Oleodotti che aggirano Polonia e Bialorussia
Russia prepares to build an oil pipeline bypassing Belarus and Poland (BTS-2)
![EastWeek_32(141)[1]](http://www.splinder.com/misc/media/32x32/file-unknown.gif "EastWeek_32(141)[1]")
Preparations for the final approval of the Baltic Pipeline System-2 (BTS-2), a project to build an oil pipeline from Unecha to Ust-Luga, have gained momentum in recent weeks. On 5 September, the Russian Ministry for Energy put the decision to proceed with the construction of the BTS-2 on the government’s agenda, and Transneft launched the environmental impact assessment for the project. It appears that the political decision to build the BTS-2 has already been taken, and will be officially announced within the coming weeks. Effective lobbying by those political and business groups which are interested in the project’s implementation is the decisive factor that will lead to the construction of the BTS-2.
Once the BTS-2 is built, the volume of Russia’s oil exports via Belarus and Poland will decrease considerably, as a result of which oil supplies via the Druzhba pipeline will be reduced, at least to some extent. Many details of the BTS-2 remain unclear, including the pipeline’s technical characteristics (such as the capacity and the origins of the oil to be transported) and the sources of financing (the project is worth around US$5 billion).
Presumably, final negotiations concerning the ultimate shape of the project are currently under way among the stakeholders (the government, Transneft, the oil companies, and the political and business lobby).
A short history of the BTS-2
The BTS-2 project came into being in January 2007 as a direct reaction to the Russian-Belarusian energy conflict. Originally, the project provided for the construction of an oil pipeline from Unecha to Primorsk with a capacity of up to 75 million tons a year, which would entail a complete shutdown of the Druzhba pipeline. In the months that followed, the project was repeatedly modified; the most recent known version states that the southern branch
of the Druzhba (which supplies 23 million tons of oil a year to Slovakia, Hungary and the Czech Republic) would be preserved, while export via the northern section (which supplies around 60 million tons of oil a year to Belarus, Poland and Germany) would be reduced (although supplies to the Belarusian refineries would continue). The BTS-2 would start in Unecha, close to the Belarusian border, and end at the port of Ust-Luga in the Leningrad oblast, branching off towards the refinery in Kirishi (see map).
The project’s objectives
The primary objective of the BTS-2 is to minimise Russia’s reliance on the transit countries, mainly Belarus. The project is in line with Russia’s strategy of exporting oil directly through its own ports. Certain sections of the Russian ruling elite are also interested in the creation of the BTS-2 because of their private business interests. Moreover, Russia is currently trying to persuade Kazakhstan to export a portion of its oil (around 10 million tons a year) via the
BTS-2, which would impede the implementation of other projects to transport Kazakh oil via routes bypassing Russian territory.
Lobbyists for the BTS-2
A strong lobby advocating the implementation of the BTS-2 has existed since the project’s inception. The key political lobbyists include Igor Sechin, deputy prime minister in charge of the energy sector, and the energy minister Sergei Shmatko. These politicians have claimed in recent weeks that the decision to proceed with the project has already been taken The Leningrad oblast’s regional government is also behind the project. The support of Prime Minister Vladimir Putin is also crucial for the implementation of the BTS-2. Finally, the Russian oil transport monopoly Transneft is also interested in creating a new transport route.
Also important are the interests of private energy companies with significant influence in the Kremlin, such as Gunvor. This intermediary which trades Russian oil, is currently building an oil terminal in Ust-Luga in co-operation with the Zarubezhneft oil company, and is interested in expanding its share (currently around 35%) in Russian maritime oil exports. Another such
company is Surgutneftegaz with its plans to build another refinery in Kirishi, which would be connected with Ust-Luga. There are many indications that that personal and business links exist between all the players mentioned above.
For example, the Transneft chief Nikolai Tokarev was director of Zarubezhneft in 2000–2007, and the Gunvor CEO Gennady Timchenko is believed to be on good friendly terms with PM Putin and Igor Sechin, and to act as an informal ‘cashier’ for a section of the Kremlin elite.
Opponents of the BTS-2
The project is opposed mainly by certain Russian oil companies which fear that the new oil transport route will be less profitable than transport via the Druzhba, as well as by officials of some economic ministries who believe that the construction of the BTS-2 will have negative economic consequences, and will adversely affect Russia’s relations with Germany and Poland. However, it seems that the companies opposed to the BTS-2 do not have sufficiently
strong political influence to stop the project; this may be indicated by the fact that the negative assessment of the BTS-2 presented in April this year by the Ministry for Industry and Energy has had no effect. After the ministry was split up and Sergei Shmatko became energy minister in May this year, criticism of the BTS-2 stopped.
Conclusions
The developments surrounding the BTS-2 during the last few months suggest that the final decision to implement the project will be formally taken within the coming weeks. The BTS-2 conforms with a number of other Russian energy projects (Nord Stream, South Stream), whose objective is to reduce Russia’s reliance on transit countries for the export of energy resources. Effective efforts by the political and business lobby interested in the project − which is expected to further their own particular economic interests − will be crucial to the decision to implement the BTS-2, irrespective of any negative consequences in other domains.
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