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Trilateral Signing in Skopje Brings AMBO Oil Pipeline a Step Closer to Realization

February 1, 2007

By Christopher Deliso

Economy ministers representing Macedonia, Bulgaria and Albania signed an important trilateral convention at a ceremony at 1 PM on Wednesday at the Macedonian government building. The signing paves the way for preliminary work to begin on the long-anticipated AMBO oil pipeline, devised since 1994 but still not executed.

However, with yesterday’s signing another hurdle was cleared. At the same time, the world was given the most tangible evidence yet that AMBO will be a pipeline, and not just a pipe dream. Interestingly, the signing “beat,” by more than a week, a similar ceremony between Greece, Bulgaria and Russia over a shorter pipeline, from Burgas in Bulgaria to Alexandroupolis on the northeastern Aegean. The Burgas-Alexandroupolis pipeline project has been presented as a rival project to AMBO in the past. But internal disputes over port controls and other issues have kept B-A from getting off the ground. The trilateral signing for that project is to be held on February 7 in Burgas.

Before a full room of officials, onlookers and journalists, Macedonian Minister of Economy Vera Rafajlovska and her peers, Bulgarian Minister of Regional Development and Public Works Asen Gagauzov and Albanian Minister of Economy, Market and Energy Genc Ruli, spoke of the importance of AMBO for their countries and the region. But the most attention was given to a special visitor, the president of the AMBO corporation, former BP executive Ted Ferguson.

In their speeches, the ministers made the usual comments about how the project was good for regional cooperation, security and economic development. Macedonian Minister Rafajlovska stated that the pipeline would help to diversify and thus make safer local energy supply. For his part, Albania’s Ruli stated that AMBO would “become another factor in [our] cooperation and security… and will pay for other projects at a regional level.” His Bulgarian colleague said that “by signing today the tripartite convention, we express the commitment of our government to provide political support for this very important project… not only an oil pipeline project, but also part of Corridor 8, of vital importance for our three countries.”

According to a prepared media announcement, the pipeline will be 894.5 km long, with four pumping stations, and have a capacity of 750,000 barrels of oil per day. It is expected to eventually transport some 30-40 million tons of crude oil annually. Macedonia, which will host 273 km of the pipeline as well as one pumping station, is due to receive $30 million in annual transit fees from the project. The total investment costs are anticipated at $1.2 billion.

In Skopje, the local media has occasionally expressed sarcasm over the allegedly slow pace of activity around the pipeline, taking a “we’ll believe it when we see it” point of view. In his comments, AMBO President Ted Ferguson acknowledged local eagerness, saying that everyone was probably most interested to know “when we are actually going to start some work.”

Although he took care to first remind that the signing was “an agreement between the three countries, not with AMBO,” Mr. Ferguson went on to say that with the signing the project was now “entering into a very exciting stage.” With the signed agreement, initial funding that has been raised can now be allotted for necessary preliminary studies.

According to the AMBO president, “we are now mobilizing people to come to the region for the environmental assessment. These studies should take six months, after which we will start engineering and ordering of materials. Before the end of 2008 we would expect to start construction… by early 2011, we should have a commissioned pipeline and be loading the first tanker in Vlore.”

In comments after the event, Mr. Ferguson added that the first necessary study is a Red Flag Survey of the most environmentally sensitive areas along the pipeline’s anticipated route. According to him, a contracting firm has been identified and can begin work “as soon as we sign a contract with them, in the next few weeks is what we’re aiming for.”

The signing ceremony also gave the public insight into the origins of the AMBO project, with the reading of a special letter from the chairman of AMBO, Stephanie Tashkovich. The letter chronicled how her late husband, Vuko Tashkovich, a former co-chairman of the World Macedonian Congress diaspora group, watched with concern in the early 1990’s as war engulfed the Balkans. The fledgling Macedonian state was imperiled by a trade embargo from the Greeks and economic sanctions on neighboring Serbia.

“Vuko tried night and day to figure out what Macedonia might have or might do that would make it in the self-interest of powerful nations to protect Macedonia’s stability and territorial integrity if it were ever challenged,” Mrs. Tashkovich recalled.

A situation soon presented itself: in January 1994, after having learned of the ever-increasing build-up of tanker traffic in the Bosporus and the anticipated future rise in oil exports from the Caspian, the patriotic and enterprising Tashkovich flew to the Balkans to negotiate exclusive rights with the Albanian, Macedonian and Bulgarian governments to develop a pipeline that someday “would surely hold the attention of Western nations who benefited from it.”

However, despite this visionary thinking, the AMBO plan was slow to get started. The ongoing volatility and war in the region kept potential investors leery, but even more of an impediment was the amount of attention given to the Baku-Tbilisi-Ceyhan (BTC) pipeline project from Washington and the oil majors at the time. Then there was the brief though unhelpful outbreak of war in 2001.

Indeed, all the evidence suggests that rather than a narrative of wars surreptitiously engineered from the outside to create the conditions for the trans-Balkan oil pipeline, the project thus seems to have represented exactly the opposite scenario: that of a constructive project for regional security that somehow has managed to stay afloat despite the odds stacked against it.

Although the man who first envisioned the trans-Balkan pipeline died a decade ago, the project has been kept alive by his wife and their son, Gligor- an AMBO executive before being named Minister of Foreign Investment in the Macedonian government after elections in July 2006. “Like Vuko, he did not care about the odds, he believed in AMBO and was determined to carry on his father’s dream,” stated the letter from Stephanie Tashkovich.

In his first few months in government, the younger Tashkovich has been working 80 and even 100-hour weeks, while traveling around the globe to raise Macedonia’s stature as a foreign investment destination (Gligor Tashkovich and Vele Samak, another young foreign investment minister, have been dubbed the “flying ministers” by the local press due to their constant travel). Despite the draining workload, he is optimistic and calls working as a government minister “the realization of a life-long dream.”

Minister Tashkovich affirmed that with the tripartite signing, the necessary work preliminary to the pipeline’s construction can begin. He identified the candidate for the environmental Red Flag Study as Walsh Environmental of Colorado, a company with previous experience on similar Balkan projects.

Although other oil pipeline projects have been stymied by protests from environmental groups, most noticeably in Georgia’s Borjomi region, Minister Tashkovich does not anticipate similar issues arising in Macedonia. He also notes that the original pipeline route was modified years ago so as to avoid the sensitive Lake Ohrid area.

Such studies as that now to be undertaken for AMBO are not simply a gesture of goodwill to nature- it is a regular and necessary process in the evolution of any pipeline. “Specifically, it is called an Environment and Social Impact Assessment Survey, and performing one is a requirement of the international financial institutions,” Minister Tashkovich underscored.

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