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13 Dec 2010 | Profile Magazine | There is a great future for countries in the Black Sea region in implementing joint socio-economic projects. Energy-related projects allowing the delivery of energy resources from Russia and Central Asia to Europe are of enormous importance. However, at the same time, special emphasis must be placed on issues of environmental protection and safeguarding the interests of the population. These were the conclusions made by participants of the First International Congress on Integration and Sustainable Development in the Black Sea Region. The congress was held in the Bulgarian city of Burgas on December 4-6, 2010.

The organizers attracted a broad range of government and public organizations from Russia, Bulgaria, Romania, Greece, Ukraine, and the EU to take part in the discussions. A wide variety of issues were discussed, including energy, trade cooperation, Russian investments in Bulgaria, and cooperation between countries of the region with consideration of EU policy.

“The Black Sea region is a bridge between East and West,” said Marusia Lyubcheva, president of the Black Sea Institute, who presented the EU’s Black Sea Synergy program. How can we strengthen this bridge? We can do it by developing intergovernmental relations and contacts between residents of different countries.

Igor Plingin, Russia’s trade representative in Bulgaria, talked about the growing trade turnover between our countries. The number of domestic tourists vacationing in this country is also growing. In 2010, 400 000 Russians visited Bulgaria, bringing income of 200 million euros. “Russian-Bulgarian economic cooperation has a great future,” Plingin says. Large-scale energy projects such as the South Stream gas pipeline, the Burgas-Alexandroupolis oil pipeline and the Belene nuclear power plant have a special role. Implementing them will benefit the Black Sea region and Europe as a whole.

The formation of the Customs Union between Russia, Kazakhstan and Belarus and Russia’s entry into the World Trade Organization (WTO) planned for 2011 create new opportunities for developing trade and economic relations for countries in the region. Anna Brzozowska, who works in the Office of the European Commission in Moscow, spoke to congress participants about Russia-EU relations.

A lot of attention was also focused on environmental issues. Sergei Osheiko, President of the Black Sea Organization for Integration and Sustainable Development, which organized the congress, talked about the Internet resources used to track oil and oil product spills in the region.

The total area of contamination in 2007-2008 was nearly 200 sq. km. Furthermore, nearly all slicks were “tied” to oil infrastructure and shipping lanes. Therefore, it is extremely important to build new modern facilities meeting the highest possible environmental standards.

The Burgas-Alexandroupolis oil pipeline Project is one of these. Discussion of the Project was one of the key topics at the congress. It has aroused a great deal of interest and public response in all Black Sea countries. Implementing the Project will help lighten the load on the Bosphorus and Dardanelles Straits and increase the energy security of the entire European continent.

It will provide a new route for transporting Russian and Caspian oil from Russian Black Sea ports by tanker to the Port of Burgas in Bulgaria, and then by oil pipeline to the Port of Alexandroupolis in Greece, where the oil will be loaded once again onto tankers for transport to world markets. The pipeline will have a capacity of 35-50 million tonnes of oil per year.

Many of the Bulgarians attending the congress admitted that no one in the country was opposed to the oil pipeline in principle, but that there were questions about the lack of information.

In order to fill this gap, Vladislav Emelyanov, CEO and Chairman of the Management Board of Trans-Balkan Pipeline B.V. (the company implementing the Project), gave a detailed presentation. In his speech he placed special emphasis on the benefits Bulgaria would receive from construction of the oil pipeline. “Today everyone is talking mainly about the $35-50 million Bulgaria could earn annually from pumping oil. But this is only the tip of the iceberg,” he noted.

The company and its partners estimate that operating costs in the first 20 years of the pipeline’s operation will be $1.8 billion, and capital investments in Bulgaria will be $1.5 billion. More than $1 billion will be spent on leasing service ships and nearly $1 billion on power supply in 40 years of operation of the oil pipeline. “All of this money will stay in Bulgaria,” Mr Emelyanov stressed. “Of course, we will also be hiring Bulgarian companies both during the construction phase and the operating phase. An oil pipeline isn’t just a pipe buried in the ground. It also means port facilities, a fleet, a tank farm and new jobs.”

There is one more important aspect. Bulgarian laws and directives stipulate a mandatory 90-day reserve of oil and oil products in the country.

At present, this volume corresponds to a consumption level two-thirds less. However, the reserves may also include oil in tankers and in tank farms. Thus, the Project will help Bulgaria solve this problem.

The Project has high environmental reliability. The probability of oil spills is minimized. The pipeline will be divided into segments that will automatically shut down in the event of any emergencies, an emergency pressure relief system to prevent leaks is provided, and Single Point Mooring (SPM) is planned for unloading tankers. They will be located several tens of kilometers offshore. However, the option of a jetty was also investigated. ERM has prepared an Environmental and Social Impact Assessment (ESIA). In a speech at the congress, ERM representative Jenny Bayer stressed that in the entire 30 years that SPM have been employed around the world there has never been a single serious accident. The ESIA has also been sent to the environmental ministries of Bulgaria and Greece.

Bulgarian experts noted the high quality of analysis of environmental issues and also spoke of the benefits the project would bring to the country if implemented.

Nikifor Gerchev, chairman of the BULSAR NGO, emphasized that Bulgaria would get rescue and salvage ships and oil cleanup vessels, which it does not have at present.

At the same time, the Bulgarian government and the public have some claims against the Project. Radoslav Nenov, a member of the Coalition for Sustainable Development advisory council, says there is a need to consider the option of building a jetty in the Port of Burgas rather than SPM. Mr. Emelyanov explained to Profile that the comments of Bulgaria’s Ministry of Environment and Water about the Project’s ESIA contain the same demand. “If follow-up and additional examinations show that a jetty is safer and more efficient than SPM, we’ll build a jetty,” he stressed.

The CEO of Trans-Balkan Pipeline did not comment on Bulgarian Prime Minister Boyko Borisov’s remarks about abandoning construction of the oil pipeline. “All I can say is that Bulgaria hasn’t withdrawn from the intergovernmental agreement with Russia and Greece and hasn’t annulled its signature on the agreement with the Project’s shareholders,” Mr. Emelyanov said.

“We understand why the Bulgarian government is making these announcements. They have the burden of responsibility for the people living in the regions along the pipelines, and they want the Project to be as safe as possible in all respects. We also want this, and this is precisely where we are concentrating our efforts today.

But we also want the Bulgarian government to understand their responsibility to our company and the Project’s other shareholders,” Mr. Emelyanov explained. At present, although Bulgaria is a shareholder of Trans-Balkan Pipeline, it is not financing the Project. “I hope this is just a technicality and that the issue will soon be resolved,” Mr. Emelyanov said.

The shareholders have still not decided how to finance the construction. There are two options. There is either project financing (shareholders provide 30% of the investments, and 70% will consist of borrowed funds) or Transneft will finance everything, as the state-owned company itself has proposed.

Mr. Emelyanov is confident that all formalities with the Bulgarian government will be settled in 2011. “We have no problem with compliance with the Project implementation schedule, and we will be able to cut the ribbon in 2015,” he said.

The Black Sea Organization for Integration and Sustainable Development (NGO) was the organizer of the congress. The goal of the organization founded at the beginning of 2010 is mutual economic, social and environmental integration of the countries in the Black Sea basin in order to comply with sustainable development initiatives, and build and strengthen economic and social ties with interested parties outside the Black Sea area.

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