Russia and Bulgaria signed a roadmap agreement on Saturday to speed up the building of the Russian-led natural gas pipeline South Stream on the Bulgarian territory. European Union member Bulgaria agreed to push ahead with the pipeline, which aims to ship up to 63 billion cubic metres of Russian gas per year under the Black Sea to central and southern Europe after Moscow committed to lower gas prices for Bulgaria.
Gazprom to directly supply gas to Bulgaria next year The signing comes a year after Sofia's centre-right government put Russian-backed energy projects on hold, saying it had to check whether they meet the national interest and EU agenda. South Stream was designed to bypass Ukraine in transporting Russian gas to Europe and is expected to become operational in 2015. It is a rival to the EU-backed Nabucco pipeline, designed to bring gas from central Asia and the Middle East.
The two sides also agreed on Saturday to sign a direct gas supply contract for Bulgaria by the end of the first half of 2011 which will imply no intermediaries in the deal. A draft should be prepared by August 15. "We are now speeding up the work on South Stream," Russian Energy Minister Sergei Shmatko told reporters. "We have no outstanding issues and we also put an end to the participation of intermediaries."
Bulgaria secures about 70 percent of its energy needs through imports. It gets almost all of its gas from Gazprom, its only nuclear power plant Kozloduy is Soviet-made and its only operational oil refinery is owned by Russia's LUKOIL. Under the South Stream agreement, Bulgaria and Russia plan to set up a 50/50 joint venture by February next year for the Bulgarian part of the pipeline, estimated to cost $835 million.
Gazprom's export chief Alexander Medvedev said a gas price reduction would take place this month. He would not elaborate. However, Bulgarian Economy and Energy Minister Traicho Traikov said prices for industry and households will be "a few percent lower."
Bulgaria also signalled it was willing to unfreeze the 2,000 megawatt Belene nuclear plant project and renegotiate the terms for its construction with Russia's Atomstroyexport. Prime Minister Boiko Borisov said Bulgaria and Russia are working to find a strategic investor for Belene - estimated to cost 7 billion euros ($8.97 billion) - by mid-September.
The warming towards Russian energy projects have irked Washington, who says the Balkan country should work more on diversifying its energy dependence on Moscow. Last week, the US Ambassador to Sofia asked what Bulgaria was doing to diversify its supplies if it was to go ahead with the South Stream and Belene and lobbied for Chevron's bid to start exploring for shale gas in the Balkan country.
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