BURGAS - ALEXANDROUPOLI PIPELINE:
CURRENT ROLE OF BULGARIA IN SOUTHEAST EUROPE
Michaletos Ioannis
(RIEAS Junior Analyst)
Copyright: www.rieas.gr
The state of Bulgaria is steadily becoming a focal point for the emerging energy scene of South Eastern Europe, and a regional hub for some of the largest projects. The Burgas-Alexandroupoli pipeline and the AMBO one have as a starting point the Black Sea of Burgas and greatly assist Bulgaria in becoming an area where the strategies of the great powers either collide or cooperate, ranging on their individual strategic interests.
The first project is the Burgas-Alexandroupoli pipeline (1), having being signed on 15th March by Russia, Greece and Bulgaria. The majority of the shares (51%) are going to be held by the Russian side and the companies: Gaspromneft, Rosneft and Transneft, whilst the Bulgarian companies: Bulgargas, Universal Terminal Burgas will get the 24.5%. The remaining share is going to be held by Greek stakeholders. The pipeline is estimated to be completed on late 2011 and will have a total length of 288 km, 161 of those passing through Bulgarian soil. The Burgas port will be equipped by then, with a 500,000 square meters storage facilities, along with a renovation of its vessel services facilities so as to able to withstand the increased maritime traffic from tankers coming from Novorossiysk in Russia.
Bulgaria aims to gain a steady income of 40-50 million USD per year as custom tax for the trespassing oil and some 1,000 new jobs that would be needed for the operation of the renewed port and the pipeline. Of course the most important aspect is not the economic side of this agreement but the geopolitical one. Bulgaria becomes an integral part of the Russian hydrocarbon exporting system, as well as, an important oil route that will By- Pass the congested Bosporus straights. Moreover it will have more interests in relation to its already cordial relations with Greece, thus becoming a focal area for the Greek interests in the Balkans.
A second project that will further expand Bulgarian influence in the energy scene being created in the Balkans is the proposed AMBO oil pipeline. It was first conceived back in 1995 by the American Halliburton Energy Corporation and it designs the creation of an oil route from the port of Burgas, passing through the FYR Macedonia and ending to the port of Vlore in the Adriatic shore of Albania. In short it connects for the first time the Black Sea with the Adriatic one and to a wider extend, Central Asia with the Italian Peninsula and beyond. The size of this pipeline is 912 km, and would be sufficient in transferring around 40 million tons of oil, roughly the same amount as the Burgas-Alexandroupoli one.
The completion of this venture is scheduled in 2012 and will create the necessary conditions for a balance in the prices of oil in the world market in relation to the other pipelines being created. In a political level, this particular project is USA-led meaning that in reality the two aforementioned pipelines would be of competitive nature between USA & Russia, but they would all have as a starting point the Burgas port, therefore upgrading the importance of Bulgaria.
Bulgaria since the collapse of the Soviet Bloc has moved into being accepted in NATO and the EU and maintains excellent relations with USA, having allowed American bases to be installed in its territory (3) and supported American actions in Iraq where it has sent a small contingent (4). Furthermore a planned scheme that will further boost Bulgarian geopolitical value is the EU funded “Transport Corridor Axis 8” (5) that is reportedly to-be-financed by the European Union and it will connect the Burgas port with the Durres port in Northern Albania. Its value is related to the opportunities involved in connecting Western Europe with the Black Sea.
Greece has already created the “Egnatia Motorway” (6) connecting Egoumenitsa in the Adriatic Sea with the Greek -Turkish borders, thus connecting Europe with Turkey and the Middle East thereafter. Even though the previous two motorways run in parallel; they are not of antagonistic nature, but of complimentary and should the vertical axis that will connect them are finished then they would greatly facilitate the economic progress of the whole Balkans region.
A recent trip of the Greek Minister of Transport to Sofia revealed a plan by Greece along with the EU to finance railroad infrastructure in Bulgaria (7), Serbia and Romania so as to connect the Aegean Sea with Central Europe. This is supposed to assist in the commercial relations between Middle East and Europe through the use of Greek ports and the modernized railroads of the countries involved. If one adds other EU-funded initiatives for the airports and motorways of Bulgaria, then the picture of an emerging market in the Balkans is becoming more visible.
On an investment level Bulgaria is performing well by expanding its GDP some 6% a year (8) and with an upward level of Foreign Direct Investments (9). Its sectors of strongest growth are: Light industry, tourism, real-estate and the media. Its largest investors are Austria, Germany, Greece, Russia and France whilst it maintains high –volume commercial relations with the above countries and with Romania, Serbia and Italy. Its recent entrance in the EU in parallel with its low level (10) of corporate taxes -15%- will most certainly assist the growth of entrepreneurship and investment spirit.
The problems Bulgaria is facing nowadays are mostly societal and have their roots in the difficulties countries in transition faced during the turbulent 90’s. Bulgaria has the lowest birthrate (11) in Europe along with a mass immigration exodus of its population heading towards Western Europe (12). The existence of a Turkish-Muslim minority with an increased population growth will probably create political strains in the coming years, when the demographic imbalance would become more visible. Lastly the existence of organized crime groups operating within the country is a serious issue that hasn’t being dealt decisively (13).
A report that surfaced in the Bulgarian press in late 2006 has revealed that the government fearing corruption tactics in relation to its future EU funding; it has decided to install the state’s intelligence services –Anti-espionage sector- as the over-sighting authority. That surely points-out the need of Bulgaria to create a transparency and anti-corruption program that will thoroughly bring the country on par with the EU norms.
Bulgaria is seen as a country that will act in the energy level as a bonding point between the West –And USA- and of Russia. The delicate geopolitical balance in which the country will have to proceed is of much interest, since a hypothetical American-Russian antithesis might eventually create domestic problems to Sofia. Last but not least Bulgaria is seen as a state that could influence any future developments in FYROM and it is a common secret that it issues Bulgarian passports to the citizens of its neighboring state to the West which is not part of the European Union (14). Any culminations resulting to a disintegration process due to Albanian extremism would surely provoke a Bulgarian initiative, a potential outcome frequently discussed in South Eastern European political-diplomatic circles.
References:
(1) Analytical information on the Burgas-Alexandroupoli pipeline, by a report of the Greek Embassy in USA
www.greekembassy.org/Embassy/content/en/Article.aspx?office=1&folder=904&article=20051
(2) An article on the proposed AMBO pipeline by the Gas & Oil news service
www.gasandoil.com/goc/news/nte71169.htm
(3) An announcement by the USA Secretary of State on the stationing of USA troops in Bulgaria usinfo.state.gov/eur/Archive/2006/Apr/28-844894.html
(4) An article on the Bulgarian involvement in the war in Iraq, by the Chinese news agency english.people.com.cn/200512/31/eng20051231_232043.html
(5) A report on the Transport Corridor 8, by the Novinite Ltd
www.secretariat-corridor8.it/download.php?sezione=articoli_en&id=31
ALSO check a new Pan-Black Sea motorway project: www.hri.org/cgi-bin/brief?/news/greek/ana/2007/07-04-20.ana.html (Report by the Athens New Agency)
(6) The official website of the Egnatia Motorway
www.egnatia.gr
(7) An article on the proposed railroad projects in Bulgaria, by the daily Sofia Echo
sofiaecho.com/article/developing-eu-corridors-to-boost-bulgarias-economic-and-social-ties/id_12998/catid_69
(8) An assessment of the Bulgarian GDP growth by the International Monetary Fund
www.imf.org/external/np/ms/2006/051706.htm
(9) A paper on the FDI flow in Bulgaria, by the Agency "Invest in Bulgaria", for 2006.
investbg.government.bg/?sid=24&ssid=121&c=590
(10) A report on the Bulgarian corporate tax level by the Heritage Foundation -Economic Freedom Index- www.heritage.org/research/features/index/country.cfm?id=Bulgaria
(11) A news coverage by the BBC on the Bulgarian low birthrate news.bbc.co.uk/2/hi/europe/6148244.stm
(12) An article on the Bulgarian decline of population and immigration by the International Herald Tribune
www.iht.com/articles/2006/10/10/news/bulgaria.php
(13) An article on the organized crime activities in Bulgaria, by the Guardian newspaper
www.guardian.co.uk/eu/story/0,,1776403,00.html
(14) A report on the issuing of passports by the Bulgarian government, by the Telegraph newspaper
www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/08/13/wbulg13.xm