Bulgaria to Pull Out of Joint Oil Pipeline Project

By Kerin Hope and Theodor Troev in Sofia

The Financial Times

Bulgaria “is no longer interested” in a project to build an oil pipeline from the Black Sea to the Aegean following the environmental damage caused by the oil spill in the Gulf of Mexico, according to Boyko Borissov, prime minister.

Mr Borissov made clear in an interview with the Financial Times that Bulgaria intended to pull out of a three-way partnership with Russia and Greece after an environmental impact study for the project is completed early next year.

He spoke ahead of what were expected to be tough negotiations on Tuesday with visiting Russian officials on joint energy projects and the price of gas purchased from Gazprom, Bulgaria’s sole supplier.

A former senior police officer and ex-coach of Bulgaria’s national karate team, Mr Borissov promised to stand up for the interests of the European Union’s poorest member state after his right-of-centre party was swept into office at last year’s general election.

“After the Mexican Gulf spill, I don’t think it would be safe for tankers to unload at an offshore terminal in an area where much of our tourism takes place,” he said.

The 285km pipeline between Burgas on the southern Black Sea coast and Alexandroupolis on the north Aegean coast was intended to help reduce tanker traffic on the crowded Bosphorus waterway.

“The pipeline would bring in no more than €35m annually from oil transit fees but it would put at risk our €10bn-a-year tourist industry,” Mr Borissov said.

Officials said Bulgaria may avoid paying a penalty under the terms of the trans-Balkan partnership if it pulls out on the basis of a negative environmental assessment.

Mr Borissov said he intended to seek substantive cuts in natural gas prices charged by Russia at talks with Viktor Zubkov, Russia’s first deputy prime minister, and Alexander Medvedev, Gazprom’s head of exports.

From this month Bulgarian households will pay 28-30 per cent more for gas under a deal made by the previous Socialist government that cut price discounts for Gazprom’s use of the Bulgarian network to ship gas to Greece and Turkey.

Mr Borissov said: “Germany buys gas from Gazprom at almost half the price Bulgaria pays ... so does Turkey. Why should the same gas get cheaper after it leaves Bulgaria and enters Turkey?”

He said Bulgaria paid 5 per 1,000 cubic meters for gas, compared with 0 paid by Germany and 5 by Turkey for gas that transits Bulgaria, citing figures published by East European Gas Analysis, a US consultancy.

Bulgaria has turned to Greece and Turkey to help reduce its dependence on Russian gas, signing agreements to build a pipeline from Greece to carry Azeri gas and to make use of a liquefied natural gas terminal in Turkey.

Mr Borissov said Bulgaria was still committed to making a €400m-€500m investment in South Stream, a Russian project to build an undersea natural pipeline across the Black Sea and ship gas through the Balkans to central Europe.

Tuesday’s talks will also focus on reviving a Russian-backed project to build a 2,000 megawatt nuclear power plant at Belene on the Danube river to produce electricity for export. Bulgaria had offered Serbia an equity stake in the plant, Mr Borissov said

The €10bn project stalled after Germany’s RWE group, a minority shareholder, withdrew over concerns about financing.

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