Bulgaria Govt Approves South Stream Joint Venture

Only days before a visit by Russian Prime Minister Vladimir Putin to Sofia, Bulgaria's Cabinet approved a joint venture to build and operate the Bulgarian section of the South Stream natural gas pipeline. The new business will be registered in Bulgaria and will be controlled on an equal-equity basis by state-held Bulgarian Energy Holding (BEH) and Russian gas giant Gazprom. The joint venture's capital will be sufficient to cover the respective stage of the project's development, Bulgarian Energy Minister Traicho Traikov said, without clarifying whether or not BEH will provide part of the funds.

Last week Bulgaria and Russia announced the launch of a tender for a feasibility study for the construction of the South Stream gas pipeline on Bulgarian territory, after months of uncertainty surrounding the project. The joint venture is expected to be signed when Russian Prime Minister Vladimir Putin visits Sofia on November 13. Putin will also discuss other large-scale energy projects in Bulgaria, including the Belene nuclear power plant and the Burgas-Alexandroupolis oil pipeline, with Bulgarian officials.

The South Stream gas transit pipeline is expected to be completed by 2015. It is estimated that its construction will cost between €19 billion and €24 billion. The pipeline will transport 63 billion cubic meters of natural gas annually, or 35 per cent of Russia's total annual natural gas export to Europe. In Bulgaria, the pipe is supposed to split in two, with one pipeline going to Greece and Southern Italy, and another going to Austria and Northern Italy through Serbia, Croatia and Slovenia. The project was initiated by Gazprom and the Italian company Eni, and the French company EdF has also indicated it may join as a shareholder. The pipeline is seen as a competitor to the EU-sponsored Nabucco project, which seeks to bring non-Russian gas to Europe.

News source: BalkanInsight link: article

Bulgaria hopes Putin visit will boost trade

While Sofia plans to use the high-level summit in Sofia to increase exports to Russia, economists are skeptical that the talks can changes matters overnight. Prime Minister's Vladimir Putin's scheduled visit to Bulgaria, which begins on Saturday, will concentrate on bilateral trade relations as well as major energy projects. Last week, Bulgaria's Prime Minister, Boyko Borisov, said Sofia needed to regain its former important position in Russian markets. Zhelyu Dobrev, chair of the Bulgarian-Russian Chamber of Commerce, said he also hoped for an increase in trade.

"In the next three years, Sofia could double its exports to Moscow to a billion US dollars per year and attract around 500,000 Russian tourists, compared to 245,000 last year," But some Bulgarian economists doubt high-level summits of this kind can do much to change trading patterns between countries overnight. “There’s no chance that the prime minister can say 'Let’s double exports to Russia' and that it will happen just like that," Petar Ganev, from the Institute for Market Economy, said.

In the Communist era, when Bulgaria was the closest Eastern European satellite to the Soviet Union, the Balkan country enjoyed a favourable position in Russian markets. But after the democratic changes in Bulgaria, exports to Russia fell drastically from a value of about 672 million US dollars in 1992 to only 91.5 million US dollars in 2002, ministry of economy data show. Since then, the downward trend has been slowly reversing. In 2009, the value of Bulgarian exports to Russia exceeded 415 million US dollars. By August this year, Bulgaria exports to Russia had reached a value of around 373 million US dollars, which was almost 54 per cent up on the same period last year.

News source: BalkanInsight link: article