BULGARIA CONFIRMS COMMITMENT TO B-A OIL PIPELINE;

C O N F I D E N T I A L SOFIA 000632

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/05/2016
TAGS: ECON ENRG EPET ETRD PREL SENV BU
SUBJECT: BULGARIA CONFIRMS COMMITMENT TO B-A OIL PIPELINE;
QUESTIONS CHEVRON'S ROLE IN DECIDING OWNERSHIP SHARES

REF: A. A) SOFIA 310

B. B) SOFIA 202

Classified By: Amb. John Beyrle for reasons 1.4 (b) & (d)

ACTION REQUEST in Paragraph 4


1. (C) In separate back-to-back meetings, Bulgarian ministers
Roumen Ovcharov, Economy and Energy, and Asen Gagauzov,
Regional Development, told Ambassador Beyrle on May 5 that
despite Greek media reports, the Bulgarian government still
fully supports the Burgas-Alexandropolous (B-A) oil pipeline.
They said the GOB decided to revamp the Bulgarian portion of
the international consortium from its original seven member
group to a smaller one consisting of Bulgargaz and Universal
Terminal Burgas - which is owned by construction company
TechnostroyExport. Gagauzov said this change reflects the
current administration's desire for participation only from
companies with significant international and/or energy
experience. The original consortium members will be kept on
as sub-contractors. The GOB will inform the Greek government
of its commitment to B-A, said Gagauzov.


2. (C) Despite Ovcharov's assurances in January and February
(Reftels) that details of the agreement would be finalized
shortly, the three governments - Russia, Bulgaria and Greece
- have not yet come to a final agreement on investor shares,
oil supply, or who will control the terminal. Ovcharov told
us the three parties have agreed in theory that Russia will
take a 51 percent share in the overall consortium, while
Greece and Bulgaria each get 24.5 percent. Gagauzov said
Bulgaria had agreed to the 24.5 percent share, but noted that
Russia had proposed that Bulgaria and Greece take only five
percent. Gagauzov thought Greece had also rejected the
Russian proposal. Ovcharov will head to Moscow again on May
15, where he will discuss B-A and gas contracts, among other
issues.


3. (C) Gagauzov asked Beyrle if he could look into an
unsubstantiated report that Chevron - long-rumored to be
considering joining the Russian group - is requiring that
Bulgaria and Greece take the smaller five percent shares as a
condition of the American company's participation. Bulgaria
welcomes the involvement of Chevron, but questions whether
this is really the U.S. group's position, and, if true, would
be disturbed at being forced to take a smaller share.
Gagauzov said Chevron would join a group of Russian/Kazakh
companies - Sibneft, Rosneft, TNK-BP, and KMG (Kazmoni Gas) -
who are meeting this month to resolve the Russian position.
Gagauzov also said the GOB would welcome American investment
for its Universal Terminal at Burgas.


4. (C) ACTION REQUEST: We continue to make the point to the
Bulgarians that we support any commercially viable Bosphorus
bypass, but clearly the viability of B-A is looking stronger
every day, at least relative to competing projects like AMBO.
The rumor about Chevron sounds more like Russian-sown
disinformation than anything, but we would appreciate any
update from addressees on B-A and the status of Chevron's
participation in it. END REQUEST
Beyrle