The Jamestown Foundation
Euroasia Daily Monitor
Vladimir Socor
March 7, 2007

The Russian government recently declared its intention to turn the Baltic Sea into an oil-shipping corridor to Western Europe, carrying up to 150 million tons of Russian oil annually aboard tankers. This intention constitutes only the most recent threat to maritime safety and ecology in the crowded Baltic Sea and the straits leading to the North Sea. Parallel plans for a Russian gas pipeline along the Baltic seabed and for a liquefied-natural-gas (LNG) plant near Leningrad, which would involve still more traffic by tankers, add up to a gathering danger for the entire Baltic basin, affecting the North Sea as well.

On March 4, Lithuanian President Valdas Adamkus criticized the proposed undersea gas pipeline as “irresponsibly posing the risk of an environmental catastrophe” (interview with Radio Ekho Moskvy cited by Interfax, March 4). On March 5, Lithuanian Foreign Affairs Ministry State Secretary Zygmantas Pavilionis, speaking in Brussels to an inter-ministerial meeting of the three Baltic and five Nordic countries, raised the twin concerns about the planned gas pipeline and increase in oil-tanker traffic (BNS, March 5).

Meanwhile, government authorities and public organizations in Sweden and, most recently, Finland have expressed serious concerns as well, calling for international evaluations of the project and criticizing the information presented by the Russian-German consortium as (according to Finnish authorities) “very scant, reflecting a very cavalier attitude” (Helsingin Sanomat, March 1).

Tanker traffic is already on the increase since Russia stopped crude oil deliveries to Lithuania by pipeline last July. The move, executed by Transneft, retaliated against Lithuania’s sale of the Mazeikiai oil refinery and related assets to Poland’s PKN Orlen company, instead of Russian companies. Russia’s pipeline closure has compelled the Polish-Lithuanian partners to import corresponding volumes of crude oil by tanker to the ports of Butinge and Gdansk.

Moscow cited a minor oil-spill from that pipeline on Russian territory as the excuse for closing it. In normal countries and circumstances, repairs may last some days or at most several weeks after a minor spill. But, ever since July, Russian authorities have ignored Lithuania’s repeated requests for basic information, such as the actual condition of the pipeline and a schedule for repairs. In mid-February, Moscow merely announced that it would prolong the period of “checks” on the pipeline (BNS, February 22; Interfax, March 5).

Meanwhile, Russia aims to build an LNG plant at the easternmost end of the Baltic Sea with a dedicated tanker port, probably by expanding the existing Ust-Luga maritime terminal. This — unlike Transneft’s Baltic oil terminal Primorsk — would be a Gazprom project. Lacking LNG technology, Gazprom is currently negotiating toward a joint venture with Algeria’s state oil-and-gas company Sonatrach (which has assimilated French LNG technology) as well as with the Calgary-based Petro-Canada company (Globe and Mail, March 5).

Moscow’s oil-corridor plan envisages nearly doubling the capacity of the Baltic Pipeline System (BPS) that runs from central and northwestern Russia to Primorsk. That capacity has already been expanded to 75 million tons per year in 2006, completing an ambitious three-year construction project. Tanker traffic of that magnitude between Primorsk and the straits into the North Sea already matches or exceeds the corresponding figure for the Bosporus, which annually accommodates some 70 to 75 million tons of Russian oil aboard tankers.

To reach its target of 125 million tons of oil annually in the first stage and 150 million tons in the second stage out of Primorsk, the Russian government proposes to re-direct there the lion’s share of oil volumes that are presently exported through the Druzhba pipeline via Belarus and Ukraine to European Union territory (see EDM, January 31). It also probably counts on some volumes of oil from Kazakhstan to be re-directed via central Russia into the BPS and to the Baltic terminal.

Russia’s Industry and Energy Ministry along with the pipeline monopoly Transneft have already draft an outline of the plan, following President Vladimir Putin’s general endorsement of the idea. On March 1, the Russian government requested amendments and additions to that first draft. Those include: 1) the Federal Tariff Service (FTSE) to clarify the level of tariffs for using the expanded BPS system, with a view to ensuring recovery of the investment through tariffs within a definite period of time; 2) Transneft to pipeline build a pipeline link from BPS to the Irish refinery of the Surgutneftegaz company, as well as ensuring transportation of that refinery’s products to Primorsk; and 3) Russia’s Technical Inspectorate (RosTekhNadzor) to report within one month on the project’s environmental impact (Interfax, March 1).

Russian oil companies and government officials are not of one mind regarding the desirable size of the project or the extent to which oil volumes should be diverted from the Druzhba pipeline to a Baltic tanker line. Lukoil president Vagit Alekperov, for example, supports the project in principle, though not giving up the Druzhba pipeline (Interfax, March 5). Moscow’s ultimate decision will be a political one, and it can be influenced if the Baltic and Nordic states take a concerted position to protect the maritime safety and environment from the cumulative risks posed by these Russian projects.