Putin seeks to breathe life into stalled Balkan oil pipeline

According to AFP, the three leaders want to reanimate a frozen plan to transport Russian oil by sea to the Bulgarian port of Burgas, and from there by pipeline to the Greek Aegean Sea port of Alexandroupolis. With an estimated cost of 900 million euros ($1.15 billion), the 280-kilometre (174-mile) 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. Tankers currently carry out this task via the Bosporus Straits, but traffic along the narrow waterway has intensified in recent years, raising congestion concerns. In addition, tanker accidents often endanger the environment and the safety of residential quarters on the banks of the Straits, which saw the transportation of 150 million tons of crude in 2005.

Drawn up 14 years ago, the pipeline project had been repeatedly shelved, most notably because Moscow doubted whether it made economic sense. But with the price of oil now reaching $75 a barrel, "the project has become much more viable," a Greek government source notes. Once completed, the pipeline will be able to handle up to 35 million tons a year, and shave an estimated $8 off transport costs per barrel.

The agreement requires the signatures of the Russian, Bulgarian and Greek governments.

"We assume that before the end of the year an agreement will be signed by the parties," a spokesperson for the Russian Industry and Energy Ministry said last week.

A multinational group of companies have lined up to cooperate in the project, including U.S. giant ChevronTexaco, the Russo-British joint venture TNK-BP, Rosneft and Sibneft of Russia, Bulgargaz and Terminal Universel Bourgas from Bulgaria, and Greece's Hellenic Petroleum, Promitheas Gas and Petrola.

The pipeline would also enable Moscow to maintain a hold on the transport of Caspian oil. In July, the leaders of Azerbaijan, Georgia and Turkey formally inaugurated a rival Baku-Tbilisi-Ceyhan (BTC) pipeline, a major U.S.-backed project that bypasses Russia.

"The Russians have pledged to assure a minimum delivery quota for the project to be viable for all parties involved," the Greek government source said, adding that in exchange, Russia will act as the consortium's dominant partner.

The Greek government had initially indicated that Bulgaria would be represented in Monday's talks by Prime Minister Sergey Stanishev.

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