A deal that would build a pipeline linking Russian oil to the Mediterranean,avoiding the busy BosphorusStraitin Turkey,has been agreed.

Vladimir Putin, Russia'spresident, will attend a signing ceremony in Greeceon Thursday with Costas Karamanlis, Greece'sprime minister and Sergey Stanishev, the Bulgarian premier.

The 280km pipeline from Bulgaria'sBlack Sea portof Burgasto Alexandroupolis, northern Greece,was first conceived in 1993.

Costing $1.2 billion, the pipeline will be 51per cent Russian owned, leaving EU-members Bulgariaand Greecewith 24.5 per cent stake each in the venture. 

European dependency

The Russian consortium is made up of state oil company OAORosneft, Transneft, and a subsidiary of state-controlled gas giant OAO Gazprom.

They will be responsible for the infrastructure, pumping stations, storagefacilities and loading docks.

Claudia Kemfert, an analyst at the German Institute forEconomic Research, said: "Russiaalready provides Europewith a third of its oil and 40 per cent of its natural gas.

"You get a strengthening of supply, but it can createhigher dependency and other problems. You always have a trade-off ... to avoidthis we need more diversification on the supply side, and to be less dependenton Russian energy," Kemfert said.

"We need to look more to the global market ... butpipelines are not that flexible."

US interests 

The 90cm (36-inch) diameter pipeline will channel700,000 barrels of oil a day to Greece,and have a potential capacity of 1 million barrels. 

On Monday, Matthew Bryza, US deputy assistant secretary ofstate for European and Eurasian affairs, visited Athens and expressed supportfor the project. 

But he said: "Where we are focusing most urgently nowis diversification of gas supply ... away from its one primary supplier,Gazprom." 

US officials want Greece to prioritise gas from Azerbaijanin a natural gas network being built from central Asia to Greece through Turkeythat is due to continue onto Italy after 2011. 

In Athens,3,000 police have been deployed for Putin's visit, which coincides with plansfor a mass student demonstration in the Greek capital on Thursday.
 
Source:Agencies