Bulgaria, Russia seal South Stream gas pipeline deal

SOFIA - Agence France-Presse

Bulgarian Prime Minister Boyko Borisov (R) and Alexey Miller (L), CEO of Russian energy giant Gazprom joke during the official signing of the contract for the South Stream pipeline in Sofia, Bulgaria, 15 November 2012. EPA photo

Russian gas giant Gazprom signed today in Sofia a deal allowing a major new pipeline to pass through Bulgaria on its way to Western Europe, stealing a march on rival EU-backed projects aimed at reducing the bloc's energy dependence on Moscow, AFP has reported.

"With the signing today of the final investment decision for the Bulgarian section of South Stream, we move towards the implementation of the project," Gazprom chief Alexei Miller said after inking the deal with the head of the state-owned Bulgarian Energy Holding (BEH) Mihail Andonov.

"Bulgaria will now become a big transit point of Russian gas to Europe," he added.

The 3,600-kilometre South Stream pipeline aims from late 2015 onwards to bring huge volumes of Siberian gas under the Black Sea through Bulgaria, Serbia, Hungary and Slovenia to Italy.

It and another new pipeline under the Baltic Sea to Germany, Nord Stream, bypass Ukraine and Belarus. Moscow has had angry disputes over transit fees with these countries in recent years, leading to supply problems in Europe.

The European Union meanwhile has sought to reduce the bloc's hydrocarbon dependence on Moscow by backing rival projects that aim to bring gas from Azerbaijan and the Middle East via routes that skirt Russia.

BEH and Gazprom had already set up in November 2010 a joint venture to plan, build and operate the 540-kilometre Bulgarian section of South Stream.

The pipeline will "give additional security to gas deliveries for the country," Bulgarian Energy Minister Delyan Dobrev said today.

Gazprom and its European partners -- Italy's ENI, France's EDF and Germany's Wintershall -- will begin work on the Black Sea section on December 7.

South Stream gas is due to start flowing from early 2015. It aims to bring an annual 63 billion cubic metres of gas to Europe by 2018. The estimated cost is about 16.5 billion euros ($21.1 billion).