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EBRD investing US$ 50 million in oil pipeline to FYR Macedonia
The European Bank for Reconstruction and Development (EBRD) is lending US$ 50 million (€59 million) towards the construction of a new 221-km oil pipeline, linking the Greek port of Thessaloniki to Skopje, the capital of the former Yugoslav Republic of Macedonia. The pipeline, which will carry up to 2.5 million tons of crude oil per year, will reduce current transportation costs and secure the long-term supply of oil to FYR Macedonia, where demand is expected to increase from 1.25 million tons a year currently to 1.5 million tons in 2006.
The total cost of the project is US$ 105 million (€122 million). Hellenic Petroleum, the largest industrial company in Greece, together with Aegek, a Greek construction group, will contribute US$ 55 million. It is expected that US$ 25 million of the EBRD loan will be syndicated to the National Bank of Greece. Initially, the finance will go to El Pet Balkiniki, a subsidiary of Hellenic Petroleum. In due course, the assets and obligations relating to the pipeline will be transferred to a special pipeline operating company to be established jointly by the government of FYR Macedonia, which will own 20 per cent, and El Pet Balkiniki, taking 80 per cent.
The pipeline, which will run from Hellenic Petroleum’s facilities at Thessaloniki to the OKTA refinery in Skopje, will replace existing methods of transportation, mainly by rail. The rail system runs alongside the Vardar River, an important wildlife habitat that flows through FYR Macedonia and Greece, and into the Aegean Sea. The new pipeline will be built away from the Vardar, to protect its sensitive local ecosystem, passing instead through agricultural land agreed to be of limited ecological importance.
Henry Russell, EBRD Country Director, said: "It is essential that FYR Macedonia has access to a reliable source of oil. This pipeline provides a cheaper and more environmentally sound alternative to the current road and rail transportation. The course of the new pipeline reduces dramatically the risk of an oil spill into the Vardar River."
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