Balkan Pipeline Research Papers

After the collapse of the Soviet Union, Russia, Azerbaijan, Kazakhstan and the other oil producing regions began seeking ways to gain greater access to world markets for their oil.  This led to the proposal to build a pipeline from Baku in Azerbaijan to the southeast Turkish port of Ceyhan on the Mediterranean Sea.  In 1999, Russia and the major Western oil producing companies indicated that they preferred a pipeline that was routed across the Balkan states from the Bulgarian port of Burgos, and through Macedonia and Albania to the Adriatic Sea.  The rationale for this alternative proposal lies in the geopolitical relationship between Russia and Turkey.  Russia and the other former Soviet Republics are reluctant to entrust their ability to access the world oil market to Turkey, either by means of a pipeline that crosses Turkish soil or by means of tanker shipments through the Turkish controlled Dardanelle Straits and Bosporus Sea.  As a result, the trans-Balkan pipeline proposal has the potential to destabilize relations between Turkey, Russia, Azerbaijan and the United States due to the loss of revenue that it represents for Turkey and the general negative implications that the proposal has for international relationships in the region.

The issue of a trans-Balkan pipeline was first raised in 1996 through discussions between Russia and the major Western oil companies.  At the time, the oil industry in Russia and the former Soviet Republics was in very poor condition due to decades of infrastructure neglect by the Soviet Union.  Output had fallen 47% from its peak year in 1987, and the industry did not have sufficient access to capital to rapidly improve its exploration and production facilities . This led Russia and the other former Soviet Republics to enter into joint venture relationships with Western oil companies in order to supply the capital and technical expertise necessary to upgrade its oil production.  As a result, the oil companies were able to assume a strong role in the decision-making process in Russia, Kazakhstan and Azerbaijan due to the desire of these nations to rapidly bring their oil to the world market.

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