Bulgaria's prime minister has surprisingly announced that it will
dump the Burgas-Alexandroupolis oil pipeline project over fears that it
is unprofitable and damaging for the country.
The statement comes a day after Russia warned that it may
indefinitely delay construction of the oil pipeline across Bulgaria and
Greece if Sofia does not complete its revision of the plan in the next
few months.
"There has to be a decision on the future of the project no later
than this fall," Russia's Energy Minister Sergei Shmatko told reporters
at the State Duma after a speech on the situation in the country's
energy industry. "It's quite possible that we will have to — not
terminate — but freeze the project."
Greece, which the European Union is saving from defaulting on its
foreign debt, has also recently called for the plan to move ahead as
soon as possible in anticipation of investment and future transit fees.
After it took office in July 2009, Bulgaria's new center-right
government of the GERB party made it clear it was going to reconsider
the country's participation in the three large-scale energy projects -
South Stream gas pipeline, Burgas-Alexandroupolis oil pipeline, and
Belene Nuclear Power Plant.
Construction of the line has been on ice even since after
Bulgaria's government balked at the potential environmental damage that
the pipeline could inflict on its resort-dotted coastline.
Three Bulgarian Black Sea municipalities - Burgas, Pomorie, and
Sozopol - have voted against the pipe in local referendums over
environmental concerns.
Municipalities neighboring Pomorie and nearby Burgas are also
harboring fears that the pipeline could damage their lucrative tourism
business, while environmental NGOs have branded the existing plans to
build an oil terminal out at sea a disaster waiting to happen.
Bulgaria, Greece and Russia agreed to build the pipeline between
Burgas and Alexandroupolis, taking Caspian oil to the Mediterranean
skirting the congested Bosphorus, in 2007 after more than a decade of
intermittent talks.
The agreement for the company which will construct the
Burgas-Alexandroupolis oil transit pipeline was signed by Bulgaria
during Russian President Putin's visit to Bulgaria in 2008.
The 280-kilometer pipeline, with 166 kilometers passing through
Bulgaria, would have an initial annual capacity of 35 million tonnes,
which could be later expanded to 50 million tonnes. Its costs are
estimated at up to USD 900 M.