement signed by its predecessors, the Stanishev Cabinet, was made up of the Bulgaria Greens political party, the Clean Sea NGO based in the Black Sea town of Pomorie, the Bulgarian Association for Encouraging Civic Initiative based in the Black Sea city of Burgas, and the Civic Committee for Saving the Bay of Burgas.

The Parliamentary Committee has thus endorsed the position of the Finance Ministry that Bulgaria has no way of renouncing the energy project because this would mean the unilateral termination of a legitimate international contract.

The contact for the construction of the Burgas-Alexandroupolis oil pipeline does not contain any clauses giving Bulgaria the right to pull out of it, nor has the country received the agreement of the other parties Russia and Greece for such a step, the MPs said.

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, 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.

Shmatko spoke in Moscow after chairing together with Bulgarian Minister of Economy, Energy, and Tourism Traicho Traikov a session of the Bulgarian-Russian commission for economic cooperation.

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 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.

Bulgarian Environment Minister Nona Karadzhova made it clear that the TBP report had serious deficiencies, and the government would give the project company two more months to complete its report. She stressed the concerns of the population in Southeast Bulgaria over the potential construction and operation of the Burgas-Alexandroupolis pipeline.  

Earlier in March, the Russian-sponsored oil pipeline project ran into further trouble as Bulgaria failed once again to pay its dues to the joint venture for its construction of the Burgas-Alexandroupolis oil pipeline.

On February 17, 2011, a joint general meeting of the Shareholders and the Supervisory Board of Trans-Balkan Pipeline B.V. (ТВР), the Bulgarian-Greek-Russian company, held in Rome, Italy, gave the Bulgarian government March 20 as a deadline to settle all of its dues for the Burgas-Alexandroupolis oil pipeline.

Even though back then all of the Company's shareholders, including the Bulgarian state, supported the idea that the project should be continued, including the revision of the Environmental and Social Impact Assessment (ESIA), according to the comments made by the Bulgarian Ministry of Environment and Water, Bulgaria failed once again to pay the EUR 7.3 M it owes to the budget of the joint venture.

Mikhail Barkov, Chairman of TBP's Supervisory Board, as quoted by RIA Novosti, commented on Monday, March 21, that the TBP company will have to go into a hibernation mode as neither Greece, nor Russia will pay any more for the project as Bulgaria is constantly refusing to do so.

Meanwhile, Greek Deputy Foreign Minister Spyros Kouvelis revealed that Greece has been exerting pressure on Bulgaria for the construction of the Burgas-Alexandroupolis pipeline but that it is blocked by the Borisov government for political reasons.

Trans-Balkan Pipeline B.V. was registered on February 6, 2008, in Amsterdam (the Netherlands) in implementation of the tripartite agreement between the Governments of Russia, Bulgaria, and Greece on the construction and operation of the Burgas-Alexandroupolis oil pipeline, signed in Athens (Greece) on March 15, 2007.

According to the Russian reports, Bulgaria owes EUR 7.3 M as a contribution to the budget of the joint project company; in December 2010, there were concerns by Russia that Bulgaria wants to kill the project by defaulting on its dues. A senior Greek government official commented at the time that Bulgaria was moving to shed the oil pipeline under pressure by American oil interests.

In November 2010, the Bulgarian Environment Ministry said the environmental impact assessment of the Burgas-Alexandroupolis oil pipeline is inadequate and needs to be reworked; the ultimate decision about whether Bulgarian will take part in the project has been put off for 2011. Bulgarian Prime Minister Borisov, however, has written off the project on a number of occasions, declaring that there is no way the ultimate environmental assessment would be positive.

Bulgaria, Greece and Russia agreed to build the pipeline between Burgas and Alexandroupolis, taking Caspian oil to the Mediterranean skirting the congested Bosphorus, in 2007 after more than a decade of intermittent talks.

The 280-km pipeline, with 166 km passing through Bulgaria, would have an initial annual capacity of 35 million tons of crude oil, which could be later expanded to 50 million tons. Its costs are estimated at up to USD 1.5 B, up from initial estimates at USD 900 M.

The Trans-Balkan Pipeline company, which is in charge of the construction and subsequent operation of the future pipeline, and is headquartered in the Netherlands, was set up in 2008.

The Russian participant in the project, Pipeline Consortium Burgas-Alexandroupolis Ltd, has a share of 51%. It was founded jointly by three companies: AK Transneft (33.34%), NK Rosneft (33.33%), and Gazrpom Neft (33.33%).

The Bulgarian Joint stock company "Project Company Oil Pipeline Burgas-Alexandroupolis – BG" AD has a share of 24.5%. It was initially founded as jointly by two state companies, Bulgargaz (50%) and Technoexportstroy (50%) but was transferred in full to the Finance Ministry in February 2010.

The Greek participants are Helpe Thraki AE with 23.5% and the Greek government with 1%. The Helpe-Thraki AE was founded jointly by "Hellenic Petroleum" (25%) and "Thraki" (75%).

Three Bulgarian Black Sea municipalities - Burgas, Pomorie, and Sozopol - have voted against the pipe in local referendums over environmental concerns.

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Tags: Burgas-Alexandroupolis oil pipeline, oil pipeline, TBP, Trans-Balkan Pipeline, Environment Minister, Nona Karadzhova, Enviroment Ministry, Russia, greece, environmental assessment, Sergei Shmatko, Sergey Shmatko, Traicho Traikov, Russia, Bulgaria Greens, Burgas, Pomorie

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