Bulgaria, Russia Ink Long-Anticipated South Stream Deal
Bulgaria and Russia have signed an intergovernmental agreement for the construction of the Bulgarian section of the South Stream gas transit pipeline in the presence of their Prime Ministers, Boyko Borisov and Vladimir Putin, in Sofia.
The two state delegations of Bulgaria and Russia formally signed the South Stream agreement, consisting of two documents, which had been prepared in advance in the past few weeks.
It was inked by the CEO of the Bulgarian Energy Holding (BEH), Maya Hristova, and the CEO of the Russian energy giant Alexei Miller.
The deal stipulates the establishment of a joint venture, South Stream AD, which will manage the construction and the operation of the South Stream gas transit pipeline on Bulgarian territory – which will be the most crucial land section of the pipe. BEH and Gazprom will each have a 50% share.
"I would like to thank Prime Minister Borisov for the invitation, our dialogue is a friendly one," Russian Prime Minister Vladimir Putin stated at the joint news conference of the two state leaders after the signing of the South Stream deal and two other intergovernmental agreements.
"The Russian-Bulgaria commercial and economic cooperation is doing well, we have already surpassed the volume from the crisis year 2009. Our relations are in various spheres but our most important ties are in the energy sector, and in this sense one of the most important projects is South Stream, in which countries like France and Italy also joined," Putin stated in Sofia.
"We have reached an agreement, and I would like to thank Prime Minister Putin for agreeing that the joint venture on South Stream will keep its funds in the Bulgarian Development Bank, which is 100% state-owned," Bulgarian Prime Minister Boyko Borisov said in turn.
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.
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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