Bulgarian Part of South Stream Venture to Cost 500 Million Euros

Bulgaria’s participation with OAO Gazprom in a joint venture to run the Bulgarian section of the planned South Stream gas pipeline to Europe will cost as much as 500 million euros ($682 million).

“The contract we signed is beneficial to Bulgaria,” Prime Minister Boiko Borissov said in an interview with private BTV television station today. “Against an investment of between 400 million and 500 million euros in the joint company, we’ll get a return of some 2 billion euros.”

Russia’s gas export monopoly signed an agreement with Bulgaria’s Energy Holding during Russian Prime Minister Vladimir Putin’s Nov. 13 visit to Sofia for a 50-50 partnership. The venture will design, build and operate the section of the gas pipeline, with construction slated to start in 2013. The link under the Black Sea, which bypasses Ukraine, may carry 63 billion cubic meters of gas a year to the European Union.

Bulgaria may eventually get 2 billion euros a year in transit fees from the South Stream gas pipeline, according to Putin and Borissov. Bulgarian Energy and Economy Minister Traicho Traikov said in an interview with Nova television station today that the “realistic estimate of South Stream transit fees for Bulgaria is around 250 million euros a year.”

“It probably will be possible to earn 2 billion euros in transit fees from South Stream, but it won’t be in a year,” Traikov told the Sofia-based television station today.

Backing Nabucco Too

Bulgaria earns some 130 million euros in transit fees from the existing Soviet-era pipeline that passes through Ukraine and Romania to ship Russian gas to Turkey, Greece and Macedonia, Traikov said today.

Gazprom pumped 13 billion cubic meters of the fuel via Bulgaria in 2009, Miller said. Bulgaria consumed 2.2 billion cubic meters of that in 2009.

Bulgaria is also backing the OMV AG-led Nabucco pipeline project, which aims to bring gas from the Caspian Sea region and the Middle East to Austria via Turkey, reducing Europe’s reliance on Russian fuel.

The South Stream project may be completed four months earlier than its current target of Dec. 31, 2015, as work is ahead of schedule, Gazprom Chief Executive Officer Alexei Miller said on Nov. 13.

Editors: Mike Anderson, Todd White.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James Gomez at jagomez@bloomberg.net

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