New pipeline to bring Russian oil to Mediterranean

Mar 19, 2007 01:00 AM

by Gabriela Preda

Greece and Bulgaria signed an historic agreement with Moscow earlier on a long-debated pipeline linking Burgas and Alexandroupolis. Although it will increase oil supplies to Europe, some say the project will also allow Russian control over more of the continent's energy infrastructure.
Two South-eastern European countries have officially become Moscow's privileged intermediaries on the European oil transport market. On March 15th, Bulgaria and Greece signed an agreement with Russia to build a new pipeline for transporting Russian oil to the Mediterranean. It would link the Bulgarian Black Sea port of Burgas with the Greek Mediterranean port of Alexandroupolis, allowing Russian oil shipments bound for the West to avoid Turkey's crowded Bosporus Strait.

Russian President Vladimir Putin, Bulgarian Prime Minister Sergei Stanishev and Greek Prime Minister Costas Karamanlis attended the signing ceremony in Athens, wrapping up almost 15 years of negotiations on the 279 km pipeline. According to regional media and experts, the deal should provide a boost to the countries' economies.
At the same time, however, it will further increase Europe's energy dependency on Russia, which already supplies a third of Europe's oil and 40 % of its natural gas. Several disruptions in supplies from Russia have occurred as a result of price disputes between Moscow and former Soviet republics that serve as transit routes.

Construction of the Burgas-Alexandroupolis pipeline is set to start in 2008 and will cost around EUR 709 mm. A consortium of state-controlled Russian energy companies, Transneft, Rosneft, and Gazprom, will hold a 51 % stake in the pipeline, while Greek and Bulgarian companies will split the remainder.
Putin said the 600,000-bpd pipeline would be filled with oil from new developments in Russia and Central Asia without diverting supplies from other export channels. Crude supplies, possibly also from Kazakhstan, will still be shipped from the Russian port of Novorossiyskto Burgas, and again from Alexandroupolis to world markets.

While speeding up the transport of crude oil, the pipeline is also expected to reduce oil-tanker congestion at the Bosporus and the Dardanelle Straits.
"Given the increasing density of maritime traffic in the enclosed Black Sea and additional quantities of oil exported from the region, it is of the utmost importance to give a higher priority to the alternative of transporting oil by pipelines," said EU Energy Commissioner Andris Piebalgs, expressing international concern over the threat of maritime accidents.

Greece believes the deal has put it and Bulgaria on the world energy map.
"It will also help international markets with improved access to oil at a time when energy is a fundamental global concern," said Greek Prime Minister Costas Karamanlis.
Various pipeline options have been in the works for years as oil production expands in the Caspian Sea basin. EU officials have also talked about diversifying the continent's energy sources.

Source / Southeast European Times
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