Bulgaria, Russia vow to catch up on South Stream delay

Bulgaria and and Russian gas giant Gazprom promised on Monday to catch up on delays and launch work on the Bulgarian section of the South Stream natural gas pipeline by the end of the year.

"No doubt, the first gas on the undersea pipeline from Russia to Bulgaria will flow in December 2015," Gazprom chief executive officer Alexei 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 assured, after meeting Bulgarian Prime Minister Plamen Oresharski.

Bulgaria's Economy and Energy Minister Dragomir Stoynev said that the 3,600-kilometre (2,250-mile) pipeline, intended to bring Siberian gas to Europe under the Black Sea, remained a key priority for the country.

Bulgaria currently receives all of its natural gas -- about three billion cubic metres annually -- from Russia via Ukraine and has been among the worst hit by repeated Moscow-Kiev price spats in recent years.

"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," Stoynev pledged on Monday.

"We need to have final detailed site development plan, environmental impact assessment and front end engineering design by the end of this year and apply for construction permit," he added.

Bulgaria's embattled cash-strapped new cabinet however confirmed an acknowledgement made by the previous administration that it did not have the money to fund the 540-kilometre (336-mile) Bulgarian stretch of the pipeline.

"I want to say clearly that South Stream will be funded on a project principle -- there will be no state guarantees, no Bulgarian taxpayers' money will be spent for it," Stoynev said.

Miller highlighted that Gazprom was ready to provide the total funding of 3.1 billion euros ($4.0 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.

Gazprom has long tried to negotiate with the EU an exemption from its requirements for granting third-party access to any new pipelines built across the bloc.

And Stoynev highlighted on Monday that it was "important to determine the regulatory regime for this project, (to see) the concrete result of talks on the EU-Russia level."