MOSCOW - Russia's Deputy Prime Minister and energy tsar, Igor Sechin, is
attempting to divide the Black Sea with a stroke almost as dramatic as the
biblical one with which Moses surprised the Pharaoh at the Red Sea.
If you believe the latter, the former may be credible, despite the refusal of
Russian energy policymakers to clarify what they are doing and what they think
the commercial logic of the move to be.
For tanker operators, the move threatens to cancel the long-planned crude oil
pipeline running from Burgas, on Bulgaria's Black Sea coast, to the Greek
Aegean port of Alexandropouli. Instead, Sechin now appears to favor expansion
of port capacity at Ceyhan, the Turkish eastern Mediterranean tanker terminal,
which will be supplied for the first time with Russian crude. This is
to be piped from a new terminal to be built at Samsun, on Turkey's Black Sea
coast
So, instead of a tanker shuttle moving westward from Novorossiysk across the
Black Sea to the Bulgarian resort city of Burgas, which has been the plan
agreed with Bulgaria and Greece until now, Sechin's plan calls for a new
southward tanker route to Samsun. Swept away also are plans for Bulgaria to
become a hub for storage and shipment of Russian natural gas, along two arms of
the proposed South Stream pipeline.
On October 19, at a meeting in Milan with Turkey's Minister of Economics, Taner
Yildiz, Sechin announced the new Russian direction for South Stream through
Turkish territorial waters. In addition, it was announced that he had agreed to
supply Russian crude oil to a new pipeline across Turkey from Samsun to Ceyhan,
which the Russian companies, Transneft and Stroytransgas, will help to build.
According to a Russian reporter granted special access to Sechin, the new
scheme has been in negotiation with the Turks since Prime Minister Vladimir
Putin was in Ankara on August 6. Ahead of Sechin's arrival to meet Yildiz in
Milan, Russian officials are reported to have been working out the new scheme,
which, in the newspaper report at least, diverts the seabed route of South
Stream under the Black Sea by up to 230 kilometers southward to Turkish
territorial waters; replaces Bulgaria as Russia's energy transit partner for
both oil and gas; and agrees to the Samsun-Ceyhan oil pipeline as a substitute
for the Burgas-Alexandroupoli route.
Most industry analysts in Moscow believe that the Samsun-Ceyhan oil pipeline
was the condition the Turks imposed in order to give the Russians the go-ahead
to lay South Stream on the Turkish sector of the seabed. However, there is no
evidence that this is what happened.
Sources in Moscow agree that the routing of the new gas pipeline must skirt the
12-nautical mile (22.2 kilometer) territorial limit of Ukraine to avoid more
political trouble with Kiev. However, at the narrowest point between the
Ukrainian coastline at the Crimean Peninsula and the Black Sea coast of Turkey,
around Inebolou, the sea is 280km wide. Subtracting 12nm (22.2km) for the
Ukrainian and Turkish territorial zones leaves a stretch of international water
of about 235km. The seabed depth in this area is between 600 meters and 1,200
meters.
This is less than the 1,200m to 2,250m depths which Gazprom's Blue Stream gas
pipeline already crosses on the Black Sea seabed between Arkhipo-Osipovka and
Durusu. According to Gazprom and the sub-sea pipeline builder Saipem, parts of
this route, which started delivering Russian gas to Turkey in 2005, are among
the deepest ever used for pipelines.
Sources concede therefore that there is no technical reason why the proposed
South Stream must be diverted so far south, out of the international zone, and
at a greater distance and project cost. Current estimates for South Stream put
the price tag of the entire project at about US$13 billion.
Gazprom, Russia's leading company, has told Asia Times Online that the reports
of Sechin's agreement with the Turkish government to reroute the South Stream
gas pipeline onto Turkish territory do not mean that Gazprom has decided to lay
a land segment of the pipeline in Turkey, and bypass Bulgaria altogether.
But Gazprom is unwilling to rule that option out, or to say what it understands
by the Sechin plan. The company's principal spokesman, Sergei Kupriyanov, is
not answering questions, adding to the impression that his company's leadership
is in disarray over Sechin's moves towards Turkey.
Another Gazprom source told Asia Times Online that Russia had asked Turkey for
permission, and received it, to explore the territorial waters of Turkey to
find out whether the area was suitable for the pipeline. "If it is suitable,
then the pipeline may be laid across Turkish marine territory," the Gazprom
source said. "Where it goes next - to Turkey or to Bulgaria or elsewhere - is
not decided yet."
The doubt in that last line is challenged by the Bulgarians, who claim they
have already signed commitments with Putin to lay South Stream across Bulgarian
land territory.
Since 2007, Gazprom's map showing its proposed route for South Stream begins in
Dzhubga, near Tuapse port, on the Russian Black Sea coast, and ends at Varna,
on the Bulgarian coast. The route passes through international waters well
south of the Ukrainian zone, and equally clear of Turkish territorial waters.
[1]
Hours after Sechin announced his Black Sea move, embracing his Turkish
counterpart Yildiz in the process, Gazprom chief executive Alexei Miller was in
Belgrade, Serbia, along with Russian President Dmitry Medvedev, to agree on
funding and building the Serbian section of the South Stream project's northern
branch; and also to establish a major gas storage in Serbia. The regular news
wires reported that Turkey's President Abdullah Gul had telephoned Medvedev
there, to inform him of the decision to allow the Russians to survey the
Turkish sector of the Black Sea.
"The Turkish president said that the Turkish government had taken all the
necessary decisions to give permission for geological and explorative work in
Turkey's economic zone of the Black Sea for the South Sea gas pipeline,"
Reuters quoted a Kremlin statement as explaining.
Note that the "economic zone" referred to in this report may not be the same
stretch of seabed as Turkish territorial waters. Turkish Embassy sources in
Moscow won't say which Gul's telephone call meant.
The hint from Sechin that he and the Turks will move South Stream away from
Bulgaria altogether has produced angry reaction in Sofia, the Bulgarian
capital, where the government denies it is losing to Turkey both the gas
pipeline and the Burgas-Alexandroupoli crude oil pipeline, which Moscow has
been backing for more than a decade - until now.
On October 22, Gazprom announced that Miller had met with Paolo Scaroni, chief
executive of Italian gas company Eni, Gazprom's partner in South Stream. But
their communique had almost nothing to say about the routing options for the
South Stream pipeline. "The plan of further actions connected with building the
marine part of the gas pipeline has been considered," Gazprom said of the
meeting. Eni spokesman, Filippo Catalini, told Asia Times Online the agreement
between Turkey and Russia to allow the route of South Stream to pass through
the Turkish EEZ was signed on August 6, 2009, in Ankara. Eni is evidently not
endorsing a change of route for South Stream.
Neither is the Bulgarian government. Bulgarian Energy Minister Traycho Traykov
flew to Moscow on October 22, where he met his counterpart, Russian Energy
Minister Sergey Shmatko. Bulgarian government officials told Asia Times Online
they already had a signed agreement with the Russians for the South Stream
pipeline to enter Bulgarian territorial waters and come ashore at Varna. How
the pipeline is routed through the Black Sea before that has not been decided,
they noted, adding that it made no technical or economic sense to reroute the
pipeline south into Turkish territorial waters. The Bulgarians also expressed
concern with the future of the Burgas-Alexandroupoli oil pipeline, as they
conceded there was no commercial future for that, if the Russians decided on
Samsun-Ceyhan.
Following his meeting with Traykov, Shmatko announced publicly he now thought
of the Turkish pipeline option as "a new rising star ... we want to build a
major refinery and jointly sell oil products from the Mediterranean coast".
Professor Alexander Kovalev is an expert on the law of the sea and on Russian
maritime law at the Diplomatic Academy of the Russian Ministry of Foreign
Affairs. He told Asia Times Online that an international maritime convention of
1982 requires a country laying a pipeline on the continental shelf of another
country to coordinate the route between them. But he noted that in Russia there
is no constitutional requirement for the Russian government to notify
parliament, or apply for its ratification, if agreements are signed on seabed
issues, including the Black Sea EEZ borders, or route changes of South Stream.
Deputy Prime Minister Sechin's office did not respond to questions, and he has
never addressed parliament to explain what he is doing.
Adding to the confusion which Sechin has set in motion, LUKoil, Russia's
second-largest oil producer and exporter, says it has no interest in supplying
crude oil for the proposed Samsun to Ceyhan pipeline. Until now, the Kremlin
has refused to countenance proposals for Russian crude to be delivered across
Turkey, either for refining in country, or for export at Ceyhan, which is the
tanker terminal on the eastern Mediterranean for a US-backed crude oil pipeline
currently delivering Azeri oil from Caspian fields.
A Rosneft spokesman told Asia Times Online that it was joining the Sechin oil
pipeline proposal, along with the Russian pipeline company Transneft, Eni of
Italy (which had originated the project in 2005, when there was no Russian
crude to fill it), and the Calik Holding of Turkey.
Sechin, who is also chairman of the board at Rosneft, the state-owned lead
producer in Russia, claimed in the October 19 announcement that LUKoil was
interested in the proposed 555km pipeline to Ceyhan, which will have a 1.5
million barrels per day capacity. LUKoil's statement to Asia Times Online is a
categorical denial. Rosneft is equally categorical that it wants to
participate.
In 2007, LUKoil tried but failed to get Turkish and Russian government
agreement for a new refinery at Zonguldak, on Turkey's Black Sea coast, 400km
to the west of Samsun.
Asked if a dramatic change was underway in Russia's oil and gas pipeline
strategy, Moscow maritime analyst Alexei Bezborodov said the situation over oil
transportation in the Black Sea had now become too complicated to understand or
to express an opinion about. Most Gazprom analysts at Moscow's investment banks
agree that the Black Sea's waters are now too murky for them to predict what
will happen next.
Note
1. For a map of this aspect of the South Stream project, see
South Stream website.
John Helmer has been a Moscow-based correspondent since 1989,
specializing in the coverage of Russian business.
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