Oil Causes and Heals All Wounds

Written By Brian Hicks

Posted April 5, 2007

A new path for petroleum is now in the works, as leaders of five southern European nations inked a deal Tuesday to build the so-called Pan-European Oil Pipeline. Not only the planned route is new: the political will expressed in the PEOP deal may foreshadow a new era for this troubled region.

Let’s face it: Most of what goes on in the world of fossil fuel seems to bring out the worst in national governments and even non-political actors. Consider the siphoning of refined fuel from burst pipelines in Nigeria, persistent sabotage in Iraq’s civil war, and China’s obsession with snapping up every last available drop of crude no matter what unsavory alliances that requires.

Though there are other pipelines that stretch farther than the 1,500-kilometer-long Pan-European Oil Pipeline (or PEOP, if you’re in a hurry), and bring essentially the same bounty, the mere fact that the former Yugoslav republics of Serbia, Slovenia and Croatia are among the parties to this new fuel transit system means plenty.

Slovenia was part of the 2004 round of nations from the former Soviet sphere of influence to accede to the European Union. Serbia was left behind due to its failure to bring convicted war criminals to trial, the unresolved status of the ethnic Albanian majority in Kosovo, and general unease within the EU over Serbia’s attitude towards its recent past of ethnic nationalist violence.

Croatia simply had not recovered economically to the extent that the European Commission could grant it membership by that time, but the country is currently in membership talks and is expected to join the club in 2009 or 2010.

But if you’re familiar with European energy policy, you know that a European country needn’t be a member of the EU for the EU to take up the cause of that country’s energy policy (usually couched in terms of "energy security"). European Commissioner for Energy Andris Piebalgs, a Latvian, is the point man for European energy integration.

Much of Piebalgs’s attention during his tenure since 2004 has been focused on the implementation and expansion of the Energy Charter Treaty, a 1994 document that aimed to incorporate the former "captive nations" into a comprehensive framework. At the time of signing, a recently dissolved Yugoslavia was in the throes of chaos, bread lines and scarcity were the norm in Russia, and Germany was struggling with how it would bring its rusting East into line with an economically healthy West.

And at that time, oil was well below 20 USD per barrel.

The oil in the PEOP will come from none of the erstwhile Yugoslavian rivals. Rather, it will originate in the Caspian Sea basin, the region where the world’s third-largest oil and gas reserves are located. From the Caspian, the oil will be shipped to the Romanian city of Constanta, which lies on the Black Sea.

Onward then from Constanta, between 1.2 and 1.8 million barrels per day will flow to the northeastern Italian port city of Trieste, on the border with Slovenia. At Trieste, the oil will be refined for use, with further destinations including Genoa and from there on inside and outside Europe.

At the document signing in Croatia’s capital city of Zagreb, Piebalgs looked on as the national energy policy leaders of the five states involved in the PEOP put their pens to paper.

The project, one of six "Bosporus bypass" oil export routes listed by the US Department of Energy on its Caspian Sea data site, will cost between two and three billion dollars to complete.

In fact, many of the pieces are already in place to get the black gold flowing, but as Piebalgs will tell you, it’s a matter of integration. With the smoke clearing and the countries of southern Europe emerging into a new European reality just as oil has tripled from its 1994 price, the parties to the PEOP have picked an opportune time to connect their fuel future until the renewable energy scenario unfolds.

What a difference oil makes.

Regards,

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Sam Hopkins

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