EU-Gazprom deal clears Bulgaria of South Stream cancellation claims

The Beregovaya gas pumping facility in Russia, at the Black Sea. [Gazprom]

The Commission published Gazprom’s commitments on Monday (13 March) to end a five-year antitrust case and avoid heavy fines. As part of the package, Gazprom agreed not to seek any damages from its Bulgarian partners following the termination of South Stream.

In what appears to be a huge deal reached behind closed doors, the Commission agreed with the Russian gas export monopoly to remove restrictions for EU countries from Southern and Eastern Europe to re-sell Russian gas across borders.

Until now, bilateral contracts didn’t allow such trade, and in the case of Bulgaria, the implementation of the gas interconnector with Greece was hampered by certain provisions of the Gazprom contracts with both countries.

Five offers made for use of Greece-Bulgaria gas interconnector

Five binding offers have been submitted for the use of the natural gas pipeline between Bulgaria and Greece, the joint venture building the link said in a statement.

The deal needs to be approved in seven weeks’ time, and all interested parties – governments and companies – are invited to submit comments. Only then is the executive prepared to make the agreement binding. If Gazprom breaks its commitments, it can be fined up to 10% of its global turnover.

On a visit to Turkey on 1 December 2014, Russian President Vladimir Putin said South Stream was over, and that the 63 billion cubic metres per year of gas would be shipped to Turkey instead of Bulgaria, which according to the Russian leader, had blocked the project.

Russia says South Stream project is over

Russia scrapped the South Stream pipeline project to supply gas to southern Europe, without crossing Ukraine, on Monday (December 1), citing EU objections, and instead named Turkey as its preferred partner for an alternative pipeline, with a promise of hefty discounts.

South Stream was a Russian-sponsored project. As initially planned, the pipeline would run under the Black Sea to Bulgaria, and continue through Serbia with two branches to Bosnia and Herzegovina and to Croatia.

The European Commission put pressure on Bulgaria to freeze South Stream, citing breaches of EU law in the intergovernmental agreement for the construction of the pipeline.

Barroso warns Bulgaria on South Stream

Speaking after the EU summit held yesterday (27 May), Commission President José Manuel Barroso made it plain that the EU executive would impose infringements on Bulgaria regarding the Gazprom-favoured South Stream pipeline, the construction of which is about to begin in breach with EU laws.

In the meantime, Russia replaced South Stream with Turkish Stream (also known as Turk Stream), intended to bring Russian gas to the European territory of Turkey, under the Black Sea. It is unclear what route the gas would take beyond Turkey, but Gazprom has indicated it plans to use the Trans Adriatic Pipeline (TAP), part of the Southern Gas Corridor, to transport its gas to Southern Italy via Greece and Albania, under the Adriatic Sea.

EU gets wake-up call as Gazprom eyes rival TAP pipeline

Gazprom’s bid to tap into a pipeline meant to wean Europe off Russian gas threatens to undermine a pillar of European energy policy and slow plans to develop rival deposits in the eastern Mediterranean.

Bulgaria seems to regret having lost the South Stream project and the income from the transit fees. Russia keeps floating the idea of a “second pipe” reaching the Bulgarian Black Sea shore, but nothing has been decided yet.

euractiv.com asked the Competition Commissioner Margrethe Vestager if the decision to clear Bulgaria from cancellation claims could be interpreted to mean that the Commission is giving approval to a new version of the project.

“That’s another issue,” Vestager replied, adding that the agreement was not about the future of South Stream.

Experts told EURACTIV that the agreement between Gazprom and the Bulgarian Energy Holding (BEH) to set up the South Stream joint venture company contained the commitment that there could be a $70-million claim in case of cancellation.

“The commitment clearly specifies that the Russian side cannot claim back those 70 million, but also that it cannot it cannot claim any other damages relating to the cancellation of the South Stream project,” the expert said.

EURACTIV asked what was going to happen to the pipes destined for the offshore section of South Stream, which are stored in the Bulgarian ports of Burgas and Varna.

Pipes for South Stream keep arriving in Bulgaria

A ship flying the Bahamas flag, loaded with pipes for the South Stream gas pipeline, was stuck on Saturday (3 January) in shallow water, maneuvering in the Bulgarian port of Burgas, reports Dnevnik, the EURACTIV partner in Bulgaria.

The proposal doesn’t deal with the ownership of the pipes, according to the expert.

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