Bulgaria opens doors to South Stream pipeline


Bulgaria and Russia have agreed that a final investment decision on the South Stream gas pipeline will be taken in November. Russia is speeding up construction of the pipeline, which will bring Russian gas through the Black Sea to Bulgaria and countries further west.

The final investment decision on the construction of the South Stream pipeline will be taken by 15 November. The announcement was made following a meeting in Moscow between Bulgaria’s newly-appointed Minister of Energy and Economy Delian Dobrev and the head of Gazprom Alexey Miller on 30 March.

Dobrev secured an 11% discount on the price it pays for Russian gas, effective from 1 April, for a nine-month period, ending December 2012.

Bulgaria depends on Russia for 89% of its petrol, 100% of its natural gas and all of the nuclear fuel needed for its Kozloduy nuclear power station which has two functioning reactors.

Asked to comment on the discount obtained by Sofia, Bulgarian Prime Minister Boyko Borissov said the only condition was "honest and open relations" between the two sides and that Bulgaria was ready to provide "full cooperation" for the South Stream project.

"You bring in pipes, you bury them underground, you take [transit] taxes, for many years, this is budget revenue for decades. In short, full cooperation on the project," he told Darik national radio.

Circumventing EU rules

But critics said that Bulgaria was in fact helping Russia to avoid playing by EU rules, by speeding up the conclusion of the Russia-Bulgaria South Stream agreement before 3 March 2013, when the Third Energy package enters into force with respect to non-EU countries such as Russia. This would allow Russia not to open the South Stream pipes to other operators.

Borissov said that if Germany has been free to open the doors to the Nord Stream gas pipeline, another Gazprom-favoured project, the same should apply to his country.

"When Germany lays down pipes, brings gas and its economy works, this is good. And when Bulgaria wants to have the same conditions, this is bad, is that what you mean," he replied to the reporter.

Borissov said he had discussed with "all EU leaders", including Commission President José Manuel Barroso and Energy Commissioner Günther Oettinger, and that no one has told him "a single word against South Stream".

The South Stream agreements are receiving criticism mainly from the Bulgarian centre-right "Blue Coalition", a union of small parties representing the former anti-communist forces.

Martin Dimitrov, co-president of the Blue Coalition, stated that the conditions of the agreement with Russia were unclear. In particular, he raised the issue of the pipeline's ownership, as well as its position within Bulgaria's existing network. The existing network is property of the Bulgarian state, but critics fear that the country would lose sovereignty over it, if it becomes part of the South Stream project.

Dimitrov also pointed out that it was unclear whether the gas transit taxes from South Stream would be added to the taxes which the country already receives, or whether it would substitute them.


The European Commission can allow South Steam exemptions from EU law, but South Stream has to bid for such exemption, Marlene Holzner, spokesperson to Energy Commissioner Günther Oettinger said today (2 April). But she insisted that such demand has never been made.

Holzner said she could not understand why the date 3 March 2013 has been referred to. The Third Energy package is fully in force since more than one year, se said, and any new pipeline that has to be built has to apply according to its rules.

She said that according to these rules, exemptions had been granted to two legs of the Nord Stream gas pipeline, but this has been done once the Commission had seen the plans.

She also explained that exceptions were only given to new pipelines to make sure that they are economically viable, and that exemptions were limited in duration. 

Nabucco and South Stream are competing proposals with similar timeframes.

South Stream is a Russia-sponsored natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, with one branch going to Greece and Italy, and another to Romania, Serbia, Hungary, Slovenia and Austria. Its planned capacity is 63 billion cubic metres per year ().

The key partner for Russia's Gazprom in the South Stream project is Italy's largest energy company, ENI.

Another pipeline in the project phase, Nabucco, does not enjoy the favour of Russian state monopoly Gazprom. It resembles South Stream, but is intended to diversify the EU's pool of supplier countries, bringing gas to Europe from the Caucasus and the Middle East to a gas hub in Austria, via Turkey, Bulgaria and Romania.

The construction of the pipeline is expected to start in 2013 and the first gas is expected to flow in 2017. As planned, the pipeline would carry 31 billion cubic metres bcm/y of gas.

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