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Russia, Bulgaria, Greece agree on Bosporus-bypass pipeline plan

Russia, Bulgaria and Greece signed a preliminary agreement to build a pipeline that will help relieve congestion in Turkey's Bosporus strait, which are clogged with tankers carrying Russian crude oil from the Black Sea.

The 285-kilometer (177-mile) pipeline will run from the Bulgarian Black Sea port of Bourgas to the Greek port of Alexandropoulos on the Aegean Sea. It will cost about €700 million ($910 million). Its capacity is estimated at 35 million tons of crude oil a year initially, which can be raised to 50 million tons later. „The agreement aims to determine the forms of cooperation between the three countries,” the Bulgarian Ministry of Regional Development and Public Works said in an e-mailed statement today. The agreement was signed in Bourgas today by Andrei Dementiev, Russia's deputy minister of energy and industry; Kalin Rogachev, Bulgaria's deputy minister of regional development and public works; and Nikos Stefanou, the secretary general of the Greek Ministry of Development. The signing comes seven days after Russian President Vladimir Putin urged Bulgaria and Greece to speed up talks on the pipeline or lose their chance to transport Russian crude. Russia will get a 51% stake in The International Project Co., a company owning the pipeline, the statement said. Russia's OAO Gazprom Neft formed a group with state-run oil company OAO Rosneft and state pipeline operator OAO Transneft to hold Russia's stake in the project. Bulgaria and Greece will each hold 24.5%, according to the statement.

The Bulgarian stake will be held by Bourgas-Alexandroupolis Oil Pipeline Project Co. and the Greek stake by Hellenic Petroleum SA. The International Project Co. will set up units on the three countries and will subcontract companies to manage and run the pipeline, the statement said. „There are several unresolved issues which have yet to be negotiated,” Nedezhda Semerdjieva, a press officer at Bulgaria's Ministry of Regional Development said in a phone interview in Sofia today. „Ownership of the pipeline entries and the adjoining oil terminals at both ends is a major item of contention.” Bulgaria will gain $35 million a year in transit fees from the pipeline, of which 155 kilometers pass through Bulgaria, she said. Russia has suggested earlier that Kazakhstan, the second-largest oil producer in the former Soviet Union, could also join as an equity partner in the project. The project is competing with a $1.2 billion, 895-kilometer pipeline project linking Bourgas with the Albanian port of Vlore and passing through Macedonia. It is managed by the US-registered Albanian Macedonian Bulgarian Oil Corp., which is ready to start work next year if it raises 25% of the funds in equity participation from Western oil companies, its president, Ted Ferguson, said February 1. The pipeline is expected to carry about 35 million tons of Caspian crude a year. (Bloomberg)