Oil Report

Funds still short for Pan-European Oil Pipeline

BELGRADE, June 4 (Reuters) - The states behind a planned Pan-European Oil Pipeline linking the Black Sea with Italy still do not have the money to build it and are looking to an investment conference to cover the shortfall.

The pipeline, initially estimated at a cost of between $2 billion and $3.5 billion, aims at diversifying European supplies and bringing Caspian crude to refineries in northern Italy and central Europe.

Romania, Serbia, Croatia, Slovenia and Italy signed the declaration to work on the 1.2 million-1.8 million barrels per day (bpd) pipeline in April last year.

The inter-state committee for the construction of the pipeline met in Belgrade on Wednesday.

Slobodan Sokolovic, assistant to the Serbian energy minister said the committee “decided to organize an investment conference to find funds for the construction of the pipeline.”

“Depending on how the conference goes and whether we find funds, we shall decide whether the construction would be possible,” Sokolovic told reporters. The date for the conference will be set within the next few days.

Due to start operating in 2012, the 1,400 km long pipeline is to connect the Romanian port of Constanta with Trieste in Italy.

Most parts are already in place, apart from a section connecting the Romanian city of Pitesti with Pancevo in Serbia and a stretch between Croatia’s northern Adriatic coast through Slovenia to Trieste.

The Italian representative in the inter-state committee, Nicola Mongelli told Reuters the pipeline “may be extended to other European countries.

“The plan is to take the oil to Trieste and from there it would be easy ... to link (the pipeline) to Genoa and from there to Marseille,” he said.

“The pipeline is very important because it will reduce the number of ships transporting oil and polluting the sea.”

The first pipeline to carry large volumes of crude from the Caspian without going through Russia was a $4 billion BP-led BP.L pipeline, opened in June 2006, running from Baku in Azerbaijan to Turkey's Ceyhan port in 2008.

The other major oil project in the Balkans is the 279-km pipeline that will run between the Bulgarian Black Sea port of Burgas and the Greek Aegean Sea port of Alexandroupolis. (Editing by Ellie Tzortzi)