Countdown on BA Oil Pipeline's Fate Starts in Bulgaria

Business » ENERGY | October 3, 2011, Monday // 18:37
Bulgaria: Countdown on BA Oil Pipeline's Fate Starts in Bulgaria Bulgaria's Environment Minister Nona Karadzhova has a lot of paperwork to go throw over the next 30 days in order to issue a decision on the fate of the BA oil pipeline. Photo by BGNES

Bulgaria's Environment Ministry is expected to decide the fate of the troubled Burgas-Alexandroupolis oil pipeline project within 30 days, as the project company TBP has submitted its environmental impact assessment.

Trans-Balkan Pipeline BV, a Bulgarian-Greek-Russian government consortium, submitted the revised and supplemented ESIA (environmental and social impact assessement) report to the Ministry of Environment and Water of Bulgaria on September 30, 2011, within the term set by the Ministry, the company announced Monday.

"With the aim of obtaining a pre-check of the report, the Company together with its environmental and technical consultants had sent a draft of the revised report to the competent Bulgarian public environmental authorities for a preliminary review prior to submission," TBP said, adding "The Executive Agency Maritime Administration confirmed its satisfaction with the made amendments. The Black Sea Basin Directorate sent an official letter to the Company with comments which were duly addressed prior to submission of the report.

The Company is intent on supporting the constructive review of the documentation by the competent Bulgarian authorities by making itself available to answer any questions which may arise during the review period. In accordance with the existing legislation in Bulgaria the evaluation results are expected within one month following submission.

The EIA of the Burgas-Alexandroupolis pipeline project company had been rejected and returned for correction three times by the Bulgarian Environment Ministry over the recent months, casting ever greater doubts on the fate of the controversial oil pipeline initiative.

The newly submitted report by TBP is said to be of enormous volume, which, according the government sources, is taken to mean that the EIA has been thoroughly reworked.

If the Environment Ministry in Sofia approves the report, its word still will not be final since the report will then be referred for a public discussion, and will then be taken to the Supreme Expert Environmental Council, a body of government and NGO experts. However, the project would be dead, if the Bulgarian Environment Ministry rules that the report is inadequate.

Last month, Russian oil pipeline monopoly Transneft said it 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 declared.

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.

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 came after in late August 2011 the Bulgarian government granted Trans-Balkan Pipeline an extension on the environmental assessment of Burgas-Alexandroupolis.

Bulgaria's Environment Ministry had given TBP until September 30, 2011, to submit anew its environment assessment impact study on the troubled oil pipeline project.

TBP 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 (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.

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.

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: Vladislav Emelyanov, TBP, Pomorie. Burgas-Alexandroupolis, Burgas, Russia, Traicho Traikov, Sergey Shmatko, Sergei Shmatko, environmental assessment, greece, Russia, Enviroment Ministry, Nona Karadzhova, Environment Minister, Trans-Balkan Pipeline, TBP, oil pipeline, Burgas-Alexandroupolis oil pipeline, Mikhail Barkov, EIA, environmental impact assessment

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