President Vladimir Putin has bagged another huge energy contact: in exchange, Bulgaria will get access to Russian gas and reinforce its strategic position in the Balkans, while flexing its muscles on the European energy map.
An agreement at the last minute, after late night negotiations, allowed the signature of a 1.4bn euro contract, ensuring a gas pipeline project linking Russia and south-east Europe. The South Stream pipeline is the brainchild of Italy’s ENI and Russia’s Gazprom energy giants. Both companies plan to invest 10 billion euros in it.
Bulgaria and Russia will set up a joint company for the stretch of the gas pipeline passing through Bulgaria. Each will have an equal stake, and equal voting rights, in that company. Bulgaria stands to earn up to 400 million euros a year in transit fees.
But the project threatens the Nabucco pipeline, the European Union’s own project, which is planning to bring gas from central Asia, through Turkey, to European markets. The European Union wants to reduce the dependence of Europe on Russian gas. At the moment, one quarter of all European gas supplies come from Russia.
But the South Stream competitor will be capable of carrying 30 billion cubic metres of Russian gas to European markets every year.
Bulgaria has also signed an enormous four billion euro contract with Russian company Atomstroyexport for the construction of a nuclear power station in Belene, on the Danube in the north of the country.
It marks the first nuclear cooperation between Russia and an EU member country. The new nuclear plant will be operational by 2013.
It will allow Bulgaria to regain its position as a major exporter of electricity in the region. It lost that ability after the EU ordered the closure of the Kozlodouy nuclear reactor a year ago amid security concerns. The shutting down of Kozlodouy was a condition of Bulgaria’s EU membership.
Bulgaria’s political opposition has lobbied against the pipeline deal. It has accused the government of being a Trojan horse for Russia, into the heart of Europe in a bid to increase its political might in the Balkans.