20 Oct 2009 10:27

Burgas-Alexandroupolis pipeline funding arrangement may be altered - Transneft

MOSCOW. Oct 20 (Interfax) - Participants in the Burgas-Alexandroupolis oil pipeline project are looking at altering the funding arrangements, Mikhail Barkov, vice president of Russian pipeline operator Transneft , told Interfax.

"The agreement on the project was signed prior to the crisis, but the situation has changed since then," Barkov said.

He said project financing was still being considered, but that on Russia's part, funding by a narrower range of companies, for example by Transneft and Rosneft or Transneft and Gazprom Neft , was also being discussed.

The approximate cost of the project has not altered, Barkov said.

The project participants plan to discuss funding for the project this week.

Barkov said the feasibility study should be updated by the end of this year. "Then funding for the first phase will have to begin," he said.

The Burgas-Alexandroupolis pipeline will link Bulgaria's Black Sea coast with Greece's Aegean Sea coast, bypassing the heavy tanker traffic through the Bosphorus and Dardanelles.

The 300-kilometer pipeline will have capacity to ship 30 million tonnes. Capacity could ultimately be increased to 50 million tonnes a year. The project will cost $900 million.

Trans-Balkan Pipeline B.V. (TBP) is the project operator. A Russian consortium has a 51% interest in TBP, which will own the completed pipeline. The consortium includes Transneft (33.34%), Gazprom Neft (33.33%) and Rosneft (33.33%). The remaining 49% is held by Bulgaria's project company Burgas-Alexandroupolis BG (24.5%), Greece's Hellenic Petroleum and Thraki (23.5%) and the Greek government (1%).

Russia, Italy and Turkey signed a package of documents on the Samsun-Ceyhan pipeline, another alternative to the congested Bosphorus and Dardanelles in Milan on Monday.

Eni, Calik Holding, Rosneft and Transneft signed a memorandum of understanding to discuss certain economic and agreement terms for the Russian companies so that they may participate in the project. This concerns the supply of crude, which would secure the economic stability of the project.

Eni has been a participant in this project since 2005, when it purchased 50% in Trans Anadolu Pipeline Company (TAPCO), which was formed for the construction and development of the pipeline system.

The 555-km Samsun-Ceyhan pipeline will carry up to 1.5 million barrels a day.

Transneft's Barkov told Interfax that the memorandum envisaged a possible joint venture to build the pipeline.