Wednesday, December 7, 2011

Bulgaria Cancelling Burgas-Alexandropolis Pipeline

After 15 years of planning, the government of Bulgaria has announced it will cancel the Burgas-Alexandropolis Pipeline in the next twelve months, because it is no longer financially viable. The argument is a bit disingenuous, since the costs escalated while the Bulgarian government used environmental concerns to delay approval of the project.

The pipeline was supposed to allow Russian crude to reach the Mediterranean while bypassing the straits of the Bosphorus. Bulgarian Prime Minister Boyko Borisov came to power in 2009 promising to cancel the project which had been opposed by residents of the towns the pipeline would transit. He returned proposals three times for inadequately addressing environmental concerns. Other investors in the project recognized this as a delaying tactic. Transneft spokesman Igor Dyomin said, "The Bulgarian side has three times given negative conclusions on the ecology (of the pipeline project) with the suggestion that the project should be improved. The last time their arguments were totally facitious, and we have got the impression that they intend to play for time instead of working on the project," according to Business Insider. Borisov's ecological bluff was called in November 2011, however, when the Environment and Water Ministry approved the last environmental impact statement.

Bulgaria owed $8.2 million dollars to its partners in the project. As a result of their failure to pay, Russian pipeline operator Transneft announced in July that it was freezing its involvement in the project. "God save anyone from partners like our Bulgarian friends," commented Transneft chief exectuvie Nikolai Tokarev.

Bulgaria is apparently blaming Transneft's freeze for the pipeline problems, rather than its own instransience. The Sofia News Agency quoted Energy Minister Traicho Traikov after a cabinet meeting: "Bulgaria's partners in the pipeline deal accused it of delaying the project quite a long time. But now it turns out it is not Bulgaria, but the other countries, which are at fault and this is the reason why we decided to walk out of this agreement. It is not Bulgaria which should be criticized for failing to meet its commitments." Traikov is proposing the dissolution without penalty of the trilateral cooperation agreement among Russia, Bulgaria and Greece; or, Bulgaria will withdraw unilaterally from the agreement.

For Transneft's part, they are considering other options to transit Greece while bypassing Bulgaria.