BUSINESS

Russia denies pulling out of Burgas pipeline project

Transneft, Russia?s oil pipeline monopoly, denied on Wednesday reports that shareholders of the Burgas-Alexandroupoli pipeline, a major energy project for Greece, have scrapped plans to complete its construction.

Earlier in the day, Moscow based Vedomosti newspaper reported that Russia?s participants in the scheme - Transneft, Rosneft and Gazprom Neft ? have decided against co-financing the project.

Igor Dyomin, a spokesman for Transneft, was cited by Russian news agency RIA Novosti as denying plans to close down the pipeline that has suffered repeated setbacks.

"We do not intend to end the project but to focus on minimising expenses,» Dyomin was cited as saying.

He added that Bulgaria has stopped financing a large part of its stake in the pipeline after Greece did so.

The pipeline was due to be launched in 2011 but construction has been held up. The latest delay has been caused by the Bulgarian government expressing concerns about the environmental impact of the scheme, which would have led to 35 million tons of crude oil per year being pumped from the Black Sea to northeastern Greece, bypassing the Bosporus and Dardanelles Straits.

According to Russia?s ITAR-TASS news agency, the pipeline was going to be constructed and owned by the Dutch-registered Trans-Balkan Pipeline B.V. The Burgas?Alexandroupoli Pipeline Consortium, a joint venture of Russian Transneft, Rosneft and Gazprom Neft, owns 51 percent of this company.

Bulgarian Burgas?Alexandroupoli Project Company-BG, a subsidiary of Technoexportstroy, owns 24.5 percent. Greek consortium HELPE S.A. - THRAKI S.A., a joint venture between Hellenic Petroleum and Thraki, which is owned by Prometheus Gas and the Latsis Group, owns 23.5 percent, while the Government of Greece has 1 percent.

The agreement for the pipeline was signed amid much fanfare in Athens in March 2007. Vladimir Putin, the Russian President at the time, described it as ?one of the most important projects in both the European Union and the rest of the world.?

Then Greek Prime Minister Costas Karamanlis said it was the first step towards making Greece a vital energy hub in the region.

However, during the September 2009 election campaign, PASOK leader George Papandreou said that he would review Greece?s participation in the project if he came to power.

Last February, Papandreou said that Greece had agreed for the scheme to go ahead and that he expected construction to begin within six months.

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