Bulgaria’s Economy and Energy Minister Delyan Dobrev denied on October 1 a media report that claimed, at the weekend, that Bulgaria has agreed to waive transit fees for gas pumped through the South Stream pipeline in exchange for not footing any bills for construction costs.
The report, in Bulgarian-language news website mediapool.bg, claimed that the agreement was reached ahead of the formal signing next month, citing unnamed sources familiar with the talks. So far, Bulgaria has put up six million euro, half the capital of the joint venture between state-owned Bulgarian Energy Holding (BEH) and Gazprom, which will build and manage the section of the pipeline on Bulgarian soil.
Bulgaria’s share of the costs is 30 per cent, or 900 million leva (about 460 million euro), but the cash-strapped BEH and its gas subsidiary, Bulgargaz, cannot afford the price, the report said.
“This project will be paid for using outside financing, which in turn will be repaid with revenue from the transit fees,” Dobrev said, without offering further details.
South Stream is meant to pump up to 63 billion cubic metres of natural gas (when it reaches maximum capacity) via the Black Sea and South-Eastern Europe, bypassing Soviet-era pipelines on the territory of Ukraine. Moskow and Kyiv have often clashed about gas prices over the past decade, leading to suspended deliveries to Central and Western Europe in the winters of 2006 and 2009.
Critics of the project, however, say that it would only further deepen Sofia’s reliance on Russian energy imports – Bulgaria buys 85 per cent of its annual domestic consumption from Gazprom.
Short pipelines linking Bulgaria’s gas grid to that of its neighbours are meant to lessen that dependency, but progress has been slow. Of three such projects, only the inter-connector with Romania is under construction (since August), while the links to Greece and Turkey remain on the drawing board.
On September 30, grid operator Bulgartransgaz said that it expected those two projects to be completed a year behind schedule, at the end of 2014.
Later in the day, Dobrev said that the company was being overly cautious. “Bulgartransgaz presented only a plan. We are, however, working to speed up the interconnector links and have them operational by the end of 2013,” Dobrev told Reuters news agency.
Bulgartransgaz’s plan, still subject to approval by the State Energy and Water Regulatory Commission, envisions investment of 650 million euro in the country’s gas grid and storage facilities.