Bulgaria, Greece, Russia heading for rubber-stamp of EUR 700 million oil pipeline project

Eastbusiness.org

March 13, 2007 Tuesday

Top officials from Bulgaria, Greece and Russia will convene Thursday in Athens to rubber-stamp a crude pipeline project sidelined for a decade over disagreements.

The three nations ended nearly 15 years of negotiations on Bourgas-Alexandroupolis project, the 280-km pipeline to ensure fast-track flow of Russian crude to the Mediterranean.

The route of the EUR 700 million pipeline will bypass the busy Bosphorus Strait and will bring USD 1.0 billion in annual savings for companies currently racking up oil tanker delays in Turkey.

The project is expected to solidify Russia’s role as an energy leader in Europe.

The start of the project has recorded a plethora of delays over the nations’ dissension regarding each country’s share in the project, ownership of the terminals and transit fees. A breakthrough in negotiations happened last year when Bulgaria and Greece bent to Russia’s call for a 51-per-cent stake in the project.

Thus, Russian oil producers Rosneft and Gazprom Neft, alongside oil pipeline operator Transneft, all in state ownership will be in command of Russia’s stake, whereas Bulgaria and Greece will own 24.5 per cent each.

Again companies in state ownership, Bulgargaz and Transexportstroy, will represent Bulgaria’s interests in the project. Yet the local government made clear a subsequentstock sale to oil majors such as Chevron and KazMunaiGas was not to be ruled out.

The Greek portion will be vested in Hellenic Petroleum, Latsis group and the Greek unit of Gazprom, Petroleum Gas.

Greece entertains hopes that the project will make it an important transit point in the region, all the more it comes in addition to a gas pipeline to move Caspian and Middle Eastern gas to Europe as of early 2008.