SEVEN companies from Bulgaria, Greece and Russia have agreed to form a joint venture to build the Bourgas-Alexandroupolis oil pipeline that will take Russian oil from the Caspian to the Aegean Sea.
"The companies interested in the project signed a memorandum to discuss within the next six months their stakes in a joint-venture International Project Company (IPC) to build the pipeline," Kalin Rogachev told a news conference on May 27 after the end of the three-day talks in Sofia. Rogachev is head of the office of Regional Development and Public Works Minister Valentin Tserovski.
"During that time other partners are also more than welcome to join," Rogachev said.
Four Russian companies - TNK-British Petroleum, Stroytransgas, Sovcomflot and Tatneft - will join the project.
Three others - Sibneft, Surgutneftegas and Rosneft - were still discussing their financial engagement in the deal, said Anatoly Yanovsky, Director of Fuel and Energy Complex Department of Russia's ministry of industry and energy.
The three Greek candidates for participation, Hellenic Petrol, Latsis Group, and Prometheus Gas have already formed a consortium called DEP-Traki, Greek deputy development minister George Salagoudis said.
Two more consortiums - Universal Terminal Bourgas and Transbalkan Pipeline Company - are to join the deal on the Bulgarian side.
Bulgaria, Greece and Russia in April signed the political accord on the 700 million euro deal to build the 285-km pipeline linking the Bulgarian Black Sea port of Bourgas, and Alexandroupolis in the far northeast of Greece.
It will allow Russian oil from the Caspian Sea to be transported from the port of Novorossiisk on the Black Sea by tankers to Bourgas and to reach Alexandroupolis through the overland pipeline.
"If everything goes according to plan, I think we will have the Bourgas-Alexandroupolis pipeline in operation by the end of 2008," Salagoudis said.
The decade-old Bourgas-Alexandroupolis project is in competition with another pipeline project joining Bulgaria's Black Sea port via Macedonia with Albania's Adriatic coast, which is backed by the US consortium AMBO.
That 912-km Bourgas-Vlore pipeline would cost $1.2 billion (about a billion euro) and will have a capacity of 35 million tons of oil a year. AMBO has said it could build it in four years.
Bulgaria is equally interested in participating in the construction of both pipelines, Tserovski said when he signed the Bourgas-Alexandroupolis deal in April.
"There is enough oil for the two pipelines and they will both be profitable because of the constantly growing environmental demands in the straits of Turkey," Tserovski said.
Turkey argues that the oil companies would have to spend more anyway because of delays in transit through the straits. So far, Turkey has used the straits as an instrument of pressure on Russia, introducing limits on the transit of tankers from Novorossiisk.
The construction of the new pipe, bypassing the Bosphorus, will force Ankara and several other parties to make concessions. The Bourgas-Alexandroupolis pipeline will provide an additional trump card for the Russian government's oil and gas talks with Ukraine.
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 Bosphorus in Turkey, minimising delays and potential environmental disasters.
According to a study commissioned by the governments of Bulgaria, Russia, and Greece, more than 110 million tons of oil were shipped through the Bosphorus in 2004 and delays added about $7 to every metric ton shipped through the strait - meaning a total cost to oil companies of about $700 million.
Excerpts from the report, published in April in the Athens daily Kathimerini, said the oil was delayed by an average of eight days in 2004 while it waited to transit the Bosphorus.
Bourgas-Alexandroupolis will have a capacity of 700 000 barrels a day. The planned annual capacity will be 16.5 tons once the first stage of construction is completed, 26.4 tons after completion of the second stage, and 35 million on final completion with an option to expand this to 55 million 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 Bourgas.