BULGARIA, Greece and Russia signed on April 12 a trilateral memorandum on the construction of the Bourgas-Alexandroupolis oil pipeline.
The document was signed by Bulgaria’s Regional Development and Public Works Minister Valentin Tserovski, Greek development minister Dimitris Sioufas and Russian industry and energy minister Viktor Hristenko.
Under the long-delayed deal, the 177-mile pipeline will be completed by the end of 2007 to link Bulgaria’s Black Sea port of Bourgas with Greece’s Aegean port of Alexandroupolis, a link that its sponsors hope will provide a faster, safer and cheaper alternative than carrying shiploads of oil through the Bosporus, Associated Press reported.
Tserovski, however, indicated that original estimates to have the pipeline completed by 2007 were overly optimistic.
“I am convinced that the project can be fulfilled in the next three or four years,” he told a news conference after the signing.
Initial talks on building the pipeline began in 1993 but were delayed because of disagreements over its cost, ownership and feasibility. The three ministers said the project would be financed by companies interested in running and using the pipeline. There would be no government financing, he said.
British Petroleum’s Russian joint venture TNK-BP is heading the project and other partners are to include Greece’s Hellenic Petroleum, US Cambridge Energy Research Associates, Russia’s LUKoil and Rosneft, and Bulgaria’s Technoexportstroy. However, LUKoil recently said the company did not view the project as efficient.
“These companies understood the concept that this pipeline could be their insurance policy against the limited piping capacity of the route via the straits,” Tserovski said. He said that rising oil prices had played a role in the project being speeded up.
An “international project company” will soon be established to “offer options for structuring and financing the project”.
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 by the three governments, more than 110 million tons of oil were shipped through the Bosporus 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 the Athens daily Kathimerini, said the oil was delayed by an average of eight days in 2004 while it waited to transit the Bosporus.
“Russia has no intention to use budget financing on this project,” Khristenko said. He said that Russia envisaged only the use of private capital, including that of Russian oil companies, because investors should be able to independently answer the question about the project’s efficiency.
The pipeline 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.
Hristenko however said that signing the deal was just the beginning and that much work remained. “Guarantees are needed to secure sufficient oil supplies to be pumped through the pipeline,” he said.