Russia presents funding proposal for oil pipeline

09/09/2010

The planned Burgas-Alexandroupolis pipeline has been stalled by local opposition, as well as environmental and financial concerns.

(Balkans.com - 09/09/10; Dnevnik.bg, Mediapool, Sofia News Agency, Money.bg, Actualno.com, Cross-bg.net, Transneft - 08/09/10; UPI - 25/08/10; RIA Novosti - 24/08/10)

Russia offers a "modernised" model for the Burgas-Alexandroupolis pipeline. [Getty Images]

Representatives of Bulgarian and Russian shareholders in the stalled Burgas-Alexandroupolis project discussed a new funding plan, under which the Moscow-based Transneft company would finance construction of the oil pipeline.

The proposal was presented on Wednesday (September 8th) during a meeting in the Russian capital.

The three countries agreed to build an oil pipeline between Burgas on Bulgaria's Black Sea coast and Alexandroupolis on Greece's Mediterranean coast in late 2007, and signed a deal on the project in early 2008.

The planned 280km-long pipe to circumvent the congested Bosphorus Strait would initially carry 35m tonnes of oil per year. Its capacity would possibly be expanded to 50m tonnes.

It is to be constructed and run by Trans-Balkan Pipeline (TBP), an international company established in Amsterdam in February 2008, in which Russia holds 51% of the shares. The remaining 49% are equally split between Bulgaria and Greece.

The Russian participant in the project company, Pipeline Consortium Burgas-Alexandroupolis Ltd, was founded jointly by Transneft (33.34%), Rosneft (33.33%) and Gazprom Neft (33.33%).

Construction was scheduled to begin in October 2009 but has yet to happen. Mixed signals have been coming from the centre-right government that replaced Bulgaria's previous Socialist-led coalition after the July 2009 parliamentary elections.

The joint oil pipeline project with Russia and Greece is viewed as highly controversial by many Bulgarians and has been rejected by residents of three Black Sea municipalities, including Burgas, in referendums held last year.

Many locals fear the pipeline will harm tourism, while NGOs warn of potential environmental disasters if plans to build an oil terminal at sea are implemented.

Bulgarian Prime Minister Boyko Borisov, leader of the ruling Citizens for the European Development of Bulgaria (GERB) party, even indicated at one point in June that Sofia may pull out of the project altogether. Shortly after, he said that a final decision will depend on the results of an international environmental assessment on the project, which is expected to be completed in February.

"We are all aware that after the situation in the Gulf of Mexico many, many environmentalists would now be more careful when placing oil in a small port such as Burgas [and] in a rough sea like the Black Sea," Borisov said in a TV interview on June 18th.

Amid continuing uncertainty about participation in the project, Sofia agreed in July to pay its 6.5m-euro contribution to the operating costs of the 1.5 billion-euro project.

Russia's new funding proposal will be discussed during a general meeting of the TBP shareholders in Amsterdam next month, Transneft said in a statement after the talks Wednesday with the Bulgarian delegation in Moscow.

The Bulgarian Finance Ministry, in charge of the project on the part of the Bulgarian government, initially appeared unaware of the meeting. Later in the day, it confirmed that a delegation headed by Rumen Porozhanov, one of the Bulgarian members of the TBP supervisory board, was in Moscow. No representatives from Greece were reported to have attended the meeting.

A Sofia News Agency report quoted Porozhanov as saying after the talks that the participants had agreed that the TBP must elaborate on the proposal, to clarify the economic benefits potentially gained from building and operating the Burgas-Alexandroupolis project.