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28/08/2016

Gazprom’s South Stream: Romania in, Bulgaria out?

Europe's East

Gazprom’s South Stream: Romania in, Bulgaria out?

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Bucharest has given Russian gas monopoly Gazprom all the documentation relevant for building the South Stream pipeline through Romanian territory, it was announced yesterday (18 February). The move appears to give flesh to a recent Russian threat to eliminate Bulgaria from the project.

"The Romanian party confirmed the interest in participating in the South Stream project and provided the Russian party with the data requested earlier and required to prepare a feasibility study for a possible pipeline route across Romania," a Gazprom press release announced.

Few details have emerged and it remains unclear if the pipeline would now simply feature an extension from Bulgaria to Romania, or if plans to move the pipe north exclude Bulgaria. In recent weeks, Romania has been under strong pressure from Gazprom to join the pipeline project, as a possible alternative to Bulgaria. Sofia is indeed seen by Moscow as a problematic partner under the new centre-right government of Prime Minister Boyko Borissov (EurActiv 14/07/09).

"As far as Romania is concerned, I would like to say that no country with serious intentions as to its participation in South Stream will be left aside," Gazprom's executive director for exports, Alexander Medvedev, recently told the Romanian press.

"Romania has a wonderful strategic location on the Black Sea and could be the point of departure for the European section of the pipeline," he added. Until now, planned the point of departure had been the Bulgarian port of Varna (see 'Background').

Asked by EurActiv if the latest move to bring Romania into the project meant that Bulgaria would be sidelined, a Gazprom spokesperson declined to comment.

Delaying tactics?

Over the last few days, the Russian press has been fuming about Bulgaria's pipeline strategies. In particular, Russia took very badly the Bulgarian parliament's ratification on 3 February of an agreement to build Nabucco, seen by Moscow as a rival pipeline designed to decrease the dependence of several EU countries on Russian gas. Bulgaria became the second country after Hungary to ratify the Nabucco agreement.

"Bulgaria will try to delay as much as possible negotiations with Russia on South Stream, while following up the developments regarding Nabucco," Alexey Makarkin, director-general of the Centre for Political Technologies (CPT), told the Russian press.

"If everything with Nabucco were fine, then Bulgaria would just forget about the Russian pipeline, but if Nabucco gets stuck, for example, if its stakeholders cannot find financing, Bulgaria will come back to South Stream," Makarkin continued.

The expert did not rule out the possibility that the Russian authorities, tired of Bulgaria's procrastination, could modify the pipeline route, leaving Sofia empty-handed.

Bulgaria is also demanding that Overgaz, a private company with 50% Gazprom participation, must no longer be the intermediary for buying Russian gas.

Another reason why Moscow is looking for alternatives is Sofia's insistence that Gazprom pays higher taxes for transit across Bulgaria, reports Dnevnik, EurActiv's partner publication in Bulgaria. This was a factor in Moscow's decision to consider building the Black Sea terminal in Romania instead of Bulgaria, Russian daily Vesti writes.

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Background

Bulgaria is key to the planned Gazprom-ENI South Steam gas pipeline project, which would run from the Black Sea's Northern Caucasus shore to the Bulgarian port city of Varna. The 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. 

South Stream will avoid Ukraine by running under the Black Sea to Bulgaria, with one branch going to Greece and Italy, and another one to Romania, Serbia, Hungary, Slovenia and 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. 

Plans to eliminate Bulgaria from South Stream were first reported by the Russian press last October (EurActiv 20/10/09).

Timeline

  • 22-23 Feb.: Bulgarian President Georgi Parvanov to visit Brussels. On Tuesday he will meet European Commission President José Manuel Barroso and Council President Herman Van Rompuy.

Further Reading