Bulgaria to Amend Russian South Stream Deal to Fit EU Law

Business » ENERGY | November 15, 2010, Monday // 16:00
Bulgaria: Bulgaria to Amend Russian South Stream Deal to Fit EU Law Russian PM Putin with Bulgarian PM Borisov in Sofia, Saturyday, Nov 13. 2010. Photo by BGNES

Bulgaria is to amend its original 2008 South Stream gas transit pipeline deal with Russia in accordance with what is described as "advice" from the European Commission.

After on Saturday Bulgarian PM Borisov and his Russian counterpart Vladimir Putin signed in Sofia two documents for setting up a joint venture for the construction of the Bulgarian section of South Stream, an EU spokesperson announced Monday that EU executive is pressing Bulgaria to make sure that third-party companies are given access to South Stream to the future pipeline.

An agreement on gas transit signed by Bulgaria and Russia in 2008 'needs to be changed to be in line with European law,' European Commission spokesperson Marlene Holzner, speaking for EU Energy Commissioner Guenther Oettinger.

'We have a principle which says third-party access, which means that energy infrastructure ... needs to make sure that other companies can also use this pipeline and we'd like to see this stated very clearly' in the Russian-Bulgarian agreement, Holzner said as quoted by DPA.

She made it clear that Bulgaria has given assurances that the 2008 agreement will be modified to come into line with EU rules. The verbal promise came after the commission wrote to Sofia in April to ask about the gas deal, without reply, she said.

EU rules say that pipelines must, in general, be made open to all companies which want to use them. However, firms building new pipelines can reserve some capacity for their own uses, as long as they ask for commission clearance first.

The EU is keen to bring more competition to its energy markets and reduce its dependence on Russia for imports of natural gas. South Stream, which would bring gas across the Black Sea, is a Russian-led project designed to bypass the traditional transit route of Ukraine.

Holzner has assured that the EC remains committed to the construction of South Stream's competitor, the EU-sponsored pipeline Nabucco, which also passes through Bulgarian territory, because Nabucco provided for diversifying the energy sources for Europe – something which South Stream fails to do.

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.

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Tags: South stream, Nabucco, Russia, gas transit pipeline, EC, European Commissioner, Marlene Holzner, Guenther Oettinger, EU, Vladimir Putin, EU law

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