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Bourgas-Alexandroupolis pipeline ground breaking put off until October 2009

Date: 21.10.2008

The construction of the Bourgas-Alexandroupolis pipeline, which will carry Russian oil to the Mediterranean bypassing the congested Bosphorus, will begin behind schedule in October 2009 and finish by 2011, Bulgarian Regional Development Minister Assen Gagaouzov told Reuters news agency in an interview.

Construction was due to start in end-2008 or early-2009 but are stalled by the selection of a financing bank, feasibility studies and other details, according to the minister.

"The Russian party has said that if other funding is not found, they are ready to provide the money. But our wish is to have an investment project with banks providing the funding," Gagaouzov said.

On October 17, the supervisory board of the international project company picked French bank Societe Generale financial advisor of the project over Lazard and Citigroup.

The financial crisis and the stiff loan market should not hinder the funding of the project worth between $600 million and $900 million under initial estimates, Gagaouzov said.

Analysts say the cost of the pipeline may soar high above a billion euro due to growing prices of building materials and rising inflation.

Bulgaria is open to negotiations on the sale of its 24.5 per cent stake in the project with interested parties such as US giant Chevron and Kazakhstan’s state-run company KazMunaiGas to maximise profits, Gagaouzov said.

Greece also holds 24.5 per cent in the pipeline, and the remainder belongs to Russia.

Talks on the Bourgas-Alexandroupolis oil project dragged for 14 years and it was only in 2007 that Bulgaria, Russia and Greece shook hands. The pipeline will carry 700 000 barrels a day when fully operational.

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