Athens.- Russia signed a long-delayed deal to build a Balkan oil pipeline with Greece and Bulgaria on Thursday which will carry Russian oil to the Mediterranean. The tripartite agreement to build the 280-kilometer pipeline was signed by Russian President Vladimir Putin, Greek Prime Minister Costas Karamanlis and Bulgarian Prime Minister Deigei Stanishev after nearly 15 years of delay because the Russians did not believe it.
Experts now believe that with the rise in oil prices, the project will bring cheaper Russian crude to the Mediterranean.
“Russia’s energy potential and the geographic location of Greece and Bulgaria open up excellent prospects of cooperation and this agreement will increase the good dialogue issue of energy interdependence,” Putin said.
For years the three countries had also disagreed on other key issues, namely who would be responsible for building the pipeline, transit fees and ownership of the terminals.
The 700-million-euro (US $924 million) oil pipeline will bypass Turkey’s busy Bosphorous Strait and will carry oil from Bulgaria’s Black Sea port of Burgas to the Greek port of Alexandroupolis.
The project is set to be completed by 2011 and 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 are transporting crude oil across the Bosphorus Straits, but increasingly congested traffic over the years has made the task environmentally unsafe.
The three leaders ensured that the construction and operation of the project would fulfil all environmental standards of safety.
“We will use the latest in technology and there is no doubt that we will be able to fulfil all ecological needs – we will do everything possible to ensure that the project is environmentally secure,” said Putin.
Karamanlis said the deal “will benefit all three countries, and it puts Greece and Bulgaria on the world energy map.”
“It will also help international markets with improved access to oil at a time when energy is a fundamental global concern,” he said.
The pipeline will initially carry 700,000 barrels of oil a day with the possibility of reaching more than 1 million barrels a day.
The project will be built and operated by a consortium of companies including Russia’s three main state oil producers Gazprom Neft, Transneft and Rosneft which will control 51 percent of the pipeline as well as Greece’s Hellenic Petroleum, Petroleum Gas and Bulgaria’s Bulgargaz with 24.5 percent each.
The pipeline will serve as a main rival to the new 2-billion-euro Baku-Ceyhan pipeline from Azerbaijan to the Mediterranean that bypasses Russian soil and will pump 400,000 barrels a day of crude oil to international markets.
Greece is also participating in a Turkish-Greek-Italian pipeline deal that will pump natural gas from the Caspian Sea and the Middle East to Europe by early next year.
On Monday, Matthew Bryza, U.S. deputy assistant secretary of state for European and Eurasian affairs, visited Athens and expressed support for the pipeline.
But he added: “Where we are focusing most urgently now is diversification of gas supply … away from its one primary supplier, Gazprom.”
U.S. officials want Greece to prioritize gas from Azerbaijan in a natural gas network being built from Central Asia to Greece through Turkey that is due to continue onto Italy after 2011.
U.S. State Department Spokesman Sean McCormack commented on Thursday on the signing of a tripartite agreement between Greece, Russia and Bulgaria, in Athens earlier in the day, on the construction of the Burgas-Alexandroupolis oil pipeline.
“I think that very basically we have no problem with agreements that do a couple of things: further the cause of diversifying supplies of energy for Europe and diversifying the means of transport of those supplies of energy. So this (Burgas-Alexandroupolis oil pipeline deal) certainly contributes to it. There are a number of other pipeline proposals that are on deck, and it is important that states of Europe as well as the energy suppliers — Russia as well as those in the Caucasus — work in a cooperative manner, that they act based on market principles,” McCormack said.
Responding to a question on criticism Washington addressed to Moscow in the past for using energy for political reasons, McCormack said: “There have been events in the past with respect to Ukraine and Georgia, as well as others, in the immediate border area of Russia that have caused concern.”