Croatia, Romania, Serbia sign Pan-European Oil Pipeline agreement

23/04/2008

Croatia, Romania and Serbia agreed in Bucharest on Tuesday to establish a company that would develop a pan-European pipeline to transport Caspian oil to the European market.

(B92, Nine O'clock - 23/04/08; AFP, Xinhua, Rompres, B92, Balkan Insight, Makfax - 22/04/08; AFP - 03/04/07)

The project envisions construction of a pipeline from the Black Sea port of Constanta, passing through Romania, Serbia, Croatia, and Slovenia before ending in Trieste, Italy. [Getty Images]

Croatia, Romania and Serbia came closer to laying a Pan-European Oil Pipeline (PEOP) on Tuesday (April 22nd), as they signed an agreement in Bucharest to promote the project valued at up to 3.5 billion euros.

"The project company will be registered in 45 days' time in London, where it will be based," said Romanian State Secretary for Economic Affairs Viorel Palasca. "It's a first step, a necessary one, to bring this project to fruition."

The project development company (PDC) will have 2,100 shares valued at 100 British pounds (about 125 euros) each, distributed equally among the three countries. Each of them will thus hold a third of the equity of over 262,000 euros through the companies representing them. Croatia's representative will be its Janaf company, Serbia's Transnafta and Romania's the Conpet and Oil Terminal companies. The two Romanian enterprises will contribute 35,000 British pounds (about 43,736 euros) to the PDC share capital each.

Palasca told reporters that the London-based company will promote the pipeline to attract more investors. According to him, Kazakhstan and Azerbaijan are already expressing interest in involvement as oil suppliers and perhaps even as investors and participants.

Monday's deal came some 12 months after the three countries, along with Slovenia and Italy, signed a declaration in Zagreb pledging to boost their co-operation in delivering Caspian oil to the European market.

The plan, first proposed in 2002, envisions laying a 1,300km pipeline from the Romanian port of Constanta to Trieste on Italy's Adriatic coast, via Serbia, Croatia and Slovenia. A feasibility study suggests it would transport 60m tonnes of oil annually. Construction could begin next year and is expected to finish in 2013.

The Constanta-Trieste pipeline project enjoys support from the 27-member EU, which wants to diversify suppliers and reduce its dependence on Russian oil.

"I and my colleagues will do everything possible to facilitate [this] work," EU Energy Commissioner Andris Piebalgs pledged in early April 2007.

He added that the Constanta-Trieste pipeline would help bypass congestion on the traditional Black Sea route.

Slovenia and Italy still must name their representative firms in the project, Palasca told reporters.

"Italy, most likely, will give us an answer after the new government is made up," he added.

Slovenia initially balked over environmental concerns.

Should that country decide to pull out, "there are still options" for the PEOP, the AFP quoted Vladimir Vrankovic of Croatia's Janaf as saying on Monday. He stressed, however, that "without Italy, there isn't a project."