South Stream project gets new momentum in Bulgaria

18/10/2010

After talks with Bulgarian officials Friday, Gazprom's CEO said the meeting gave a "serious push" to the South Stream gas pipeline project.

(Various sources -- 11/10/10 - 18/10/10)

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"Today's meetings gave a serious push to the project," Gazprom CEO Alexei Miller said after meeting with Bulgaria's Boyko Borisov. "We achieved serious progress." [Victor Barbu/SETimes]

A Bulgarian-Russian joint venture to oversee the Bulgarian part of the South Stream gas pipeline will be set up in November, four months ahead of schedule, Gazprom CEO Alexei Miller said following "very fruitful" talks with officials in Sofia on Friday (October 15th).

"Today's meetings gave a serious push to the project," the head of the Russian energy giant said after meeting with Bulgarian Prime Minister Boyko Borisov.

In July, the two countries agreed that the joint company to operate the Bulgarian section of the pipeline would be established by February next year, the deadline for the completion of a technical and economic feasibility study for that part of the gas line.

Miller told reporters in Sofia that an agreement to launch that study would be signed with the Bulgarians within a week.

A joint project of Gazprom and Italian energy group ENI, South Stream is designed to carry Russian natural gas to Europe, bypassing Ukraine. According to plans, a 900km-long offshore segment will link the Black Sea ports of Novorosiysk in Russia and Varna in Bulgaria, where the pipeline will split into two branches -- a northwestern one ending in Austria and a southwestern going to Greece and Italy. Construction is scheduled to begin in 2013, at an overall cost of between 10 billion and 24 billion euros.

Many observers viewed Miller's visit as an attempt to renew Russian pressure on Bulgarian authorities to stop stalling in a bid to win additional benefits, such as preferential prices for Russian gas deliveries to their country. His trip to Sofia was preceded by numerous media reports that Bulgaria could be eliminated from the project and be replaced by Romania as the primary transit hub.

Two days before his trip to Sofia, Miller visited Bucharest and signed a memorandum of understanding with Romania's Transgaz.

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Konstantin Simonov, director of the independent National Energy Security Fund in Moscow, viewed that as an attempt "to use Romania as an instrument of influence on Bulgaria".

On the other hand, securing an agreement with Sofia, would strengthen Moscow's positions in gas talks with Ukraine later this month, showing authorities in Kiev that the South Stream project, which would circumvent their country, is realistic.

South Stream is considered a rival of the US and EU-backed Nabucco project, aimed at reducing Europe's reliance on Russian gas supplies. The planned 3,300km pipeline, which will run from Turkey to Austria via Bulgaria, Romania and Hungary -- bypassing Russia -- is designed to carry 31 billion cubic metres of natural gas from the Caspian region and the Middle East to Europe annually. The long-delayed project got a boost last month when three key international financial institutions agreed to start due diligence on loans totalling up to 4 billion euros.

Moscow has meanwhile been trying to boost South Stream's standing by getting more companies from key EU nations involved. Earlier this month, Russian Prime Minister Vladimir Putin and his Italian counterpart, Silvio Berlusconi, agreed to allow Wintershall, which is part of Germany's BASF, to join the project. About six months earlier came word that the French power company EDF would become a South Stream shareholder.

This content was commissioned for SETimes.com.
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