January 2011 Vol. 238 No. 1

Projects

Bulgaria Rejects Approach To New Oil Pipeline

Bulgaria rejected two environmental impact reports on a planned oil pipeline that bypasses Turkey’s crowded Bosporus Strait.

Bulgaria ordered the study before deciding whether to back out of the project to construct the Burgas-Alexandroupolis pipeline on concern an oil spill would harm the Balkan country’s Black Sea resorts.

Russia, Bulgaria and Greece agreed in 2007 to build the 285-km pipeline from the Bulgarian Black Sea port of Burgas to the Greek port of Alexandroupolis on the Aegean Sea. The $1.4 billion) link, with capacity of 35 million metric tons of oil a year, would bypass the Bosporus and Dardanelles straits, saving shipping costs.

Meanwhile a new intergovernmental agreement on South Stream between Russia and Bulgaria reflects a thawing in energy relations between the two countries, partly a result of reduced gas prices, but does little to
advance the pipeline’s progress.

Russia and Bulgaria have signed an intergovernmental agreement (IGA) on construction of the Bulgarian section of the South Stream gas pipeline; the IGA has been widely anticipated and comes as Gazprom offers a 5% discount on prices to Bulgargaz.

The agreement reasserts Bulgaria’s role in South Stream and relegates Romania to a mere customer as opposed to a transit state. The IGA means little in practical terms — evinced by Bulgaria’s freeze on the Burgas-Alexandropoulos oil pipeline despite an IGA signed by Russia, Greece, and Bulgaria in 2007. A final investment decision will have a real impact but is still some way off.