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Bulgaria in midst of 2 major oil projects.

The leaders of Macedonia, Albania and Bulgaria have signed a political declaration for the AMBO oil pipeline. The document represents a political guarantee from the three nations that would practically enable the U.S. consortium to secure financing for construction of the Bourgas-Vlore oil pipeline.

The next step calls for a project company to be created in the three nations which will own, construct and use the pipeline. Subsequently, they will establish an inter-state commission and an expert committee for the trans-Balkan oil pipeline. The AMBO project has been prepared for more than 10 years. Its value is estimated at around US$1.2 billion. The construction period is expected to last 30 months and start later this year. The total length of the pipeline is 894 km, of which 273 km will pass across Macedonia. Thus far, the AMBO consortium has secured around $900 million.

The project also will include oil storage facilities in the Bourgas and Vlore ports and four pumping stations: two in Bulgaria, one each in Macedonia and Albania. The greatest portion of the pipeline (50%) will run through Bulgaria, while Macedonia and Albania will get 30% and 20%, respectively.

The financial benefit to the three nations is estimated at $250 million. Macedonia would earn between $20-30 million only from the transit fees, depending on the quantity of oil. It would also get a share in the future company that would manage the pipeline, equivalent to the value of the state-owned construction land that Macedonia would cede to the pipeline.

Macedonia, Albania and Bulgaria are signing the document after three years of delays. Reportedly, the project was delayed because Bulgaria hesitated between AMBO and the competitive Bourgas-Alexandroupolis oil pipeline. Bulgaria now supports both, but which pipeline is going to be built depends on the major oil companies. AMBO says that the oil companies are on its side.

Each of the two trans-Balkans oil pipelines would have to be built very quickly, as the Bosphorus straits, which is currently used to ship Caspian oil, is becoming ever more narrow due to the increased production and demand of oil.

Meanwhile, a trilateral meeting between Russia, Bulgaria and Greece in Moscow also brought news of a push forward in the long-anticipated Bourgas-Alexandroupolis oil pipeline. An intergovernmental memorandum on building the oil pipeline that would connect Bourgas in Bulgaria and Alexandroupolis in Greece is to be signed shortly. The pipeline would carry Russian oil via Bulgaria to Greece. Its future capacity is still to be determined.

The cost of the oil pipeline project is estimated at approximately $700 million, and the feasibility study of the project exists in two versions. The first envisages construction of an oil pipeline with a capacity of 35 million tons of oil a year, and the second up to 50 million tons annually.
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Title Annotation:International
Comment:Bulgaria in midst of 2 major oil projects.(International)
Publication:Pipeline & Gas Journal
Geographic Code:4EXBU
Date:Mar 1, 2005
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