Varna Plans Revolt against Russian-sponsored Gas Pipeline

Business » ENERGY | July 14, 2013, Sunday // 17:31| Views: | Comments: 0
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Varna Plans Revolt against Russian-sponsored Gas Pipeline: Varna Plans Revolt against Russian-sponsored Gas Pipeline Map of the South Stream gas transit pipeline project. Map from south-stream.info

Residents of Bulgaria's Black Sea city of Varna are preparing to stage a protest rally against the joint Russian-Bulgarian South Stream natural gas pipeline project.

They have prepared 9 questions to Russian gas giant Gazprom's CEO Alexey Miller regarding the environmental impact of the pipeline.

Varna people, whose houses are just 2 km away from the pipeline and will be directly affected by it, have sent an open letter with the questions. They say they are ready for civil unrest and are expecting the reaction and the opinion of Ivan Portnih, the newly-elected Mayor of Varna, who ran on the ticket of the formerly-ruling Citizens for European Development of Bulgaria party, GERB.

On July 8, Miller was in Bulgaria for talks with Prime Minister, Plamen Oresharski, and the Minister of Economy and Energy, Dragomir Stoynev.

Miller explained then that the first volume will reach Bulgaria in December 2015 and Gazprom will invest EUR 3.1 B for the Bulgarian section with plans to include many Bulgarian companies in the works.

Stoynev assured Russia that the South Stream gas pipeline remains a project of strategic importance for Bulgaria.

On Tuesday, July 16, the management of the project company South Stream is arriving in Varna to lead a direct dialogue with citizens and present the environmental impact assessment report in an attempt to convince them the gas industry is clean and ecologically safe.

The listed advantages include new job openings (at least 2 500) in Varna, where the unemployment rate is at record high despite the summer season; increased and stable profits for the port of Varna of at least EUR 30 M initially, compensations for land owners, investments in satellite industries, and additional profits and local business boom over the hundreds of engineers and construction workers expected to arrive in the city to work on the project.

Russia says Bulgaria will not have to shell taxpayers' money for the pipeline.

However, the entire gas pipeline is expected to cost a minimum of EUR 16 B, of which the EUR 3 B for Bulgaria, pledged by Miller, are actually a loan from Russia. The loan will be repaid by Bulgaria giving up on transit fees for 15 years.

In April, Bulgaria's caretaker Prime Minister, Marin Raykov called for a new and more in-depth analysis of the project.

The South Stream pipeline is intended to transport up to 63 billion cubic meters of natural gas to central and southern Europe, diversifying Russian gas routes away from transit countries such as Ukraine. Construction started in December 2012 in Russia.

The pipes will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy.

The Black Sea underwater section of South Stream between Russia and Bulgaria will be 900 km long, and will be constructed at a maximum depth of 2 km.

The pipeline's core shareholders include Gazprom with 50%, Italy's Eni with 20% and Germany's Wintershall Holding and France's EDF with 15% each.

Gazprom has already established national joint ventures with companies from Austria, Bulgaria, Croatia, Slovenia, Greece, Hungary and Serbia to manage the onshore section of the South Stream pipeline.

The pipeline is expected to carry the first gas supplies before 2015 and reach full capacity in 2018, providing 10% of European gas supplies.

A number of experts have already questioned the profitability of the pipeline on the backdrop of increasing competition and reduced interest in Russian gas supplies in Europe. Some also add Russia's attempt to circumvent the Ukraine at all costs makes South Stream more of a political than a business project.

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Tags: Varna, GERB, Ivan Portnih, South Stream gas pipeline, Gazprom, underwater, Black Sea, gas supplies, Russia, transit fees, Marina Raykov, caretaker, Prime Minister, South stream, natural gas, Alexey Miller, Plamen Oresharski, Russia, Gazprom, Dragomir Stoynev
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