Economy Minister Traicho Traikov believes it is practically impossible for Romania to replace Bulgaria as the major Balkan hub of the Russian gas transit pipeline South Stream.

Fears in Sofia about such a scenario were raised by a memorandum signed Wednesday in Bucharest between Gazprom and the Romanian company Transgas.

According to Russian analysts and media, this move was aimed at pressuring Bulgaria to fulfill its promises for the realization of South Stream.

It might have produced the desired results as on Friday Gazprom CEO Alexei Miller and the Bulgarian government agreed to set up a 50/50 joint venture for the construction of the Bulgarian section of South Stream.

"Romania could also benefit from South Stream. As far as the fears that Romania will replace Bulgaria in the project are concerned, I think the chance of that happening is insignificant," Traikov told the 24 Daily in an interview shortly before his meeting with Alexei Miller.

Russia and Romania first started talks for that in June fueling fears in Bulgaria that Romania's inclusion into the project – combined with Macedonia's accession for which talks are under way - might allow the Russians to go around Bulgaria as a result of the Borisov Cabinet balking at two other large-scale Russian-sponsored energy deals – the Belene NPP and the Burgas-Alexandroupolis oil pipeline.

While Russia sought to refute such fears by saying that Romania will only be supplied with gas through South Stream, and most likely will not be a transit country, recent publications in the Russian media interpreting a statement by Italian PM Berlusconi that Bulgaria was creating difficulties for the project continue to fuel suspicions that Moscow might swap Bulgaria for Romania.

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 a recent meeting 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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