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Gazprom launches South Stream construction in Bulgaria

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(Globalpost/GlobalPost)

Construction began Thursday constructing the Bulgarian stretch of Russia's South Stream pipeline, which will bring Russian gas directly to Europe, making it less vulnerable to price disputes.

"We are launching today the construction of the Bulgarian section of South Stream," Alexei Miller, CEO of Russian gas giant Gazprom, said in Sofia as he watched a live broadcast of two giant pipes being welded together near the northwestern Bulgarian village of Rasovo.

"The pipeline is a key element for all of Europe's energy security as gas shipments will be made directly from Russia to Bulgaria and the European Union, eliminating transit countries," he added.

Bulgaria receives all its natural gas from Russia, but until now it all ran through Ukraine, causing severe shortages during price spats between Moscow and Kiev in recent years.

On Thursday, Gazprom and Bulgaria's state-owned energy holding BEH also signed a long-discussed protocol regulating funding for the gas link and putting its cost at 3.5 billion euros ($4.8 billion).

Previously it had been estimated at around 3.1 billion euros.

The project will be fully financed by Russia with Sofia agreeing to pay back its share by using transit fees once the pipeline is in operation.

The 540-kilometre (336-mile) Bulgarian section is expected to be completed within two years, with the first gas shipments scheduled to flow in December 2015, Miller said.

"We put great importance in this project and we will continue to cooperate for its implementation," Bulgarian Prime Minister Plamen Oresharski added.

Gazprom and BEH also agreed Thursday to grant third-party access to the pipeline, which was a key requirement of the EU's internal market regulation.

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http://www.globalpost.com/dispatch/news/afp/131031/gazprom-launches-south-stream-construction-bulgaria