Greece and Russia agree to begin pipeline construction

Dec 6, 2006, 12:34 GMT

Athens - Greece and Russia agreed on Wednesday to begin construction by the end of the year on a long delayed oil pipeline linking the Black Sea to the Aegean.

Greek Prime Minister Costas Karamanlis met with visiting Russian Deputy Prime Minister and Defence Minister Sergei Ivanov and the two men expressed their political willingness to advance the project by the end of the year.

Ivanov, who arrived on Tuesday for a two-day visit, also met with Greek Foreign Minister Dora Bakoyiannis and President Karolos Papoulias.

Greece, Russia and Bulgaria agreed on the deadline for the construction of the oil pipeline, which will run from the Bulgarian port of Burgas to the Greek Aegean Sea port of Alexandroupolis, during a trilateral summit in September 2006 in Athens.

The 280-kilometre pipeline has been repeatedly stalled since it was first drawn up 13 years ago, namely because the Russians did not believe it could be economically viable.

Experts now believe that with the rise in oil prices, the project could at last become a reality by bringing cheaper Russian crude to the Mediterranean and ensure Moscow's hold on the region's energy market.

For years the three countries have also disagreed on other key issues, namely who would be responsible for building the pipeline, transit fees and ownership of the terminals.

All sides have agreed to speed up the creation of an international project team and to sign an intergovernmental agreement to support the pipeline project by year's end.

At a cost of 900 million euros (1.2 billion euros), the Burgas- Alexandroupolis pipeline is designed to reduce the cost and time of transporting Russian oil from the Caspian Sea to Europe and the United States.

Currently thousands of tankers transport crude oil across the Bosphorus Straits, but increasing congested traffic over the years has made the task environmentally unsafe.

Once completed, the pipeline would be able to transport some 35 million tons of crude oil a year.

Greece is also participating in a Turkish-Greek-Italian pipeline deal which will pump natural gas from the Caspian Sea and the Middle East to Europe by early next year.

The project also stands to include many of the top oil companies in the world, including the US Chevron Texas, Russian-British TKK-BP, Russian Rosneft, Bulgargaz and Universal Terminal Bourgas from Bulgaria, and Greece's Hellenic Petroleum, Promitheas Gas and Petrola.