Wednesday, June 13, 2012

Russia Buys Bulgarian Support for South Stream

Since coming to power in 2009, Bulgarian Prime Minister Boyku Borrisov has halted every Russian energy project in his country.  Before he was even sworn in, he asked former energy minister Petar Dimitrov to halt negotiation on all energy projects.  Since then, he cancelled his country's involvement in the Burgos Alexandroupolis pipeline, and the partially completed Belene nuclear power plant (one of the largest Russian energy projects in Europe).

As Andrew McDowall reports in his Financial Times blog, however, this has not landed Bulgaria in hot water.  One day after announcing suspension of the power plant, Bulgarian Minister of economy and energy Delyan Dobrev held meetings with Gazprom chief Alexey Miller.  At the end of the meeting, the leaders announced that Bulgaria would receive a price reduction for natural gas purchases of 11.1 percent for nine months.  This is a significant saving, since Bulgaria imports 100% of its natural gas from Russia.

Prime Minister Boyko linked the price reduction to the construction of South Stream.  He said that the only condition for the price discount was "honest and open relations" between the two sides, but that Bulgaria was ready to provide "full cooperation" for the South Stream project.  "You bring in pipes, you bury them underground, you take taxes, for many years, this is budget revenue for decades.  In short, full cooperation on the project," he told Darik national radio

By securing Bulgaria's cooperation, South Stream can speed up its construction plans, as Russian President Vladimir Putin has ordered.