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November 10, 2007
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Home / Issue Archive / 2007 / February #2 / Putin to Sign Oil Pipeline Deal in Greece

№ 2 (February 2007)

Putin to Sign Oil Pipeline Deal in Greece

President Vladimir Putin will visit Greece on March 14 to sign the long awaited deal to build the Bourgas-Alexandropoulis pipeline which will carry Russian oil across Bulgaria and Greece to the Mediterranean Sea bypassing the Turkish Bosporus Strait. The 176 mile pipeline, worth about €900 mil ($1.2 bln), will have the carrying capacity of 700,000 barrels a day with the potential to eventually reach over a million barrels a day. Greek Development Minister Dimitris Sioufas and Bulgarian Prime Minister Sergei Stanishev are expected to join Putin at the signing ceremony in the culmination of 13 years of ongoing negotiations.

By Sergei Balashov

Greece came up with the idea of such a construction project back in 1994 to allow direct transportation of the Caspian oil through the pipelines instead of using oil tankers, report UralPolit.ru experts. Russia, Greece and Bulgaria signed a cooperation memorandum in 2005. In September 2006 the three countries announced the deal would be completed by the end of the year, however the sides didn’t manage to find common ground delaying it until the beginning of 2007. The latest delay came on Tuesday when Russian Ministry of Industry and Energy said it had to spend more time studying the documentation finally agreeing to hold a signing ceremony on March 14. This came after Greek Development Ministry representative Kinos Vlakhos stated the deal would be finalized by the end of March on Monday. The process is believed to have been catalyzed by Vladimir Putin’s comments last month stating that Russia would "seek alternative supply routes if a pipeline agreement is not reached soon."

Russia owns 51% of the International Project Company which will be operating the pipeline. Greece and Bulgaria each own 24.5% of the company, according to Neftegazexpert.

"The Burgas-Alexandropoulis pipeline is considered a great step forward in trilateral cooperation," said Russian ambassador to Greece Andrei Vdovin to the Associated Press. 

Once built, the 285 km Burgas-Alexandropoulis pipeline, 155 km of which will lie on Bulgarian soil, will be capable of transporting 35 to 50 mil tons of oil from the Black Sea fields to the European, American and Asian Pacific markets annually sparing Russia the need to send its tankers from the port of Novorossiysk through the Bosporus Strait known for its intense traffic.

The imminent completion of the pipeline has influenced Lukoil’s decision to abandon plans to build a $3 bln refinery and opt for extension of the plant located in Bulgarian Burgas. 

"We have put our Turkish project on hold and decided to extend the capacity of our plant in Burgas to 10 mil tons of oil per year from the current 7.5 mil," commented Lukoil’s President Vagit Alekperov as quoted by the Vzglyad newspaper, - "our experts thought this would be more efficient."

"The Burgas-Alexandropoulis oil pipeline will emerge as the most important route in the region," opined the head expert of Megatrustoil Alexander Razuvaev, - "Lukoil’s Burgas refinery will most likely process some of the oil shipped there from Novorossiysk; this could lead to further expansion of the refinery."

Copyright © 2007 Eurasia Press, Inc. (USA). All rights reserved.
Copyright © 2007 Eurasia Press (www.eurasiapress.com)