Greece: Bulgaria's Balking at Oil Pipeline Is 'Madness'

Business » ENERGY | January 31, 2011, Monday // 15:57
Bulgaria: Greece: Bulgaria's Balking at Oil Pipeline Is 'Madness'

Bulgaria's evolution towards a negative position with respect to the construction of the Burgas-Alexandroupolis oil pipeline in unjust and unjustified, according to a Greek Deputy Minister.

In an interview for Interfax Monday, Yannis Maniatis Deputy Minister of Environment, Energy and Climate Change of Greece, has described as "madness" Bulgaria's position against the construction of the troubled project for transport of oil from the Black Sea to the Mediterranean.

"If someone's position on the project has changed, this is not Greece's position. What changed is the position of our Bulgarian partners. From the very start of the discussions to this day all governments of Greece have supported the idea for the construction of this oil pipeline firmly and decisively," Maniatis said.

While he points out he hopes that Bulgaria will eventually come to its senses, and will realize the importance of the Burgas-Alexandroupolis project.

"Indeed, if the Greek side and the Greek structure, based on European norms and laws, have confirmed that the project does not pose a threat to the environment, how can the corresponding structure of another EU member state to adopt some kind of the opposite decision? This is, in truth, some kind of madness. We have stated this openly and very much hope that our neighbors and friends in Bulgaria, too, will come to the same opinion," the Greek Deputy Minister says when asked if Greece cannot get the EU institutions to prod Bulgaria for the realization of the project.

Maniatis says Greece expects that in February or March Bulgaria will come to the conclusion that Burgas-Alexandroupolis is environmentally safe; he emphasizes that many European energy companies and banks have indicated they wanted to invest in the oil pipeline.  

In 2010, the Burgas-Alexandroupolis oil pipeline – one of the three major Bulgarian-Russian energy projects – ran into much disrepute with the Bulgarian government of PM Borisov.

In December, news emerged that Bulgaria failed to pay the EUR 6 M that it owes as its contribution to the joint project company with Greece and Russia, which is supposed to construct the Burgas-Alexandroupolis oil pipeline.

Ever since the center-right government of Bulgarian Prime Minister Boyko Borisov took office in the summer of 2009, it has been balking at the construction of the Burgas-Alexandroupolis oil pipeline, which had been promoted vigorously by the formed Socialist-led Stanishev Cabinet and the Socialist President of Bulgaria, Georgi Parvanov. It has also been met with staunch resistance along Bulgaria's southern Black Sea coast over environmental concerns.

In the summer of 2010, Borisov said that Sofia has no money to participate in the construction of the pipeline. Later Sofia has agreed to pay EUR 4.88 M as a contribution to the project company, Trans-Balkan Pipeline. The Bulgarian authorities, however, have made the construction of the pipeline conditional on complex environmental assessment procedures.

In November 2010, the Bulgarian Environment Ministry said the environmental impact assessment of the Burgas-Alexandroupolis oil pipeline is inadequate and needs to be reworked; the ultimate decision about whether Bulgarian will take part in the project has been put off for 2011. Bulgarian Prime Minister Borisov, however, has written off the project on a number of occasions, declaring that there is no way the ultimate environmental assessment would be positive.

In December, Greece's Deputy Prime Minister Theodoros Pangalos was especially critical of Bulgaria as regards the issue of the construction of the Burgas-Alexandroupolis pipeline claiming that the rightist governments in Bulgaria in the past 15 years – including the current Borisov government – have served American interests by blocking the progress of the oil pipeline. Greece has been a strong proponent of the pipe.

Russian Prime Minister Putin and Energy Minister Shmatko have generally expressed "understanding" for the "environmental concerns" of the Bulgarian state but have also insisted on the realization of the project.

Bulgaria, Greece and Russia agreed to build the pipeline between Burgas and Alexandroupolis, taking Caspian oil to the Mediterranean skirting the congested Bosphorus, in 2007 after more than a decade of intermittent talks.

The agreement for the company which will construct the Burgas-Alexandroupolis oil transit pipeline was signed by Bulgaria during Russian President Putin's visit to Bulgaria in 2008.

The 280-km pipeline, with 166 km passing through Bulgaria, would have an initial annual capacity of 35 million tons of crude oil, which could be later expanded to 50 million tons. Its costs are estimated at up to USD 1.5 B, up from initial estimates at USD 900 M.

The Trans-Balkan Pipeline company, which is in charge of the construction and subsequent operation of the future pipeline, and is headquartered in the Netherlands, was set up in 2008.

The Russian participant in the project, Pipeline Consortium Burgas-Alexandroupolis Ltd, has a share of 51%. It was founded jointly by three companies: AK Transneft (33.34%), NK Rosneft (33.33%), and Gazrpom Neft (33.33%).

The Bulgarian Joint stock company "Project Company Oil Pipeline Burgas-Alexandroupolis – BG" AD has a share of 24.5%. It was initially founded as jointly by two state companies, Bulgargaz (50%) and Technoexportstroy (50%) but was transferred in full to the Finance Ministry in February 2010.

The Greek participants are Helpe Thraki AE with 23.5% and the Greek government with 1%. The Helpe-Thraki AE was founded jointly by "Hellenic Petroleum" (25%) and "Thraki" (75%).

Three Bulgarian Black Sea municipalities - Burgas, Pomorie, and Sozopol - have voted against the pipe in local referendums over environmental concerns.

Municipalities neighboring Pomorie and nearby Burgas are also harboring fears that the pipeline could damage their lucrative tourism business, while environmental NGOs have branded the existing plans to build an oil terminal out at sea a disaster waiting to happen.

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Tags: Burgas-Alexandroupolis, Burgas-Alexandroupolis oil pipeline, oil pipeline, greece, Russia, Yannis Maniatis

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