Unprecedented situation linked with South Stream project

БНР Новини
After the meeting, Sunday, with US senators John McCain, Ron Johnson and Christopher Murphy, Bulgarian PM Plamen Oresharski announced the suspending of South Stream until clarifying EC position
Photo: BGNES

Bulgaria found itself in unprecedented situation after it was threatened with sanctions by Brussels and Washington at the same time, because of the construction of the South Stream gas pipeline on Bulgarian territory. Moscow described the actions of the Bulgarian government as “energy blackmail against Russia”. Western media commented that the pressure exerted over Bulgaria turned successful, while Russian media blame the USA for making a smashing blow against the South Stream project. The events in Bulgaria had a sharp turn in just a day and even the Bulgarian people could not realize what exactly happened.


Bulgaria’s Premier Plamen Oresharski ordered suspension of the South Stream pipeline until the country negotiates with Brussels about the construction of the project. It happened after the meeting of Premier Oresharski with three US congressmen who arrived on official visit to Sofia. Bulgaria’s Energy Minister Dragomir Stoynev said that the South Stream project was irreversible and was important for both Europe and Bulgaria and the current arguments regard the way it should be carried out. In his view, Washington opposes against the selected subcontractor only.


“The European Commission is to guarantee that the whole energy infrastructure and projects fulfilled in the EU including the South Stream pipeline would fully meet the European competition rules regarding public procurement orders in the power engineering field, etc. We have just initiated an infringement procedure against Bulgaria which proves that we mean no joke”, said EC President Jose Manual Barroso during the G-7 summit. To prove its intentions Brussels froze the EU funds granted to Bulgaria under several programmes. EU Commissioner for Consumer Protection Neven Mimica who pays an official visit to Bulgaria stood in Brussels support that the South Stream project diversifies only the gas routes, not the actual gas source, which is not an EU priority.


US Senator John McCain directly said after the meeting with Premier Oresharski that the USA would like to see Russia taking smaller part in the construction of the South Stream gas pipeline. US Ambassador to Sofia Marcie Ries has said that her country was deeply worried about Bulgaria’s decision to choose the Russian company Stroytransgas to build the pipeline on Bulgarian territory. Gennady Timchenko who is close to Vladimir Putin is one of the shareholders at the company which entered Washington’s blacklist during the Ukrainian crisis. Washington has warned Bulgaria that it would impose sanctions to all companies which enter in partnership with the Russian firm in question. The latter could affect the Bulgarian Energy Holding and each bank which decides to provide loan to the subcontractors of the South Stream pipeline.


Moscow contends that it would build the pipeline, despite the sanctions coming from Brussels. Even if the European banks refuse to provide financing, Russian energy giant Gasprom would pay the project estimated at over EUR 16 billion with own money. Moscow blames the EC in double standards, because the requirements placed over the South Stream did not apply to similar pipelines connecting North Africa with Spain and Italy for example. A Russian MP even described Bulgaria’s decision to suspend the construction of the South Stream pipeline as “energy blackmail against Russia” and accused Europe in “simulating activity and trying to solve the problem, but it was actually trying to force Moscow to transit gas through Ukraine only.”

Politicians and experts

Some people from the ruling Bulgarian Socialist Party were surprised by Premier Plamen Oresharski’s decision to suspend the project. GERB leader Boyko Borissov said that Premier Oresharski ruined a project which was important for Bulgaria, Russia and Europe. The price of the South Stream gas pipeline is six times higher than a similar pipeline in Germany, show estimates of former Minister of Economy and Energy in Borissov cabinet Traicho Traikov. The project costs EUR 3.5 billion and would create some 200 jobs only, says Mr Traikov. It is not clear whether a contract with the selected subcontractor was sighed, are there any forfeits in the possible contract and who would pay for these forfeits.

Pressure exerted from Brussels

Why Bulgaria? This is so, because this country is closest to the Black Sea where the water section of the pipeline connects to European territory. Brussels decided to grant some EUR 15 billion to Bulgaria for the next programming period 2014-2020 and along with the possible sanctions Bulgaria could also lose a lot of money under these EU funds. That is why it is worthy respecting the European energy legislation.

English version: Kostadin Atanasov

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