Russia, Greece negotiate development of oil pipeline

(Source Article: Russia seeks pipeline deals with Greece - FT.com)

Today Russian president Putin made Greece an offer to become a transit hub for his country’s oil and gas exports; the offer seeks to revive a joint project for a 260km oil pipeline that would run from the Black Sea to the north Aegean.

Russia’s growth as a major international energy supplier has spurred its government into reviving the 12-year-old project in hopes of capturing a larger portion of the oil and gas markets. The pipeline, to be entitled Burgas-Alexandroupolis, would allow Russia to bypass Turkey’s Bosporus Strait – which is heavily trafficked – as well as boost Greece’s position as a transit point. Putin and leaders from Bulgaria and Greece pledged their full political support to finalizing an agreement before year’s end. (see Putin, Greece, Bulgaria agree to support pipeline project - Kyiv Post)

The pipeline will be constructed at a projected cost of US$1.3 billion; currently, negotiations aim to discern shareholdings in the pipeline – Russia is insisting on a controlling stake. All three countries, Russia, Greece and Bulgaria, will have stakes in the pipeline. Participants on the Greek side include state oil refiner Hellenic Petroleum and Prometheus, a private pipeline constructor.

Additionally, Russia aims to persuade Greece to double the capacity of a cross-border gas line from Turkey; the US is putting pressure on Greece to not accept Russia’s offer to expand the Greek-Turkish pipeline, and will offer a gas supply to the Mediterranean country. However, Greece has incentive to ignore the US, as it stands to lose its position in the pipeline network of Europe -- the EU’s Nabucco project, which will supply gas through Turkey and the Balkans, will reduce Europe’s dependence on Greece’s state-owned gas company. (see Gazprom’s project conflicts with EU priorities in Hungary - Eurasia Daily Monitor)