Russia, Greece, Bulgaria to sign oil pipeline deal

ATHENS, March 12 (Reuters) Russian President Vladimir Putin will visit Athens to sign a long-delayed Balkan oil pipeline deal with Greece and Bulgaria on Thursday, ensuring the flow of cheaper Russian crude to the Mediterranean.

Ending almost 15 years of negotiations that often saw the ambitious deal on the brink of collapse, the three nations have set aside differences to allow construction of the 280-km (174 miles) pipeline to begin.

The 700-million-euro oil pipeline between the Bulgarian Black Sea port of Burgas and the Greek Aegean Sea port of Alexandroupolis will bypass the congested Turkish Bosphorus Straits where tanker delays are costing oil companies nearly .0 billion a year.

It will also further strengthen Russia's influence in the European energy market, a move viewed with suspicion by the United States.

The deal will be signed by Putin, Bulgarian Prime Minister Sergei Stanishev and Greek Prime Minister Costas Karamanlis. It will the Russian leader's second visit to Athens in six months.

''This is a historic agreement with considerable benefits to all of us,'' Greek Development Minister Dimitris Sioufas said.

''For all the countries involved, but also for the energy markets in the Mediterranean and Europe.'' RUSSIA WEIGHS IN For years, the three countries wrangled over issues such as who would build the pipeline, ownership of the terminals and transit fees. Agreement was reached when Russia weighed in, saying three of its state-controlled firms would share a controlling stake.

Oil producers Rosneft and Gazprom Neft and crude oil pipeline monopoly Transneft will now share 51 percent of the pipeline, ensuring Russia is in command. Greece and Bulgaria will share the remaining 49 percent.

Sofia's stake will be handled by state firms Bulgargaz and Transexportstroy, but it could sell part or all of its share to oil majors such as KazMunaiGas or Chevron. Around 155 km (95 miles) of the pipeline will pass through Bulgaria.

Greek firms Hellenic Petroleum, Latsis group and the Greek unit of Gazprom, Petroleum Gas, will participate.

It will rival the new billion Baku-Ceyhan pipeline from Azerbaijan to the Mediterranean that bypasses Russian soil and will pump 300,000-400,000 barrels per day of Azeri crude to world markets by the year-end, rising to a million bpd in 2008.

The pipeline will initially carry 10 million tonnes of crude, reducing environmental risks from oil spills. It is designed to eventually reach 35 million tonnes about three years after its expected launch in 2009.

Greece hopes the project will turn it into a regional energy hub, especially after a Turkish-Greek-Italian pipeline pumping natural gas from the Caspian Sea and the Middle East to energy-hungry Europe will start operating by early next year.

The agreement to build the pipeline could also have a positive knock-on effect for another project, the Chevron-led Caspian Pipeline Consortium (CPC), which pumps oil from the Caspian Sea to the Black Sea.

REUTERS KR RS1734