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Platt's Oilgram News

Bosporus Bypass Planned; Line Has Adriatic Terminus. November 1, 1994

New York - Cabinet-level officials of three Balkan states are meeting in Skopje, capital of Macedonia, Nov. 4 to sign a "protocol of support" for a project that would carry Black Sea crude from the port of Burgas in Bulgaria to the Albanian port of Vlone on the Adriatic Sea, via Macedonia.

The project to build a 512-mile trans-Balkan pipeline as an alternative route to carry Urals, Tengiz and eventually Caspian crude to Mediterranean and Central European markets was developed over the last 18 months by AMBO Corp., a company recently registered in Skopje, whose president Vuko Tashkovich is a U.S. citizen of Macedonian origin.

The governments of Albania, Bulgaria and Macedonia have already agreed to the routing of the pipeline and indicated that each would equally retain minority shares in the proposed Balkan Pipeline Consortium, Tashkovich told Platt's. The Nov. 4 protocol would be a reconfirmation in writing for the benefit of would-be outside investors.

Tashkovitch, who is in the construction business in the U.S., has discussed the project with a number of international majors, including Chevron and ENI, and Russia's Transneft, as well as the European Bank for Reconstruction & Development. He said he hadn't yet approached Lukoil, but senior officials of Russia's Ministry of Foreign Economic Relations had shown interest, he said.

International majors he had talked to also showed interest, but wanted to see how the consortium would fare with the Russians first. Signatures formalizing the support of all three Balkan governments is needed before undertaking serious discussions with potential investors, he said.

Present plans call for an initial 300,000 b/d capacity line, later to be increased to 800,000 b/d with seven pumping stations, three of which would be in Bulgaria. There, the line would follow the route of a domestic gas pipeline for two-thirds of the way to the Macedonian border. According to Tashkovich, the infrastructure already exists in Bulgaria, and AMBO is now working with a Bulgarian engineering company for a technical feasibility study. It has also asked Brown & Root's London office for a proposal to do a full engineering study.

Tashkovich said Slovenia and Croatia, as well as Italy, were potential markets for the crude. The Vlore terminal on the Strait of Otranto, linking the Mediterranean to the Adriatic Sea, is direcly opposite the Brindisi oil refining center on the Italian mainland, he said, adding that if the Italians are interested, they could study the feasibility of an undersea pipeline to Italy's Adriatic cost.

Initially, the pipe would be supplied from Germany and the U.S., but Tashkovich said the Belgrade government had built a pipe manufacturing plant in Macedonia, before it broke away from Yugoslavia, hence the pipe might be supplied locally he said.

He estimated that if construction starts in 1996, the line would be ready by the year 2000.

He said the line ending on the Adriatic would be environmentally more sound than a competing Greek-Russian pipeline project also bypassing the Bosporus tanker route (ON 9/15). The latter linking Burgas to the Greek port of Alexandroupolis on the Aegian Sea could be an ecological threat to the many Aegian islands and antiquities, worse than the Exxon Valdez disaster, Tashkovich said.

EBRD, he said, was specially interested because it fitted into the bank's plans to integrate the Balkan countries economically with Europe. The trans-Balkan would be part of an "East-West" trade corridor with rail and highway links. Tashkovich said EBRD might fund the project with up to 35%.