Putin playing pipeline politics

BRUSSELS, Dec. 12 (UPI) -- Expansions for the Baltic Pipeline System may be a political move for Russia due to the financial constraints on the project, analysts say.

Russian Prime Minister Vladimir Putin signed a decree Dec. 1 on a 600-mile expansion of the Baltic Pipeline System, BPS-2, in an effort to reduce dependence on transit countries Ukraine, Belarus and Poland.

But Anisa Redman, an energy analyst for HSBC Bank in London, told the European weekly New Europe that BPS-2 did not make economic sense for Moscow.

"To me, it sounds more political than economical, because if you just consider how much more companies will have to pay more," she said, noting Russian pipeline firm Transneft likely will raise tariffs to finance the project.

BPS-2 may serve as a rival to the Druzhba pipeline, the longest in the world, which brings oil from Russia to European markets.

Transneft proposed BPS-2 following a row with Belarus over oil deliveries. Druzhba splits into northern and southern branches in the Belarusian refining town of Mazyr.

"Obviously Russia doesn't like to depend on transit countries, and Ukraine, Belarus have proved to be very difficult countries to negotiate with," said Redman.