Construction of a trans-Balkan pipeline due to carry Russian oil to Greece via Bulgaria is expected to start later than planned, in Oct. 2009 and would come onstream in 2011, a Bulgarian minister said on Friday.
After 14 years of negotiations and delays, the three countries agreed last year on building the 1.0 billion euro ($1.35 billion) pipeline which aims to bypass the traffic-clogged Turkish Bosphorus Straits.
Construction of the project, due to pump 700,000 barrels per day of Russian crude a year into the Aegean port of Alexandroupolis from the Bulgarian Black Sea port of Burgas, was previously expected to start in late 2008 or early 2009.
But Bulgarian regional development and construction minister Asen Gagauzov told Reuters that the three countries were yet to pick a bank to help them raise funding, prepare an updated feasibility study and work out the project details.
"We expect to be ready to start construction around September-October 2009," Gagauzov said in an interview. "To finish the project would take about two years, which means launching the pipeline in 2011."
The Dutch-registered Burgas-Alexandroupolis project company will pick a financial consultant between Societe Generale, Lazard Ltd and Citigroup by the end of this month, the minister said.
The global financial crisis and tighter credit conditions should not hinder efforts to raise funding for the project, which was initially estimated at between $600 million and $900 million, he said.
"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," Gagauzov said.
He said it was hard to say how much exactly the pipeline would cost as not all project details were clear yet and the estimated cost remained at around 1 billion euros.
Rising construction and raw material costs have made many energy projects more expensive worldwide. Some analysts say the price tag of Burgas-Alexandroupolis pipeline is likely to jump well above the currently estimated 1 billion euros.
"It (the cost) also depends on when we will launch the project because the longer we procastinate, the higher the price would become due to rising inflation," Gagauzov said.
He said Bulgaria was open to discussing selling parts of its 24.5 percent stake in the pipeline to interested parties such as U.S. oil major Chevron and Kazakhstan's state-owned KazMunaiGas but would only do it after the project was launched to maximize its profit.
The idea of selling the whole or parts of the stake was first raised several years ago but was later abandoned. Bulgaria and Greece will each have 24.5 percent of the pipeline.
Russian oil pipeline monopoly Transneft, state-controlled oil producer Rosneft and Gazprom Neft , the oil arm of gas export monopoly Gazprom, will share the 51 percent Russian stake and provide crude for the project.
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