ECONOMY

Project company formed for trans-Balkan pipeline

MOSCOW – Russia, Bulgaria and Greece signed an agreement yesterday for the creation of a project company, Burgas-Alexandroupolis, for the trans-Balkan pipeline that will take oil from Bulgaria to Greece. The company will be registered in the Netherlands, Russian oil pipeline monopoly Transneft said in a statement. President Vladimir Putin said Russia aimed to have the scheme completed soon. «This is the penultimate step before realizing the project. We heard today from our ministers and experts they intend to complete it in the very near future,» Putin told reporters during a state visit to Moscow by Greek Prime Minister Costas Karamanlis. The 285-kilometer pipeline will take 35 million tons of Russian oil a year (700,000 barrels per day) from Bulgaria’s Black Sea port of Burgas to Greece’s Alexandroupolis on the Aegean Sea, with the possibility to increase this to 50 million tons in the future. The three countries in March sealed a long-postponed deal to build the pipeline, which is due to come on stream in 2009, and is seen as a further consolidation of Russia’s influence on the European energy market. Transneft, Russian state-controlled oil producer Rosneft and Gazprom Neft, the oil arm of gas export monopoly Gazprom, will share the 51 percent Russian stake and provide crude for the project. Bulgaria and Greece will each have 24.5 percent of the pipeline, which will bypass the congested Turkish Bosporus Strait and has an estimated cost of up to -1 billion. Greek shareholders of the project include the country’s largest refinery, Hellenic Petroleum, oil company Thraki and the government, while the Bulgarian project company Burgas-Alexandroupolis BG will own the Bulgarian stake. Double gas imports Putin also said Greece wants to double imports of Russian gas after 2016 when a new link will be built to supply fuel from Siberia to Europe’s south. «Greece is interested in signing new contracts after 2016 which will last up to 2040 with volumes rising almost twofold,» Putin said after talks with Karamanlis. «We are ready to work on this, but to boost volumes there is a need for new transport capacities,» he said. Greece consumes a total of 3.2 billion cubic meters (bcm) of gas per year, of which over 2.7 bcm comes from Russia. Putin said Greece supported Russian plans to build a new gas link under the Black Sea, called South Stream. The -10 billion pipeline, led by Russian gas export monopoly Gazprom and Italy’s Eni, will export up to 30 billion cubic meters of Russian gas to Europe, enough to cover the annual demand of a country like Spain. Analysts see the South Stream project posing a challenge to the rival Nabucco pipeline scheme, which would take gas from Azerbaijan to Southern Europe via Turkey in a European Union effort to diversify energy sources away from reliance on Russia. For South Stream, Russian gas will go from the port of Novorossiisk, travel 900 kilometers under the Black Sea, re-emerge on the Bulgarian coast and then continue through one of two onshore routes. If it goes south, it would then pass Greece and reach Italy’s southern Puglia region. Going north, gas would pass through Romania, Hungary, the Czech Republic and Austria before arriving in Italy.