Sofia and Moscow have agreed to establish a 50/50 joint venture by November this year for the building of the Bulgarian part of the Russian-led natural gas pipeline South Stream.

This was announced by Alexei Miller, chief executive officer of Russian energy giant Gazprom, following his meeting with Prime Minister Boyko Borisov and Turkey's Ambassador to Sofia.

In his short statement to the media Miller stressed that talks with Sofia over the implementation of the project have marked a considerable progress and expressed confidence that South Stream, which aims to bypass Ukraine in transporting Russian gas to Europe, will be put into operations in 2015 as scheduled.

Earlier in the day Miller also held talks with Minister of Economy and Energy Traicho Traikov, during which the minister was expected to make a new attempt to cut gas prices and sign a direct gas supply contract with Gazprom. The minister however said the topic was not on the agenda of the meeting.

Minister Traikov negotiated a gas price reduction during his talks with Russian officials in July and forecast that prices for industry and households will be "a few percent lower", but this did not happen to be the case.

Gazprom CEO was also expected discuss delivery of Russian natural gas and the signing of a contract, which will imply no intermediaries in the deal.

According to energy experts Bulgaria needs to back its demands by pointing out the newly discovered local deposits of gas near Kavarna and the agreements for construction of gas network connections with Turkey and Greece.

In July Russia and Bulgaria signed a roadmap agreement on Saturday to speed up the building of the gas pipeline on the Bulgarian territory.

Bulgaria however has had an uncertain stance on South Stream, which has led to an activizing on the part of the Russian side. Just Monday Russian press characterized Buglaria as the "problematic" country for South Stream.

Jut a day before Miller's visit to Sofia the Russian energy giant practically renewed its threats to replace Bulgaria with Romania as the primary transit hub of the South Stream gas pipeline.

Bulgaria has been committed to the execution of the EU-sponsored Nabucco gas pipeline project, which is widely seen as rival to South Stream.

Imports account for nearly 70% of the energy Bulgaria uses and Gazprom provides almost all of its gas.

The South Stream gas transit pipeline is supposed to be ready by 2015. Its construction is expected to cost between EUR 19 B and EUR 24 B. It will be transporting 63 billion cubic meters of natural gas annually, or 35% of Russia's total annual natural gas export to Europe.

The South Stream pipe will start near Novorosiysk on the Russian Black Sea coast, and will go to Bulgaria's Varna; the underwater section will be long 900 km.

In Bulgaria, the pipe is supposed to split in two - one pipeline going to Greece and Southern Italy, and another one going to Austria and Northern Italy through Serbia, Croatia and Slovenia.

The project was initiated by Gazprom and the Italian company Eni, and the French company EdF is also planned to join as a shareholder. It is seen as a competitor to the EU-sponsored project Nabucco seeking to bring non-Russian gas to Europe.

As early as April 2010, Russian Prime Minister Vladimir Putin announced that the French company EDF will also become a partner in the South Stream project. Back then he said that EDF asked for a 20% share, which, if granted, will probably leave Gazprom and Eni with 40% each.

At their meeting on Saturday in St. Petersburg, Berlusconi and Putin welcomed the idea of having German companies join in as shareholders. There is no indication as to how the joining of RWE or some other German company would re-apportion the stakes.

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