EC CLOSELY FOLLOWS THE SITUATION WITH SOUTH STREAM IN BULGARIA

closely follows situation south stream bulgaria

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15:47, 28.05.2014

The consortium Stroytransgaz won the bid for the construction of the Bulgarian section of South Stream gas pipeline. The results of the bidding procedure were announced on Tuesday 27th May. Stroytransgaz consortium comprises of Russian Stroytransgaz and the Bulgarian Gasproekt Jug, which includes some of the biggest constructing companies: Industrial Construction Holding, Technoexportstroy, Glavbolgarstroy, Ponsstroyengineering, PST Holding.

The project will cost approximately 3,5 billion euro and its implementation will start this year. Gazprom says that gas deliveries for Bulgaria from Russia will be less expensive after the project is completed.

The selection procedure for the contracting company for the Bulgarian section of the pipeline started at the end of 2013. 11 candidates from 9 countries submitted their offers and only three were shortlisted for the final selection stage.

Nearly 7 500 people will be employed and 410 Bulgarian companies will be contracted for the construction of the pipeline.

iban yonchev According to Ivan Yonchev, the executive director of the Bulgarian Energy Holding the project will boost the economic activities and will significantly influence employment in the Northern Bulgaria, which is one of the poorest regions in Europe.

Bulgarian Energy Holding (BEH) represents the country in the Bulgarian-Russian joint venture ‘South Stream Bulgaria AD’. Gazprom and Bulgarian Energy Holding set up on a par the South Stream Bulgaria AD joint project company to manage the implementation of the South Stream project in Bulgaria. BEH will use a Russian loan from Gazprom at the amount of 620 million euro and at an interest of 4,25% for the constructions of the pipeline. The loan agreement will include a grace period of 5 years, until 2019. The payback period wil be 22 years. Ivan Yonchev specified that the loan payments will be covered from the revenues BEH receives as owner in ‘South Stream Bulgaria AD’.

Leonid Chugunov, Head of the Gazprom Project Management Department has said that all European requirements for the bidding procedure have been met. He emphasized that there will be no risks for the environment neither during the construction, nor afterwards when the pipeline becomes fully operational.

The first gas supply via the new South Stream route is envisaged for late 2015.

The gas pipeline full capacity of 63 billlion cubic meters per year will be reached at the end of 2017.

The President of the European Commission, José Manuel Barroso said after the informal dinner of the EU leaders in Brussels on 27th May that the European Commission would react if Bulgaria did not observe the European legislation because of the South Stream Project. Earlier, on Tuesday 27th May, he spoke with the Bulgarian Prime Minister Oresharski. At the informal dinner, the EU leaders met to discuss the election of the new President of the EC, but the European energy policy was also on the agenda.

Barroso stated in the European Council on 27th May that the European Commission would act if it believed the energy market rules were not observed. According to the European Commission, such was the case with the agreements signed by Bulgaria.

“In fact I also expressed to the European Council members our opinion to the European Commission that some of the agreements that have been or are being negotiated on South Stream are in contradiction with the European Union rules. So we will act of course in that regard. And in fact today I have informed the Prime Minister of the intentions of the European Commission in that regard. We have to make sure that the rules of the internal market are respected' said José Manuel Barroso, President of the EC . "Because we believe we are putting at risk Bulgarian energy security and the European energy security if the respect of these rules is not observed. So we are fully aware of the situation, we are following it very closely for several months now", he explained. "I had no illusion about the fact that the European Commission will act any time we believe that the rules of the internal market, namely the rules for the energy are not being respected and for our point of view this is the case at least in the agreements reached by or done by Bulgaria”, Barroso added.