ECONOMY

Pipeline deal after long delay

The end of the beginning for the long-awaited Burgas-Alexandroupolis oil pipeline was officially marked at 1.45 p.m. yesterday in Sofia, as Greece’s Development Minister Dimitris Sioufas, Bulgaria’s Minister for Regional Development Valentin Tserovski and Russia’s Industry and Energy Minister Viktor Khristenko signed a memorandum of cooperation for the construction of a 285-kilometer pipeline linking the Bulgarian port of Burgas and the northern Greek port of Alexandroupolis. Bulgarian Prime Minister Simeon Saxe-Coburg was present at the ceremony. As all three ministers acknowledged, the signature of the memorandum is a crucial step toward realizing a project first conceived by Greek business people 13 years ago and which the sponsor countries hope will provide a faster, safer and cheaper alternative to carrying shiploads of oil through the congested Bosporus strait. Under the plan, ships will carry oil from the southern Russian port of Novorosiisk to Burgas, across the Black Sea, and from Alexandroupolis, in the Aegean Sea, to mainly western markets. All three ministers said their governments supported the project and would directly cooperate with the firms that are to construct the pipeline. The total cost of the project is 522 million euros and will be entirely privately financed. BP PLC’s Russian joint venture, TNK-BP, is heading the project and other partners are to include Greece’s Hellenic Petroleum and the Latsis and Kopelouzos Groups, the US’s Cambridge Energy Research Associates, Russia’s Lukoil and Rosneft, and Bulgaria’s Technoexportstroy. «We are still at the beginning, not the end,» said Khristenko, who, in a pointed reference to past problems, called for «more dynamism and cooperation than in the past.» The Russian minister acknowledged that Russia had long been skeptical about the project’s efficiency as an alternative to the Bosporus route, adding that the decisive factor in favor of the project was the interest expressed by Russian companies, who offered to put up capital toward the construction of the pipeline. Russia exports about a third of its oil production through the Black Sea and the pipeline will allow it to bypass the crowded and dangerous Bosporus in Turkey, minimizing delays and potential environmental disasters. According to excerpts from a study carried out by the three governments, more than 100 million metric tons (110.23 million US tons) of oil were shipped through the Bosporus in 2004 and delays added about $7 to every metric ton shipped through the strait – for a total cost to oil companies of about $700 million. The study, published in Kathimerini, said the oil was delayed by an average of eight days in 2004 while it waited to transit the Bosporus. The pipeline will have a capacity of 700,000 barrels per day. The planned annual capacity will be 15 million metric tons (16.5 million US tons) once the first stage of construction is finished, 24 million tons (26.4 million U.S. tons) after completion of the second stage, and 35 million tons (38.5 million US tons) upon final completion with an option to expand it to 50 million tons (55 million US tons). It will be able to handle exports from oil-rich Azerbaijan via a Russian pipeline linking the Caspian and Black seas. It would also allow oil from Kazakhstan to be shipped to Burgas. Tserovski indicated that original estimates to have the pipeline completed by 2007 were overly optimistic. «I’m convinced that the project can be fulfilled in the next three or four years,» he said. He added that Bulgaria was still committed to building a much longer pipeline from Burgas to the Albanian port of Vlore. «There is enough oil for both pipelines,» he said. (Kathimerini, AP)