Bulgarian Govt Gives Go-Ahead to South Stream Pipeline

Business » ENERGY | November 10, 2010, Wednesday // 14:05
Bulgaria: Bulgarian Govt Gives Go-Ahead to South Stream Pipeline Borisov and Putin are set for a crucial meeting on Saturday, November 13, 2010. Photo by BGNES

Bulgaria has finally dispelled any doubts about its commitment to the Russian-sponsored South Stream gas transit pipeline as the Borisov Cabinet decided to sign a shareholders' agreement with Gazprom for the construction of the project's Bulgarian section.

During its regular meeting on Wednesday, the government decided in favor of the setting up of a joint venture with Gazprom for the construction of the Bulgarian route of South Stream.

The actual agreement is to be signed during the upcoming visit of Russian Prime Minister Vladimir Putin to Sofia on Saturday, November 13, 2010.

Gazprom and the Bulgarian Energy Holding (BEH) each will have a share of 50% in the joint venture, which will manage the construction and the operation of the Bulgarian section of South Stream.

Last week, the Bulgarian Energy Holding and Gazprom have announced the start of a tender to select a company to carry out a preliminary investment study for the construction of the South Stream gas pipeline on Bulgarian territory.

The start of the tender was announced Thursday by the press office of the Bulgarian Energy Holding, a state-owned mega-structure.

The long-anticipated first specific step towards the realization of the Russian-sponsored project South Stream came after months of uncertainty about the fate of the project amidst rough talks between the Borisov Cabinet in Bulgaria and the Putin-led leadership in Moscow.

Russian Prime Minister Vladimir Putin will visit Sofia on November 13, 2010, for talks not just on South Stream but also on other large-scale energy projects – the Belene nuclear power plant and the Burgas-Alexandroupolis oil pipeline.

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 900 km long.

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.

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.

The ownership of the Russian-Bulgarian joint company to build and manage the Bulgarian South Stream section will be split 50-50%.

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Tags: South stream, gas transit pipeline, Gazprom, BEH, Bulgarian Energy Holding, Vladimir Putin
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