Bulgaria Deals Russia Setback Over Gas Pipeline Project

Views on BG | June 10, 2014, Tuesday // 10:00| Views: 1183 | Comments: 5
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Bulgaria: Bulgaria Deals Russia Setback Over Gas Pipeline Project Photo by EPA/BGNES.

From Financial Times

 

Bulgaria's prime minister has halted work on a new Russian-led pipeline that would provide a route around Ukraine for Russian gas into Europe, dealing a setback to Kremlin efforts to strengthen its hold on EU energy supplies.

The pipeline project, known as South Stream, would bring Russian gas from the Black Sea to Austria through Bulgaria, circumventing the substantial Ukrainian pipeline network that serves as the conduit for most of the gas sent to Europe by Russia's state-controlled Gazprom.

Brussels, which has long viewed South Stream as at odds with its efforts to diversify the bloc's gas supplies, last week launched an investigation into the project, citing questions about how public contracts were awarded.

Meanwhile, EU and US officials have raised geopolitical concerns about Sofia moving ahead with the project at a time when Ukraine crisis has heightened tensions between Moscow and the EU over Russian gas.

South Stream would increase Moscow's leverage over Kiev by allowing it to threaten a shut-off without the risk of imperilling supplies to customers in central Europe. Construction on the Bulgarian branch of South Stream was to begin this month.

"[This] shows that we mean business," said José Manuel Barroso, the European Commission president, in announcing the inquiry.

Plamen Oresharski, Bulgaria's Socialist prime minister, said he would suspend construction to ensure the plan complies with EU law. "We have received a request from the European Commission, after which I ordered the works suspended," Mr Oresharski said, according to Russia's Itar-Tass news service. "Further actions will be clear after additional consultations with Brussels."

US diplomats have expressed particular concerns over the use of Russia's Stroytransgaz as a contractor on the project; the consortium is controlled by Gennady Timchenko, a Russian businessman sanctioned by the US after Russia's incursion into Ukraine. The announcement came after Bulgarian officials met a US delegation led by Republican Senator John McCain.

"The political pressure is intense," said one EU official. "It's not a surprise this was announced after a meeting with McCain and a few other Americans."

Sabine Berger, a spokesperson for EU energy commissioner Günther Oettinger, said Brussels welcomed the Bulgarian decision and was ready to discuss the project with authorities in Sofia. "This is an important step in response to the concerns raised by the commission last week," Ms Berger said.

Still, Bulgaria's energy minister, Dragomir Stoynev, said he believed the project would eventually move forward.

"If we look at the situation strategically and without emotions, the South Stream project looks irreversible and important for both Europe and Bulgaria," Mr Stoynev told Bulgarian state radio. "I am convinced that all pending issues will find a solution."

The decision to suspend the project came ahead of another round of negotiations over the price Kiev must pay Gazprom for Russian gas. Talks were set to resume Monday night. Gazprom has threatened to disrupt supplies until Ukraine's state-controlled Naftogaz pays off its arrears.

Before the current crisis, Ukraine was given deep discounts on gas prices to as low as 8 per thousand cubic metres; soon after Russia annexed Crimea in March, it ended price subsidies and Gazprom subsequently demanded 5. Officials are hopeful a compromise price can be reached in Monday's talks, before a Gazprom-set deadline of Tuesday.

Bulgaria, which joined the EU in 2007, has emerged as a flashpoint between Russia and the west because it is the only EU country to allow construction on South Stream to proceed on its soil. That decision has divided the government, with some in the Socialist party urging closer ties with the Kremlin while others, including small coalition partners, urging compliance with Brussels.

"The premier made a political statement to appease his foreign and domestic critics but he still needs cabinet approval before he can freeze the project," said Ilian Vassilev, a former Bulgarian ambassador to Moscow and an energy consultant. "A lot of the country's political and business interests are reliant on South Stream going ahead, so the government is looking very fragile over the issue."

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Tags: pipeline, Gunther Oettinger, Plamen Oresharski, Jose Manuel Barroso, EU, Gazprom, Ukraine, Russian gas, Bulgaria, South stream, Dragomir Stoynev
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» To the forumComments (5)
#5
Pussy Riot - 11 Jun 2014 // 07:48:44

T'storm,

That is the best!!

#4
Thunderstorm - 11 Jun 2014 // 02:32:24

These Russian propagandists are so boring and stupid... Everyone speaking English better than a chimpanzee can realise that what some (fake) Charley says is written by some Ruski holding fingers in his/her/its mouth out of excitement.

#3
Charley Sheen - 10 Jun 2014 // 23:56:45

Before scheduled any election the current government should act responsibly and complete the deal with Russia over the South stream project. It is a question of national pride! Senator McCain came to Bulgaria to lecture the government of Bulgaria how and with whom to do business. Who is he? nobody and he doesn't represent the interest of Bulgaria. Common people. It is clear that, 25 years ago USSR was our Foster parent, now is USA. Any relationship it should be base on mutual respect and territorial sovereignty! If America want to help Bulgaria, like they help Israel financially and militarily but not telling their government who to deal or not to, it is O.K. Again the point is-MUTUAL respect and interest! America and Europe are dependent on foreign oil and gas ,they do what is the best for them. Why Bulgaria shouldn't? The "secret" is the- world banks are making the big money they don't want to lose. They don't want Gennady Timchenko to profit . If Senators McCain's son ,wife or daughter was member of the board of directors of Gazprom then, USA will approve the deal. It is time to stop all this manipulation on the great people of Bulgaria!
USA imposed embargo on Cuba over 50 years ago, and in reality the people are suffering, not the government! Now with Ukraine the same game and the same goal-USA want to be a world police! All that is a game try to control countries, and never worked or bring any positive results. This is an issue for Bulgarian politicians to put on the table and tell EU and USA-we will do what is the best interest for Bulgaria! If we need to leave EU or Nato, so be it! How about Neutral?

#2
Optimistic. - 10 Jun 2014 // 17:33:13

EDC, maybe Bulgaria should exploit their 300 year reserves of shale gas that will make them completely energy independent.

#1
EDC - 10 Jun 2014 // 13:20:02

When Bulgaria and the rest of the Balkans have no GAS what will they do then cry to the USA ?
cry to the EU ? and then discover that the price is three/four times higher than before .
They can not see beyond the EU CASH FLOW THE EU MONEY TREE THAT fattens their bank accounts ,but will COST the PEOPLE their lives because they can not afford to keep warm .
Blinded by GREED .