By John Helmer in Moscow
The chief executive of Russia’s pipeline company Transneft, Nikolay Tokarev (left), has told Deputy Prime Minister Igor Sechin that there is not enough Russian crude oil to make commercially feasible the proposed trans-Balkan pipeline to a new tanker terminal at Alexandroupoli. Tokarev’s opinion, conveyed privately last September, appears to have encouraged Sechin to announce the following month that he, Russia’s chief decision-maker for oil, gas and the energy sector, favours replacing the trans-Balkan pipeline route between Burgas, Bulgaria, and Alexandroupoli, Greece, in favour of a much bigger-capacity pipeline delivering Russian crude from the Turkish Black Sea port of Samsun, across land, to Ceyhan, the Turkish tanker terminal on the Aegean.
Sechin is also chairman of the board of the state-controlled oil company Rosneft, Russia’s leading oil exporter. Without the backing of Rosneft to supply oil, or Transneft to build and manage the trans-Balkan pipeline, the Trans-Balkan Pipeline Company (TBP) has no future – at least, not unless the 51% stake in TBP currently held by the Russians is transferred to an alternative, non-Russian stakeholder.
According to Bulgarian sources, these alternatives include Chevron of the US and the Kazakhstan government’s energy firms, which produce and export crude oil from the eastern shore of the Caspian Sea, and currently pipe it to the Russian port of Novorossiysk, on the Black Sea, for onward tanker delivery to the international market. The Bulgarian stake in TBP of 24.5% was recently transferred to the direct control of the Bulgarian Ministry of Finance, according to an announcement on the TBP website dated March 15.
The remaining 24.5% stake in TBP is owned by Greeks – 1% by the Greek government, and 23.5% shared between the Greek oligarch groups, Latsis and Copelouzos.
TBP reports this week that the Bulgarian government, headed by Prime Minister Boyko Borisov, “has decided to allocate BGN 50 000 [equivalent to $35,000] from the national budget for the acquisition by the state from Technoexportstroy EAD of 50 000 shares representing 100% of the capital of the Burgas-Alexandroupolis Oil Pipeline Project Company EAD. The face value of each share is 1 BGN. By transferring the ownership of the project company directly to the Ministry of Finance, better coordination and supervision of the company activity will be achieved. Furthermore, this will optimize the decision-making process related to the management and financing of the Bulgarian participation in the project.”
Independently, a Bulgarian government source has told Fairplay that plans have been made in Sofia for two variants for delivering crude oil to Burgas – one at a point 15 kilometres offshore; and another at a brand new, ecologically secure oil terminal near Burgas. The source added that the project may survive without Russian oil. The Borisov government believes, according to the source, that the US-Kazakh Tenghiz oilfield, operated by Chevron, may be able to deliver at least 18 million tonnes per annum (350,000 barrels daily) to Burgas for the new pipeline. Planned capacity of the pipeline has been reported at 18 million tonnes in the initial stage; 35 million tonnes (700,000 bd) at peak.
There has long been public speculation that Chevron and KazMunay Gas might take equity in, and supply oil to the project; but until now noone has intimated that they would do so in place of the Russians. In addition to Transneft and Rosneft, the third Russian stakeholder in TBP, Gazpromneft – the state-owned oil company which bought out Roman Abramovich’s Sibneft – has said the maximum volume it would commit to the project is 3 million tonnes per annum (60,000 d) – far too little to be significant.
The letter from Tokarev to Sechin last autumn was leaked in a Moscow newspaper today; public disclosure of correspondence between the two has never occurred before. Neither official has given public or parliamentary testimony, nor answered press questions, on the current policy of the government in Moscow towards the oil export options in the Black Sea.
The leak appears intended to reinforce doubt that the 15-year old pipeline project will be built, despite a go-ahead from Prime Minister Vladimir Putin two years ago. Public statements of Russian dissatisfaction with the Borisov government, and divisions inside the government in Sofia, have also added to the woes of the project planning. Borisov has responded by replacing his energy minister, Traycho Traykov, for the Kremlin negotiations with Deputy Prime Minister and Finance Minister, Semeon Djankov (right). Reportedly, Djankov has a new mandate to negotiate with Moscow. But the former World Bank economist isn’t saying what he proposes. Bulgarian sources also say that no meeting between Djankov and Sechin has been scheduled to date.
This week’s statement by TBP reports that Djankov “has taken up the coordination and supervision of the Bulgarian participation in the Burgas-Alexandroupolis oil pipeline project. The aim is to optimize the decision-making process in managing and financing the Bulgarian participation in the project for construction and operation of the oil pipeline. This will guarantee the Bulgarian interest in this infrastructure project to the highest degree.”
Asked to clarify what Bulgaria wants, Djankov has told Fairplay through a spokesman that he “has highly restricted his media activities at this time”.
Putin’s spokesman Dmitry Peskov said this week that the trans-Balkan pipeline is not “competing or mutually exclusive” with the trans-Turkey pipeline now favoured by Tokarev and Sechin. The second pipeline has planned capacity for shipping 1.5 million bd, roughly double the TBP.
For the time being, Transneft is claiming today’s letter leak is “a figment of the imagination.”
However, Transneft makes no bones about its disagreements with Borisov and Djankov. “We are worried by the position of the Bulgarian side,” Fairplay was told by Transneft spokesman Igor Dyomin. “We have sent several applications to find out the Bulgarian position on their participation in the project, but we haven’t received any answer yet, so the official Bulgarian position remains unknown to us. Also, the Bulgarian side is not participating in the project financially, although it should, they hold a quarter in the project. Another quarter is financed by Greece, and another 50% is accounted for by Russian companies. Moreover, the Bulgarian side wants us to guarantee the volumes of oil in the pipeline, which we cannot agree to.”