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Sofia Readies for Pivotal AMBO Oil Pipeline Meeting

July 25, 2006

(Balkanalysis.com Research Service)- A tri-country expert meeting that could determine the future of Balkan oil transit is set to take place tomorrow in the Bulgarian capital.

The meeting, which brings together representatives of Bulgaria, Macedonia and Albania as well as the chief executive of the AMBO oil pipeline project, Ted Ferguson, had been delayed by one month because of a conflicting event- a lawsuit against Macedonia in the Paris Court, related to the privatization of the Greek-owned OKTA oil refinery. The lawsuit, scheduled for the same date as the original date of the planned AMBO meeting (June 26), has resulted in an order to Macedonia to pay over 60 million euros to OKTA.

At the Sofia meeting, it is expected that a treaty for the project will be finalized, and then sent to each Council of Ministers for approval. The document in question is the Intergovernmental Treaty, which would make a previously signed memorandum of cooperation between the three countries involved legally binding. Such a document must precede the finalization of any such transnational oil pipeline project.

The AMBO pipeline project, which would bring Caspian oil to the West, linking the Black Sea and the Adriatic, was inaugurated in 1994. However, owing to the political instability and war that characterized the region through 2001, and Western oil companies’ strategic interests elsewhere, in the BTC (Baku-Tbilisi-Ceyhan) oil pipeline, AMBO was put on the back burner. And a competing pipeline idea, from the Bulgarian port of Burgas to the Greek port of Alezandropoulis, has also been championed by Greek lobbyists adamantly opposed to AMBO.

However, AMBO supporters are now more confident that the project will go ahead. While funders from oil majors have now allegedly begun to step forward, the company says it cannot disclose further information for at least the next few months. Nevertheless, it is believed that AMBO has received assurances of first-round financing, and that the relevant legal documents are now being drawn up.

A short report published on July 22 by Skopje newspaper Vecer on tomorrow’s meeting has been criticized by AMBO Vice President for Media Relations Gligor Tashkovich. In a public response, Tashkovich sought to correct certain assertions made by the article. He denied that outgoing Minister of Economy Fatmir Besimi will participate, because “the meeting will be of the Interstate Commission at the expert-level in Sofia on July 26th for the principal purpose of finalizing the Tripartite Treaty documentation. Because this meeting is taking place at the expert level, it is highly unlikely that Minister Besimi will attend and we are not expecting him to do so.”

Tashkovich also noted that contrary to the report, “there is no new document regarding “route negotiation’ that will be presented. Actually, at the Macedonian government’s request, AMBO prepared a bilateral protocol document regarding the specific border crossing points between Macedonia/Albania and Macedonia/Bulgaria.”

Most significantly, the AMBO vice-president refuted the newspaper’s claim that the Bulgarian and Albanian governments had wanted advance payments from AMBO.

A critical but now forgotten moment in the history of AMBO occurred way back on December 28, 2004, when the prime ministers of Macedonia, Albania and Bulgaria (Vlado Buckovski, Fatos Nano and Simeon Saxe-Coburg-Gotha) met in Sofia and signed a political declaration showing their support for the pipeline project. At the same time, the Macedonian Minister of Economy Fatmir Besimi, Bulgarian Minister of Regional Development and Public Works Valentin Cerovski and Albanian Minister of Industry and Energy Viktor Doda signed a memorandum of understanding with AMBO’s Ferguson.

With these signings, AMBO officially entered the FEED (Front-End Engineering and Design) stage of development. Pipeline projects that survive to this stage of the game generally have a 90-95 percent chance of being built.

Now, therefore, it seems to be a question of not if but when the AMBO pipeline will be built. A recurring concern remains Macedonia’s political stability. Recent veiled threats by Albanian leader Ali Ahmeti that inter-ethnic relations have been “gravely” affected and could worsen due to his party’s likely exclusion from the future government were criticized by the international community and the winning Macedonian party, VMRO-DPMNE. Yet considering that it was Ahmeti himself who started an unprovoked war against the country in 2001, the bullying today is being taken seriously.

There seem to be other promising angles in the country, however. Foreign oil companies are also considering exploring for oil in Macedonia. In May, the Canadian company Bankers Petroleum signed a memorandum of co-operation with the Macedonian government According to a report in economics weekly Kapital, the oil is believed to be in Ovce Pole, a mostly flat and accessible plain near Sveti Nikole in peaceful eastern Macedonia.

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