New Pipeline to Pump Caspian Oil to Europe

November 8, 2004

BUCHAREST, Romania — Six European countries, including Austria, Italy and Romania, approved a plan for a pipeline to ship oil from the Caspian Sea region to western Europe, officials said Friday.

The pipeline would pump an average of 60 million tons of oil per year from Romania’s Black Sea port of Constanta into the Transalpine Pipeline, which supplies storage terminals and refineries in Austria, Germany and the Czech Republic via Trieste, Italy, the officials said.

"The new pipe would cover for a future deficit of oil in Europe, especially as there won’t be much oil left in the North Sea by 2025," Romanian Deputy Economy Minister Andrei Grigorescu said at a news conference in Bucharest. "This new pipeline could reach maximum capacity in 2014 at the latest."

Grigorescu said the six countries, which also include Croatia, Serbia and Slovenia, have agreed to push for a larger pipeline than one considered in 2001, which was originally planned at 15 million metric tons a year.

The actual construction of the pipeline should start at the end of next year, Grigorescu said at the end of a meeting with government representatives from all six countries involved in the project. He wouldn’t elaborate on the construction cost.

The pipeline would provide an alternative to one now being built between Baku, in Azerbaijan, and Turkey’s port of Ceyhan, through the Georgian capital Tbilisi, he said.

"It’s also meant to ease tanker traffic in Turkey’s Bosporus Straits, as well as ease pumping of about 800 million tons via pipelines crossing the Mediterranean Sea each year," Grigorescu said.

Grigorescu said the feasibility study on the pipeline project would be financed by the European Union. Construction of the actual pipe has attracted interest from "very many investors," he said, without naming any of them.

Eni, Italy’s largest oil company, called for construction of a similar pipeline in 1998. It said then building a pipeline through Romania and Serbia would cost about $1.2 billion, using some existing pipes in both countries. That pipeline would have carried no more than 35 million tons of oil per year.

"This pipeline would be the shortest way for Caspian oil to reach the European market," said Serbia’s Slobodan Sokolovic, the head of the committee made of representatives of the six countries considering the project.

"It would also help add stability in the region."

Refineries in all six countries are expected to benefit from processing crude pumped through the pipeline, Sokolovic and Grigorescu said.

OMV, Austria’s biggest oil company which processes oil from the Transalpine Pipeline in its refineries at home and in neighboring Germany, in July agreed to pay as much as 1.52 billion euros to buy 51 percent of SNP Petrom, Romania’s biggest refiner.


Tags: Energy Infrastructure, Fossil Fuels, Oil