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Russia in pipeline war with Bulgaria1


Published: 17 June 2010

Gazprom, the Russian state-owned gas monopoly, has excluded Bulgaria from
its planned South Stream pipeline, apparently in retaliation to Sofia's decision to
scrap an oil pipeline designed to circumvent the Bosphorus strait, the Russian
daily Kommersant writes today (17 June).
Kommersant has learned that the offshore section of the South Stream pipeline
would now be diverted to reach Romania instead of the Bulgarian port of Varna
as initially planned.
The intention is that the pipe would run across Romania instead of Bulgaria,
punishing Sofia for undelivered promises.
Plans to eliminate Bulgaria from South Stream were first reported by the
Russian press last October (EurActiv 20/10/09) and were later confirmed in
February (EurActiv 19/02/10).
The final straw came with Bulgaria's surprise withdrawal from a Russia-
sponsored project for an oil connection running under the Black Sea.
Meeting with EU ambassadors in Sofia on 11 June, Bulgarian Prime Minister
Boyko Borissov announced Sofia's withdrawal from the Burgas-
Alexandroupolis oil pipeline.
The announcement came as a big surprise to observers, and even to the country's
energy minister, Traicho Traikov, who said he did not believe the statement was
true.
The planned pipeline, led by Russian firms, is designed to provide a short cut to
Greece's Aegean coast from the Bulgarian Black Sea coast, thereby relieving
tanker congestion in the Bosphorus and the Dardanelles.
Borissov explained that the decision was a result of environmental concerns, as
Bulgaria did not want an ecological disaster similar to the one affecting the US
in the Gulf of Mexico.
Greek leftist MPs commented that Bulgaria's decision was the result of US
political pressure. Forbes magazine also commented that the move had come
following a two-day visit to Sofia by CIA Director Leon Panetta, the result of
which was seen as a major geopolitical tilt by Bulgaria from Moscow to
Washington.

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In any case, Russia's decision appears to be unambiguous, with Gazprom CEO


Alexei Miller holding talks on Wednesday with Romanian Economy Minister
Adrian Videanu and the heads of gas companies Romgaz and Transgaz, one of
which is expected to become the Romanian partner in the South Stream project.
As Gazprom sources explained, in the course of a few months, it had become
possible to design a route for South Stream across Romania.
Gazprom sources told Kommersant that building South Stream across Romania
and Slovenia to Italy would be commercially more attractive, as it could be built
in parallel with a planned oil pipeline, namely Constanta-Trieste.
POSITIONS
Bulgaria's hopes of becoming a regional power strongly allied with the USA have caused it to pull out
of planned large-scale Russian energy projects in the Balkans, according to Alexei Fenenko, senior
analyst at the Institute on International Security Issues (RAN), quoted by Bulgarian news website
Novinite.
Fenenko points out that Russian experts believe the recent statement by Borissov is the result of US
pressure on the Balkan nations.
"Yet, the problem is deeper. The breakup of Yugoslavia and the worsening of the US-Turkish
contradictions have given Bulgaria hopes of becoming a regional power. In order to achieve this goal,
Sofia wants to become a stronghold of the American influence in Southern Europe. This leads to an
increase of anti-Russian elements in Bulgaria's policies," says Fenenko, recalling the signature of
Bulgarian-US agreements for allowing America to use Bulgarian military bases near the Black Sea.
He concludes that the withdrawal of Russian energy projects logically completes this process.
Fenenko says Russia must continue to fight to preserve its "Bulgarian resource" but it should also
consider three alternative partnerships – with Turkey, Romania and Hungary.

BACKGROUND
Bulgaria is key to the planned Gazprom-ENI South Steam gas pipeline project, which
would run from the Black Sea's Northern Caucasus shore to the Bulgarian port city of
Varna.
Russia recently signed agreements with Italy, Bulgaria, Greece, Serbia and Slovenia to
start building South Stream, and also announced that it would more than double its
planned capacity from 31 billion cubic metres per year (bcm/y) to 63 bcm/y (EurActiv
18/05/09 and 25/05/09).
The South Stream project is seen as a rival to the EU's planned Nabucco pipeline and its
commissioning term is also nearly identical to the EU-favoured project.
Until now, Nabucco and South Stream's capacities were considered identical (30 bcm/y),
making South Stream potentially more interesting.
South Stream will avoid Ukraine by running under the Black Sea to Bulgaria, with one
branch going to Greece and Italy, and another one to Romania, Serbia, Hungary,
Slovenia and Austria, ending at the Baumgarten gas storage facility. In January 2008,
Austrian energy company OMV and Gazprom signed a deal to turn the Baumgarten
trading platform into a 50%-50% joint venture.
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