BULGARIA 'COMMITS' TO RUSSIAN SOUTH STREAM PROJECT

Bulgaria is expected to commit Thursday to participate in the Russian South Stream gas pipeline project with signing the final contract.

Alexey Miller, CEO of Russian energy giant Gazprom, has arrived in Bulgaria late Wednesday evening, but declined to offer any comments to reporters gathered at Sofia International Airport.

The contracts are expected to be signed before noon Thursday. On Wednesday, Prime Minister, Boyko Borisov, asked the media to not sabotage the talks, and pledged to give a press conference at 11 am Thursday.

Borisov and Economy and Energy Minister, Delyan Dobrev, said on several occasions that the priority for Bulgariawas to secure natural gas supplied from Russia at the lowest possible price.

The PM stressed Wednesday Bulgaria will seek a gas supply contract with Russian Gazprom for a period of 6+4 years. He explained that the contract, which is also to be signed Thursday, would be valid for an extra four years in caseBulgaria failed to produce sufficient gas on its own territory.

Meanwhile, Miller came up with a statement that the price of natural gas for Bulgaria and the construction of the South Stream gas pipeline were unrelated. He underscored that all necessary amendments to the contract had been made in 2012.

The cost of the project is estimated at EUR 16 B.

The South Stream pipeline is intended to transport up to 63 billion cubic meters of natural gas to central and southern Europe, diversifying Russian gas routes away from transit countries such as Ukraine. Construction will start in December 2012, and not 2013 as previously planned.

The pipes will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy. Recent reports have indicated, however, that Russian energy giant Gazprom may give up on the construction of the offshore section of the South Stream gas pipeline to Austria.

The Black Sea underwater section of South Stream between Russia and Bulgaria will be 900 km long, and will be constructed at a maximum depth of 2 km.

In order to service the supplies for South Stream, Russia will expand its own gas transit network by building additional 2 446 km of pipelines with 10 compressor stations with a total capacity of 1473 MW, a project to be called "South Corridor" and to be completed in two stages by 2019.

The construction of the South Stream gas pipeline will begin in December 2012, and the first supplies for Europe are scheduled for December 2015.

The pipeline's core shareholders include Gazprom with 50%, Italy's Eni with 20% and Germany's Wintershall Holding and France's EDF with 15% each.

Gazprom has already established national joint ventures with companies from Austria, Bulgaria, Croatia, Slovenia, Greece, Hungary and Serbia to manage the onshore section of the South Stream pipeline.