Russia, Greece, Bulgaria sign pipeline deal

Russia, Greece, Bulgaria sign pipeline deal

The planned 280-kilometer, pipeline would run from Burgas, on the Black Sea in Bulgaria, to Alexandroupolis, Greece, on the Aegean.

The intention would be for tankers carrying oil from the Novorossiysk terminal in Russia to offload their cargos in Bulgaria rather than passing fully loaded through the narrow waterway. On the other side, tankers would pick up the oil in Greece and carry it on to world markets.

That could allow companies to ship more oil from Russia and the Caspian Sea area via the Black Sea to international markets; volumes are now restricted by the capacity of the strait to safely handle tanker traffic.

"It's like floating through people's living rooms," Cliff Kupchan, an energy industry analyst and director at Eurasia Group, said by phone from Washington. From the decks of ships passing through the strait, he said, "You can literally see into people's homes. There is a real problem. It is narrow and windy."

In rough weather, tankers sometimes wait days for clearance from the Turkish coast guard to pass through the strait, considered one of the most critical half-dozen or so oil choke points in the world.

Various pipeline options to bypass the Bosporus have been in the works for years as oil production expands in the Caspian Sea basin. The Burgas-Alexandroupolis route was first proposed in the early 1990s. It will compete with the U.S.-backed Baku-Ceyhan route, which avoids Russia entirely.

Under the deal signed Thursday, a consortium of three Russian companies will own a 51 percent stake in the pipeline venture; Greece and Bulgaria will divide the remainder.

President Vladimir Putin of Russia, at the signing ceremony in Athens, praised the pipeline deal as allowing an overall increase in the volume of exports from Russia and Central Asia.

"The implementation of this project increases stability not only for the Balkans but also for the entire world," Putin said in remarks carried on Russian television. "It provides the possibility to expand supplies of energy to world markets."

Putin said the 600,000-barrel-a-day pipeline would be filled with oil from new developments in Russia and Central Asia without diverting supplies from other export channels. The pipeline is moderate in size by world standards. The Trans-Alaskan Pipeline, by comparison, has a capacity of two million barrels a day but now typically ships about half that.

A U.S. deputy assistant secretary of state, Matthew Bryza, visited Athens on Thursday and expressed support for the pipeline, The Associated Press reported.

Still, in the strategic game of energy pipeline placements in Eurasia, where European countries and the United States are trying to both increase the export of oil and loosen Russia's grip on the trade, a kind of slow-motion chess match spanning a decade already, Russian control of the Bosporus bypass pipeline is a mixed blessing for Europe.

While raising supply, it also increases reliance on energy exported via Russian- controlled pipelines. Russia already supplies about a third of the oil and 40 percent of the natural gas used in Europe.

For Russia, it provides another way around troublesome pipeline routes through former the Soviet states of Ukraine and Belarus.

"There's an element of a double- edged sword here," Kupchan said.