Burgas-Alexandroupolis Pipeline Project Gets Green Light

Today Russia, Bulgaria, and Greece endorsed the Burgas-Alexandroupolis oil pipeline project, which as we earlier reported will seek to relieve the bottleneck at the Bosporus Straight in Turkey between the Black Sea and the Mediterranean. Some analysts don’t think this pipeline makes much economic sense, and is a ploy by the Kremlin to pressure Turkey’s control of a critical transit route. According to AP, Russia (with participation of Gazprom and Rosneft) will control its typical 51% of the project – the minimum share required for opacity and their preferred style of shareholder relations:

No immediate details were announced about the cost of the privately funded project, in which a 175-mile pipeline will be built, but experts had estimated it at between $1 billion and $1.3 billion. The pipeline will bring Russian oil from Bulgaria’s Black Sea port of Burgas to Alexandroupolis in northeastern Greece, bypassing the environmentally vulnerable Bosporus Straits. Russia is expected to have a 51 percent share in the deal, with Bulgaria and Greece splitting the remaining 49 percent. … The Burgas-Alexandroupolis pipeline, tentatively scheduled for completion by 2010, would initially carry 700,000 barrels of oil a day port through a 36-inch pipeline, with capacity set to eventually rise to more than 1 million barrels a day. Russia’s Gazprom-Neft and Rosneft are to participate in the venture, along with Russian-British venture TNK-BP (nyse: BP – news – people ), Bulgargaz and Terminal Universal Burgas from Bulgaria, and Greek companies Hellenic Petroleum and Thraki.