ECONOMY

Russia said to be withdrawing from Burgas pipeline

Russia intends to withdraw the Burgas-Alexandroupoli oil pipeline project, which also involved Bulgaria and Greece, according to reports in Russia.

The Russian participants in the scheme – Transneft, Rosneft and Gazprom Neft ? are expected to announce that they will no longer co-finance the project at a meeting of the supervisory board and shareholders involved in the project in Rome on Wednesday, the Vedomosti newspaper reports.

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.