The Bulgarian government has been given March 20 as a deadline to settle all of its dues for the Burgas-Alexandroupolis oil pipeline, a long-delayed Bulgarian-Greek-Russian project.

A joint general meeting of the Shareholders and the Supervisory Board of Trans-Balkan Pipeline B.V. (ТВР) was held in Rome, Italy, on February 17, 2011.

The meeting participants agreed upon the Shareholders' proposals regarding the possibility

of TBP further financing, TBP announced. The motion was that the Bulgarian Shareholder should settle the existing debt before March 20 of this year and continue further financing of the project.

Barkov, Chairman of TBP's Supervisory Board and Vice President of AK Transneft reported

on the current status of the oil pipeline projects in the Black Sea Region and the Burgas-Alexandroupolis pipeline project role. Vladislav Emelyanov, TBP CEO, Chairman of the Management Board made a report on the project status and the Company's financial standing.

All of the Company's shareholders supported the idea that the project should be continued, including the revision of the Environmental and Social Impact Assessment (ESIA) according to the comments made by the Bulgarian Ministry of Environment and Water within the term agreed with the Ministry.

The representative of the Greek Government stated that a decision had been made on VAT refund to the Company for the period of 2008-2010.

In addition, the Shareholders and the Members of the Supervisory Board of Trans-Balkan Pipeline B.V. agreed upon a package of cost minimization measures proposed by the Russian party.

Trans-Balkan Pipeline B.V. was registered on February 6, 2008, in Amsterdam (the Netherlands) in implementation of the tripartite agreement between the Governments of Russia, Bulgaria, and Greece on the construction and operation of the Burgas-Alexandroupolis oil pipeline, signed in Athens (Greece) on March 15, 2007.

According to the Russian reports, Bulgaria owes EUR 7.3 M as a contribution to the budget of the joint project company; in December 2010, there were concerns by Russia that Bulgaria wants to kill the project by defaulting on its dues. A senior Greek government official commented at the time that Bulgaria was moving to shed the oil pipeline under pressure by American oil interests.

Earlier this week, Russia refuted reports that it intended to abandon the project.

Shareholders in the project to build the Burgas-Alexandroupolis oil pipeline have no intentions of giving up on it, the CEO of the Russian oil giant Transneft, Igor Demin said. .

According to Demin, cited by the Russian news agency ITAR-TASS, halting the project had never been put on the table and redirecting the oil to another pipeline is not in the works.

Demin announced that during the Thursday shareholders meeting in Rome, participants only plan to discuss Bulgaria's and Greece's overdue payments for the project.

Demin's comments came on the heels of Russian media publications Moscow is halting financing for the project, mainly because Bulgaria is not paying its dues.

According to Finance Minister, Simeon Djankov,  Bulgaria has not received any official notification Russia plans to withdraw from the project to build the Burgas-Alexandroupolis oil pipeline.

The Burgas-Alexandroupolis oil pipeline – one of the three major Bulgarian-Russian energy projects – appears to have run into much disrepute with the Bulgarian government in 2010.

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.

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%).

On July 16, 2010, the Bulgarian government completed the restructuring of its Project Company Oil Pipeline Burgas-Alexadroupolis – BG" AD, which sealed the transfer of the company under the responsibility of the Finance Minister.

Construction of the pipeline has been on ice even after Bulgaria's government balked at the potential environmental damage that the pipeline could inflict on its resort-dotted coastline. The cabinet has stated that its final decision on the country's participation in the project will depend on its upcoming international environmental assessment.

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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