Bloomberg News

Bulgaria May Sell Stake in Black Sea Pipeline, Stanishev Says

February 08, 2007

Bulgaria may sell its stake in a Russian-Bulgarian-Greek company that will build an oil pipeline to bypass Turkey's clogged Bosporus and Dardanelles straits, Prime Minister Sergei Stanishev said.

Bulgaria will hold a 24.5 percent stake in the International Project Co., which will manage the construction and operation of the 700 million-euro ($910 million) pipeline. The pipeline will run from the Bulgarian Black Sea port of Bourgas to the Greek port of Alexandroupolis on the Aegean Sea.

``How we shall manage this part of the company, we shall decide at a later stage,'' Stanishev said in an interview in London today. ``There are different options, we can manage it on our own, or we can sell it to investors, if they are interested and the price is good.''

Russia ships oil from ports on the Black Sea through Turkey's Bosporus and Dardanelles straits to the Mediterranean. Turkish authorities have barred tankers longer than 200 meters from sailing through them at night. Fewer daylight hours in winter limits the number of ships that can use the waterways, and bad weather can clog them further.

The 285-kilometer (177-mile) pipeline's capacity is estimated at 35 million tons of crude oil a year. The project competes with a $1.2 billion, 895-kilometer pipeline project linking Bourgas with the Albanian port of Vlore and passing through Macedonia. It is managed by the U.S.-registered Albanian Macedonian Bulgarian Oil Corp. and would also carry 35 million tons of crude.

``Bulgaria's interest is to have as many pipelines, both for oil and natural gas, and electricity networks, as possible,'' Stanishev said. ``Once you have a pipeline, you have greater stability and security.''

Bulgaria will gain $35 million a year in transit fees from the Bourgas-Alexandroupolis pipeline, under a preliminary agreement signed by Russia, Bulgaria and Greece yesterday. Russia will get a 51 percent stake in The International Project Co., which will be held by OAO Gazprom Neft, state-run oil company OAO Rosneft and the state pipeline operator OAO Transneft. Greece will hold 24.5 percent in the pipeline, according to the agreement.

The Bulgarian stake will be held by Bourgas-Alexandroupolis Oil Pipeline Project Co. and the Greek stake by Hellenic Petroleum SA. (ELPE) U.S. and British investors have shown interest in Bulgaria's stake, Stanishev said. Bulgaria is in talks with Chevron Corp. (CVX:US) and KazMunaiGaz, Kazakhstan's national oil producer, to sell its stake in the Russian-Bulgarian-Greek pipeline, Dnevnik newspaper said on Dec. 15.

Russian President Vladimir Putin urged Bulgaria and Greece on Feb. 1 to speed up talks on the pipeline or lose their chance to transport Russian crude. His warning came a day after Bulgaria, Macedonia and Albania signed an agreement in the Macedonian capital Skopje to build the alternative AMBO pipeline. It is ready to start work next year if it raises 25 percent of the funds in equity participation from Western oil companies, AMBO president, Ted Ferguson, said Feb. 1.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editors responsible for this story: Chris Kirkham at ckirkham@bloomberg.net


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