Bulgaria gets cold feet over South Stream

One day after Sofia officially lent its backing to the Nabucco pipeline project, Russia said it was “unpleasantly surprised” by Bulgaria’s announcement to freeze its participation in the Gazprom-favoured South Stream project, a rival of Nabucco.

The Russian side was “unprepared” for Bulgaria’s change of position on South Stream, Russian agency Prime TASS reported today (14 July) after Bulgaria’s incoming Prime Minister Boyko Borissov requested the outgoing government to freeze major energy deals until he takes over the country’s leadership. 

In a letter to Bulgaria’s current energy minister Petar Dimitrov, published on his party website, Borissov requests the outgoing government to “temporarily stop” negotiations over the country’s participation in major energy projects, including South Stream and the construction of a new nuclear power plant at Belene (see EURACTIV 03/09/08). 

Vladimir Bruter, an expert at the Moscow-based International Institute for Humanitarian and Political Sciences, said Borissov has always adopted pro-Western positions, sharing the EU’s energy security objective of reducing dependence on Russian gas. 

Bruter said Borissov’s position should not come as a surprise to Russia and that Moscow should better get used to the idea that the new Bulgarian leader will keep his distance from Moscow. Vitaliy Kryukov, an expert at IFD Kapital, a financial holding, said that a change of positions or a slowdown in building South Steam could become “painful” for Russia. 

Gazprom wants South Steam to be launched ahead of Nabucco, Kryukov argues, and if this target is not met, Gazprom would lose part of its market, he explained. 

He further added that the new government in Bulgaria would understandably try to obtain better conditions for the country’s participation in the project. But Kryukov does not expect Russia to make any concessions, Prime Tass writes. 

Background

Bulgaria's centre-right GERB party, which is built around the personality of Boyko Borissov, the current mayor of Sofia, won the national elections by a landslide on 5 July (EURACTIV 06/07/09). 

Borissov will be the country's next prime minister in a cabinet to be formed in the next few days. 

Bulgaria is key to the South Steam gas pipeline project, which is planned to run from the Black Sea's Northern Caucasus shore to the Bulgarian port city of Varna. The Gazprom-ENI South Stream project is seen as a rival to Nabucco and its commissioning term is also nearly identical to the EU-favoured project. 

Russia recently signed agreements with Italy, Bulgaria, Greece, Serbia and Slovenia to start building South Stream, and also announced that it would more than double its planned capacity from 31 billion cubic metres per year (bcm/y) to 63 bcm/y (EURACTIV 18/05/09 and 25/05/09). Until now, Nabucco and South Stream's capacities were considered identical (30 bcm/y), making South Stream potentially more interesting. 

A branch of the planned South Stream pipeline is expected to run through Serbia and Hungary to Austria, ending at the Baumgarten gas storage facility. In January 2008, Austrian energy company OMV and Gazprom signed a deal to turn the Baumgarten trading platform into a 50%-50% joint venture. 

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