South Stream: Opaque Deal Falling Through

Opinions | December 23, 2014, Tuesday // 12:12|  views

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Novinite's team is publishing brief daily comments about how 2014 unfolded in Bulgaria and elsewhere.
South Stream has determined political disputes in Bulgaria to a very large extent in 2014. Agreements among interested parties, however, remain undisclosed to this very day.
It was not until the end of the year when it emerged that no long-term contract for transiting Russian gas had been signed between Bulgaria and Russia to set out transit fees for our country, based on which the benefits of the project could be estimated. Only a connoisseur of Bulgarian political psychology could possibly answer the question how the construction of a mammoth infrastructure project worth billions of euro could be launched without a contract.
What is known for sure, however, is that potential foregone benefits for our country as of today remain solely hypothetical. All activities relating to the implementation of the project had been opaque, starting from the projected price of the Bulgarian section of the pipeline that increased by one billion euro for unknown reasons. This also holds true for suspected attempts by Russia to swing Bulgarian legislative decisions into its favour with the aim of taking the project out of the scope of the European Union’s energy legislation, thus banning third parties’ access to the pipeline. It also remains unclear what criteria had been used to select a Bulgarian company to build the national section of the pipeline.
Bulgarian Prime Minister Oresharski’s government halted work on the project on the country’s territory only after the European Commission intervened. After all, it was the proper decision for EU member Bulgaria to declare willingness to implement the project only if it complied with the EU’s law.
These developments led to President Vladimir Putin’s announcement that Russia was halting work on the project and was abandoning it. In fact, the decision was not that surprising. Russia’s economy had sunk into a deep crisis die to the slump in oil prices and the international sanctions against Moscow over the crisis in Ukraine. The Russian rouble had lost half its value as of the date the decision was announced.
Under these circumstances it was difficult to calculate the price of the pipeline in roubles. While South Stream was a project of great geostrategic importance to Moscow, it didn’t have much chances to considerably increase Gazprom’s market share in Europe.


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Tags: Bulgaria, Russia, oresharski, Putin, South stream, gas pipeline, project, EU, European Commission, Gazprom.


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