Commitment to build oil pipeline

The leaders of Bulgaria, Greece and Russia agreed yesterday to proceed with construction of an oil pipeline that will carry Russian oil through Bulgaria and Greece, avoiding its transit through the Bosporus. Presidents Vladimir Putin of Russia and Georgy Parvanov of Bulgaria met yesterday in Athens with Greek Prime Minister Costas Karamanlis. The three agreed that a tripartite pact for the construction of the 280-kilometer Burgas-Alexandroupolis pipeline will be signed later this year. «This is a historic agreement for the three countries, the international oil community and the big western consumer markets,» Karamanlis said after the talks. «The Burgas-Alexandroupolis pipeline will be an additional outlet for the transport of Russian oil from the Black Sea, complementary to the Bosporus route and its construction will provide an occasion for a further expansion of trade relations among the three countries,» he added. «Assured access to energy sources is a guarantee of development,» said Putin, who added that the interests of all parties, the energy producers, the transit countries and the consumers, must be taken into account. Putin’s statement was taken as a jab at the United States, whose government is said to have expressed skepticism toward the project and which has been wary of Russia’s intentions concerning its energy policy and its use as a tool to expand its influence. Parvanov remarked upon the project’s delay and said that «with so many alternative plans, further delay in implementing the Burgas-Alexandroupolis pipeline could be fatal. It’s now or never.» Despite Parvanov’s decisive language, he is apparently under pressure from opposition at home as well as the Americans to not proceed with the project. But there have also been rumors that the US has finally acquiesced to the project, now that the Baku-Ceyhan pipeline linking Azerbaijan and Turkey via Georgia is operating. It is significant, however, that Foreign Minister Dora Bakoyannis will meet later in the month with US Energy Secretary Samuel Bodman. Putin’s decision to go ahead with the project, which has been mulled since 1991, was finalized earlier this year, when his deputy energy minister signed a memorandum in Sofia, Bulgaria. His decision to go to Athens to make a more binding commitment was also seen as a message to members of Russia’s strong oil lobby that this pipeline, and not other alternatives, is going to be Russia’s priority. Consortium ready The pipeline will be built by a consortium named Transbalkan Pipeline, which involves Russian-British company TNK-BP, Russian firms Rosneft and Gazprom-Sibneft, Bulgaria’s Neftochem and Greece’s Hellenic Petroleum and the Kopelouzos Group. Lately, US oil giant ChevronTexaco has expressed an interest in the pipeline but also set a condition, that no state-controlled company join the consortium. This is expected to diminish its chances to participate. The Russian companies taking part in Transbalkan Pipeline are said to have committed themselves to supplying adequate amounts of oil to the pipeline. Oil will be transported from the Russian port of Novorosiysk to Burgas by tankers, offloaded to the pipeline and loaded at the Alexandroupolis terminal to other tankers. It has been estimated that this transit method will reduce the price of oil by $8 per barrel compared to its transport through the Bosporus. Greece will benefit from transit fees. The pipeline’s carrying capacity will initially be 35 million tons of crude annually, to be expanded to 50 million. That’s about a third of the amount of oil exported through the Bosporus (150 million tons in 2005). There are still technical and other difficulties to overcome, with the most intractable issue being who will control the management and for how long. Talks on this have been long and difficult, with the emerging consensus being that the oil providers control 51 percent and the Bulgarian and Greek companies, who are refiners, getting the remaining 49 percent. Still, the Greek companies want a say in the management and there are differing opinions concerning cost and its amortization.