Bulgaria suspends work on Russia gas pipeline at EU request

By bne IntelliNews June 9, 2014

Clare Nuttall in Bucharest -

 

Bulgaria has suspended work on the South Stream pipeline, which will carry Russian gas to Central and Southeast Europe, on the request of the European Commission. Prime Minister Plamen Oresharski said June 8 that work would not resume until his government gets the go-ahead from Brussels. 

“[T]he [South Stream] project will go forward only after we resolve all issues that Brussels has and agree on the project’s further implementation,” Oresharski said following a meeting with US senators in Sofia. “Depending on upcoming consultations with Brussels, we will decide the course of further work. I have ordered to stop construction until the procedure is agreed with Brussels.”

The EU requested on June 2 that Sofia suspend work on its section of the 2,380km South Stream pipeline, which will transport gas to the EU bypassing Ukraine. The project is increasingly out of sync with EU policy, as European leaders have backed Kyiv in the conflict between Russia and Ukraine, and imposed sanctions on Russia over its annexation of the Ukrainian province of Crimea.

However, this has caused a rift within the EU, as several countries - in particular Bulgaria - are heavily dependent on gas flows from Russia. Bulgaria currently imports almost all of the gas it consumes from Gazprom, with supplies routed via Ukraine. The South Stream pipeline is deemed to be of strategic importance to Bulgaria.

Sofia reacted with dismay in April when the European Parliament voted in favour of ending the South Stream project, as well as backing EU economic sanctions against Russia over its role in the crisis in Ukraine. Speaking after the vote, Bulgarian Energy Minister Dragomir Stoynev appealed to the European Commission to “take into account of the negative effects for each member state of its future actions."

However, the situation was further complicated by the choice of a consortium led by Stroytransgaz, a Russian company owned by Gennady Timchenko’s Volga Group, one of the companies subject to US sanctions, to build the Bulgarian section of the pipeline. 

The European Commission said June 3 that it had launched an infringement procedure against Bulgaria over its section of the South Stream pipeline. Chantal Hughes, the spokesperson for EU Internal Market and Services Commissioner Michel Barnier, told Bulgarian National Radio that there were concerns over the lack of transparency in awarding contracts to build the pipeline and advantages given to certain Russian and Bulgarian companies. 

“The Commission will... ensure that all energy infrastructure and projects in the European Union such as South Stream comply 100% with European rules on energy competition public procurements and so on,” European Commission President Jose Manuel Barroso said June 4. “We have just launched an infringement procedure against Bulgaria which shows that we mean business. Other infringements procedures related to other countries will follow if some of the obstacles to the respect of our internal market are not removed meanwhile.” 

Moscow has not yet received any official notification from Bulgaria about suspension of the project, Itar-Tass reports, citing the Russian energy ministry. However, the issue is expected to be discussed at a meeting between officials from the EU, Russia and Ukraine due to take place in Brussels today. 

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