Sofia says it will not contribute to the cost of the Russian-backed natural gas pipeline
Bulgaria Does Not Need South Stream, Expert Says
09/07/2013 - 4:36pm
Bulgaria does not need the Russian-backed South Stream natural gas pipeline, will not contribute to the cost and will only back it if it is seen as being in the economic interests of the Balkan country, a leading expert told New Europe on 9 July.
“Bulgaria does not need South Stream,” said Julian Lee, a senior energy analyst at London’s Centre for Global Energy Studies (CGES). “Even though the Shah Deniz consortium has selected TAP [Trans Adriatic Pipeline] over Nabucco West, Bulgaria will still have access to gas from Azerbaijan via TAP and the Interconnector Greece-Bulgaria [IGB], which could carry up to 5 billion cubic metres of gas per year, if necessary,” Lee said, adding that this is approximately twice as much as Bulgaria currently buys from Russian gas monopoly Gazprom.
“Its attitude towards South Stream seems to be very much like its earlier attitude towards the Burgas-Alexandroupolis oil pipeline. It will not contribute to the cost and will only back it if it is seen as being in the economic interests of the country,” the CGES expert said.
After meeting with Gazprom CEO Alexey Miller in Sofia on 8 July, Bulgaria’s Energy and Economy Minister Dragomir Stoynev assured Russia that South Stream remains a project of strategic importance for the Balkan country, but noted that Bulgaria will not cough up any cash for its section of the natural gas pipeline.
“We assured Mr. Miller that South Stream remains a strategic project for the country,” Stoynev said. “We will speed up work on South Stream as it is important to diversify our natural gas delivery routes and have direct deliveries from Russia without passing via third countries,” he said, referring to Ukraine. A dispute between Kiev and Moscow disrupted gas supplies to European countries twice before. Bulgaria was especially hard hit.
But he told local reporters that no state guarantees would be necessary for the project, declaring that Bulgarian taxpayers’ money would not be spent on it. “The government has always followed one basic principle – to defend the national interest in the context of the economy, the region and Europe,” Stoynev said.
Miller said Gazprom was ready to provide the total funding of €3.1 billion for the link and that Sofia will pay back by using transit fees once the pipeline is in operation.
Gazprom and the state-owned Bulgarian Energy Holding already set up in end-2010 a 50-50 joint venture to plan, build and operate the Bulgarian section of the pipeline expected to carry 63 billion cubic metres of Russian gas to Europe annually by 2015.
The Bulgarian section of the pipeline was planned to be started by the middle of the summer of 2013, but it has no environmental impact assessment and construction permit issued yet.
Bulgaria and Gazprom promised to catch up on delays and launch work on the Bulgarian section of South Stream by the end of 2013. “No doubt, the first gas on the undersea pipeline from Russia to Bulgaria will flow in December 2015,” Miller said. “The project has been implemented with certain delays from schedule ... We are however certain that the deadlines for the start of construction will be met,” Miller said, after meeting Bulgarian Prime Minister Plamen Oresharski.
Konstantin Simonov, head of the National Energy Security Fund in Moscow, told New Europe that TAP’s selection is good news for South Stream. He said South Stream received a boost after the Shah Deniz consortium in Azerbaijan picked TAP instead of Nabucco West to connect with the Trans Anatolian Pipeline (TANAP) to carry 10 billion cubic metres of Azeri gas through Greece and Albania to Italy. Nabucco West was seen more as direct competitor to South Stream’s markets.
“It’s good news for South Stream. But it doesn’t mean that South Stream will take this exemption from the Third Package, from the European Commission. That is why our main problem is not from Azerbaijan. Our main problem is from Brussels,” Simonov said.
He reminded that Russia has been trying to secure an exemption for South Stream from the regulations of EU’s Third energy package. One of the key requirements of the package is that third-party companies should be allowed to use 50% of all pipeline capacities to ship gas. Russian officials hope participating countries – Bulgaria, Serbia and Hungary – designate their respective stretches of the pipeline as national priority projects and then get EU to recognise South Stream as a trans-national project. “It is important to establish the regulatory framework of [South Stream], meaning a concrete result of the negotiations between Russia and the EU,” Stoynev said. EUROPE ON LINE
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