Bulgaria’s government pulls out of Transbalkan Oil Pipeline company

Associated Press Worldstream, May 4, 2006

By Nicholas Paphitis, Thessaloniki, Greece

Bulgaria expressed its determination Thursday to build an oil pipeline from the Black Sea to the Aegean despite its decision to withdraw from the Bulgarian consortium that will contribute to building it.

The Bulgarian government announced that it would withdraw it largely symbolic share in a Bulgarian consortium that includes seven companies. It was not immediately clear if the consortium would continue its work, or whether a new one would be created to take its place.

"This is not a negative development. We are determined to proceed with the project," Bulgarian Foreign Minister Ivailo Kalfin said of the pipeline, which he described as a priority for his country.

Transbalkan Oil Pipeline Bulgaria AD was formed in 2003 by a Cabinet decree to participate in building a trans-Balkan pipeline that will bypass Turkey's busy Bosporus strait and link Bulgaria's Black Sea port of Burgas with Alexandroupolis on the Greek Aegean coast.

Greek Prime Minister Costas Caramanlis said he had received assurances from his Bulgarian counterpart Sergei Stanishev that the project would go ahead as planned.

"The Burgas-Alexandroupolis pipeline project will continue normally. The Bulgarian side as was its right defines the way it will participate in the
project. The political agreement remains in effect," Caramanlis said after the meeting, held on the sidelines of a regional summit.

In April 2005, Bulgaria, Greece and Russia signed a euro522 million (US$642 million) agreement for the construction of the pipeline. Funding for the
project was to provided by companies interested in running and exploiting the pipeline and not the three governments.

Bulgarian officials would not elaborate on the decision to pull out, but the government's information office said in a statement that the move was motivated by the consortium's lack of experience with such projects.

"Therefore the company may not act as  Bulgaria's representative at the investment stage of the Burgas-Alexandroupolis pipeline project or the international project company that is expected to be set up," the statement said.

The pipeline will have a capacity of 700,000 barrels per day and will be able to handle exports from oil-rich Azerbaijan through a Russian pipeline linking the Caspian and Black seas. It would also allow oil from Kazakhstan to be shipped to Burgas.

Associated Press reporter Veselin Toshkov contributed to this story from Sofia, Bulgaria.