Russia's Kommersant: Gazprom Surrendered to Bulgaria

Energy | November 1, 2013, Friday // 16:00|  views

The official ceremony for the launch of the construction works for the Bulgarian section of the South Stream gas pipeline took place on Thursday in Sofia. Photo by EPA/BGNES

The construction of the "most problematic stretch" of the South Stream gas pipeline, the one in Bulgaria, has been officially launched, according to Russian daily Kommersant.

In an article on Thursday's ceremony for the launch of the construction of the Bulgarian section of the conduit titled "Gazprom surrendered to Bulgaria", Kommersant says that Gazprom will have to reduce gas prices for Bulgaria and agree to major concessions as regards the terms of the loan to the Bulgarian Energy Holding (BEH).

"What is more, the agreement with Bulgaria says that other suppliers will also be given access to the South Stream gas pipeline, on which the EU insists and which Gazprom has never done so far for any of its projects," the Russian daily insists, as cited by the Bulgarian Telegraph Agency (BTA).

"Apart from that, taking into account the soured relations between Russia and Ukraine, the success of the South Stream gas pipeline, which bypasses Ukrainian territory, appears to be all the more significant," Kommersant says.

The publication also describes Thursday's official ceremony for the launch of the construction of the Bulgarian section, which was attended by Gazprom CEO Alexei Miller and Bulgaria's Economy and Energy Minister Dragomir Stoynev.

Miller is quoted as saying that the price of Russian gas for Bulgaria has plummeted to one of the lowest rates in Europe.

Gazprom does not comment on the official stance of the Bulgarian government saying that the two parties signed a protocol envisaging the option of granting third parties access to the capacity of the gas pipeline.

"The issue of whether the monopoly would win an exemption from the requirements of the EU's Third Energy Package was brought up at the early stages of work on the project. The company will otherwise be forced to reserve a part of the pipeline's capacity for potential alternatives suppliers, which means that it will definitely start generating losses," the Russian daily says.

Kommersant claims that Gazprom announced that talks with EU authorities on the matter were still underway.

"The rules of the Third Energy Package envisage half of the capacity of South Stream to be auctioned, so Gazprom will compete with the Shah Deniz consortium" Mikhail Korchemkin, Managing Director of East European Gas Analysis, is quoted as saying.

"Gazprom makes no secret of the fact that the main purpose of South Stream in view of the stagnant gas demand in Europe is to circumvent Ukraine," Kommersant points out.

The newspaper quotes Alexei Miller as saying that the South Stream gas pipeline will eliminate the risks related to transit once and for all and reminds that the Russian monopoly is currently in intense talks with Ukraine over the price of gas supplies to the country.

The article claims that if Gazprom fills the entire capacity of South Stream and Nord Stream, it will be able to quit transporting natural gas through Ukraine.

"However, Gazprom expected at an earlier stage that gas import in Europe would rise sharply by 2020 and was ready to use all transport capacity. Nowadays the company is gradually beginning to admit that these forecasts were wrong," Kommersant argues.

The Russian daily also quotes Gazprom Deputy CEO Valery Golubev as saying that the current situation allows the energy giant "to make a pause" as regards prospects of expanding the existing pipelines.

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Tags: Gazprom, South Stream gas pipeline, Alexei Miller, gas supplies, Economy and Energy Minister, Dragomir Stoynev, Bulgarian Energy Holding, BEH


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