INTERVIEW - Bulgarian Minister Says Construction of Russian-Bulgarian-Greek Oil Pipeline Likely To Start by End-2009

“All deadlines so far have been only hypothetical. My personal expectations are that construction can start by the end of next year,” Gagauzov told SeeNews by phone.

He declined to comment on the costs of the construction of the Burgas-Alexandroupolis pipeline that will transport crude carried by Russian tankers to Bulgaria's Black Sea port of Burgas and then overland to the Greek Aegean port of Alexandroupolis, bypassing the congested Bosphorus Straits. The construction is estimated to take around two years to complete.

The chair of Burgas-Alexandroupolis Bulgaria project company Stefan Gunchev told Bulgarian Klasa daily earlier this year he expected project costs to exceed 1.2 billion euro ($1.62 billion), up from previous estimates of 800 to 900 million euro. Through this company Bulgaria is one of the shareholders in the Dutch-registered Burgas-Alexandroupolis project company that will build the 280-kilometre pipeline.

Under an agreement that took 14 years to sign, Bulgaria and Greece will each have 24.5% of the pipeline. Russian oil pipeline monopoly Transneft, state-controlled oil producer Rosneft and Gazprom Neft, the oil arm of gas export monopoly Gazprom, will share the 51% Russian stake among themselves.

The project company is to choose a financial consultant among Societe Generale, Lazard Ltd and Citigroup later on Friday, officials from the Bulgarian Energy Holding company, a recently created megastructure compising power generation and transmission capacities in the country, told SeeNews.

“Discussions are going on at the moment,” Gagauzov said.

He dismissed any likelihood of Bulgaria's government extending financing for the project, or Russia giving money for the project in return for increasing its share in it. Gagauzov has previously said that Bulgaria could sell parts of its stake in the project.

Neither of the parameters of the deal has been changed, said Gagauzov, but added that an environment study of the project, which has raised public concern in Bulgaria, is yet to be completed.

“The pipeline is designed to carry between 30 [million] and 50 million tonnes of crude per year,” said Gagauzov.

The Burgas-Alexandroupolis route could compete with another major oil pipeline project planned in southeastern Europe, the AMBO pipeline. AMBO is designed to transport Caspian and Russian crude oil via Bulgaria, Macedonia and Albania to the Ionian coast and then to northern Europe and the U.S. East Coast.

($ = 0.739 euro)