Putin, Karamanlis set pipelines for the EU

[Lucas Corso]

Putin, Karamanlis set pipelines for the EU

The Bourgas-Alexandroupolis oil pipeline and the South Stream gas pipeline dominated talks in Moscow on December 18 between visiting Greek Premier Costas Karamanlis and Russian President Vladimir Putin. The implementation of the two projects will dramatically increase Europe’s energy security, Putin said. “We hold that joint efforts should be centred on promoting large bilateral and multilateral projects, including the construction of the Bourgas-Alexandroupolis oil pipeline and South Stream gas pipeline. Their implementation will both be highly profitable and will dramatically increase energy security on the whole European continent,” Putin told a news conference after talks with Karamanlis on December 18. “I would like to note that a trilateral (Bulgaria, Greece, and Russia) protocol on the establishment of the Bourgas- Alexandroupolis International Project Company. This document is real. One can say that it is the last but one step to the practical implementation of this very important project,” the Kremlin leader said. Participants in the Bourgas- Alexandroupolis project signed the agreement on the establishment of the International Project Company and its registration in the Netherlands at the Transneft office on December 18. The document was signed by Greek Development Minister Christos Folias, Hellenic Petroleum- Thraki consortium Director General Christos Dimas, Bourgas-Alexandroupolis Project Company BG Stefan Gunchev and Bourgas-Alexandroupolis Pipeline Consortium head Dmitry Evstratov. During the signing Folias said: “Today is an exceptional day. We’re finally realising what we had promised a few weeks ago: The inauguration of the International Project Company in 2007. Many said it couldn’t be accomplished. Where, however there is a will there is a way.” Others taking part in the signing ceremony included Russian Deputy Industry and Energy Minister Andrei Dementiev, the company heads of Transneft, Rosneft and Gazprom Neft: Nikolai Tokarev, Sergei Bogdanchikov and Alexander Dyukov. Tokarev said at the ceremony that Greece’s and Bulgaria’s role in energy will be strengthened. The oil pipeline will transit Greece and Bulgaria and help reduce oil tanker congestion in the Bosporus and the Dardanelles. The project had been much delayed, but now it seems, after five meetings between Putin and Karamanlis, everything is ready for the commencement of construction in 2008. “I think we are pretty close at resolving the final issues,” Chris Weafer, chief strategist at Moscowbased UralSib, told New Europe, adding that there is much greater momentum on this pipeline. “I don’t think Russia has much choice but to try and get this pipeline built as quickly as possible,” Weafer said. Russia needs this alternative access to the Mediterranean because it can’t put any more oil through the Bosporus Straits. If Russia wants to retain its strong energy relationship with Central Asia, it needs to be able to facilitate oil exports out of Kazakhstan and Turkmenistan via Russian territory and then out to the global market place. If it can’t do that then Kazakhstan and Turkmenistan might look for alternatives, turning to China or Europe for constructing pipelines. “We are going to see more oil coming out of the Caspian and Russia wants it to come through Russian territory, which basically means a lot more oil from Central Asia is going to arrive at Novorossisk port in the Black Sea. But, we already know the Bosporus is a difficult channel to transit and putting more on the ships to get through Bosporus is only going to make the problem worse and worse and worse,” Weafer said. So I think it’s going to get done because they have no choice. They need that pipeline.” In order to get Bourgas- Alexandroupolis done the Kremlin has put pressure on US energy major Chevron, which operates the Caspian Pipeline Consortium (CPC). The implementation of the Bourgas-Alexandroupolis project will allow Russia to decide whether to enlarge the CPC. Chevron has been looking to double the daily capacity of the pipeline from 625,000 barrels to 1.3 million barrels of oil per day, but Russia said they would block that expansion until the Bosporus pass pipeline was approved. “So they basically said to Chevron that they had to get the support of the US State Department to get this pipeline agreed. So the US State Department has been very instrumental in smoothing out some of the difficulties with Bulgaria and Greece to get this pipeline done because without this pipeline CPC’s capacity would not be doubled because Russia would not allow any extra oil in the Caspian because of the congestions,” Weafer said. But while the US does not object to the construction of the Bourgas-Alexandroupolis pipeline, Washington is watching with concern Russia’s plans to build the South Stream gas pipeline. Putin said on December 18 Greece supported Russian plans to build the new gas link under the Black Sea. Karamanlis in June announced his country’s involvement in South Stream. South Stream is seen as a direct challenge to the EUbacked Nabucco pipeline. South Stream might also undermine plans to fill the Turkey- Greece-Interconnector once it is extended to Italy without turning to Russia for gas. Former Greek energy minister Elefterios Verivakis told New Europe it looks like Bourgas- Alexandroupolis will materialise. But he noted that the US would not allow Russia’s increased presence in Greece without a quid pro quo. “There is a big question mark. There is a delicate balance of pressures and counter pressures in the region and no last word. The question is whether these agreements will have any meaningful effect,” Verivakis said. The Moscow-based Ural- Sib strategist said Russia will probably try and push for yet another Bosporus oil bypass pipeline on the southern side via Turkey. “I think that’s going to be the next item on the agenda and the US is definitely keen to try and do,” Weafer said. “Once the Greek-Bulgarian pipe starts, I think almost immediately we will shift focus to the southern bypass. I think that project will be resurrected.”

Source: Putin, Karamanlis set pipelines for the EU - NEW EUROPE

Good move Greece, however now we'll have to await for the atlantists' next moves...