Russian and American oil to reach the Adriatic

Jan 02, 2007 01:00 AM

Zeljko Tomsic, Assistant Economy Minister responsible for energy and mining, is Croatia’s main negotiator in the PEOP oil pipeline project. Though little known to the public, Croatia has for some time been a participant in a project to channel Russian oil to the Adriatic.
This was also the idea of the Druzba Adria project, a project which has all but fallen through. While Druzba Adria was most criticized for a somewhat exaggerated danger of potential tanker spills, this project would avoid that possibility as the oil is planned to travel exclusively via pipelines.

The Pan European Oil Pipeline (PEOP) is a project that would channel Russian and Caspian oil from the Red Sea to the Adriatic through 1,319 km of pipeline. However, not only Russian oil would be transported. Considering that American and Western European oil companies such as ExxonMobil, Chevron, British Gas, ENI and Shell control the majority of Caspian wells, the project has received the support of both the European Commission and the Americans.
The oil pipeline would begin at Costanza in Romania and would follow the existing corridor to the town of Pitesia. From there to Pancevo in Serbia, a new corridor would be established, and from Pancevo the pipeline would lead to Sisak where it will hook up with the Adriatic pipeline towards Trieste via Slovenia or Istria.

Tomsic, Assistant Economy Minister responsible for energy and mining, represents Croatia in the ongoing PEOP negotiations.
“The PEOP originally began as a project for the pipeline Constanza-Pancevo-Omisalj-Trieste, but the primary idea was to export 5 to 15 mm tons of oil from Omisalj. An international commission of the participating countries -- Romania, then Serbia and Montenegro and Croatia, had already drafted the project. However, this project occurred simultaneously with the Druzba Adria project that had the same goal, the export of Russian oil, but on a different route.”

“With respect to the PEOP, in Croatia, the existing JANAF oil pipeline is planned to be used. This pipeline has an annual capacity of 20 mm tons of oil, while currently, only 4.5 mm tons are used. The system needs only to be adapted so that oil can flow in the opposite direction, as this was planned for transport from Croatia to Serbia.”
“At that time, Romania received an EU PHARE project that resulted in a study which concluded that this project could be different,” said Zeljko Tomsic.

In fact, the PEOP began due to problems with the Bosporus Strait, where tankers are forced to wait in long lines and the export of Caspian and Russian oil is limited.
“The study concluded that the need for the export of Caspian oil would be significantly larger and it was proposed that the quantity of oil in the PEOP be increased to 40-90 mm tons annually, with 60 mm tons as the most likely variation. Also, in order to avoid ecological problems on the Adriatic Sea, it is proposed that the pipeline not go all the way to Omisalj, and instead be turned towards Trieste at Melnice, 15 km before Rijeka.”

“In Trieste, this oil would not be exported, but instead the oil pipeline would be joined to the existing TAL oil pipeline that travels through Austria and the Czech Republic all the way to Munich. Also, at Trieste PEOP would be hooked up to the oil pipeline for northern Italy.”
“In this way, oil transport would not be via ships, but from pipeline to pipeline. Then, in 2005, the Italians and Slovenians entered into the project. At first, the Slovenians had reservations, but were not against the project, while the Italians should great interest in the PEOP,” says Tomsic.

As the project evolved, the time can to sign letters of intent, but on the day of signing, the Slovenians backed away.
“The pipeline was supposed to pass through 20 km of Slovenia. This is not a large investment, but also the revenues were relatively small. They said that the entire pipeline would pass through sensitive karst areas and that they would have serious political projects with ecologists if Slovenia consented.They have not made it clear whether or not they consent to the project, as they have not definitively rejected it. At the last meeting of the international commission, which the Slovenians did not consent to, the remaining four countries signed a memorandum inviting Slovenia to participate, although it was clearly said that the project would be realized with or without Slovenia. In that case, the pipeline would go via Istria into the sea to Trieste, thereby bypassing Slovenia,” says Tomsic.

The project though does not clearly define what will become of JANAF if the PEOP pipeline becomes a reality. Namely, the PEOP project has not been completed.
“Romania has done its share of the work, financial and marketing studies have been drafted, while the route has not been defined in detail in the remaining countries. Also, a final decision has not been made on JANAF, whether its pipeline will remain, as this is to a large extent a decision of Serbia. If they believe that PEOP will supply sufficient oil, then there is no need for JANAF and its infrastructure can instead be used for PEOP. Clearly, Croatia would retain the route from Omisalj to Sisak,” stressed Tomsic, who also acts as chairman of the Supervisory Board of JANAF.

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