Putin leaves Bulgaria with a gas deal and a new puppy


15.11.2010 @ 09:24 CET

Russian prime minister Vladimir Putin left Sofia on Saturday (13 November) with two diplomatic presents: an agreement on a new inroad for his country's gas export monopoly Gazprom into the EU and a puppy given by his Bulgarian counterpart Boiko Borisov.

Mr Putin seemed so happy after the visit that he hugged and kissed the puppy on his way out of the government headquarters instead of leaving it to his aides.

Putin hugs a puppy from the Bulgarian shepherd breed which Borisov presented him with (Photo: Dessislava Vesselinova)

He is the fourth world leader to be presented with a Bulgarian shepherd dog, a favourite diplomatic tool which has also been given to US presidents George W. Bush and Barack Obama, and King Juan Carlos of Spain.

Earlier in the day, Alexei Miller, chief executive officer of Gazprom, and Maya Hirstova, executive director of Bulgarian Energy Holding (BEH), signed an agreement to set up a joint venture to build and run the Bulgarian stretch of South Stream, the pipeline intended to supply Russian gas to Europe across the Black Sea and the Balkan region.

Gazprom and BEH will each hold 50 percent stakes in the facility, construction of which is scheduled to start in 2013. The pipeline is intended to circumvent Ukraine, a transit country between Russia and Europe that Moscow deems problematic. Trade disputes with Ukraine have repeatedly led to cuts of Russian gas supplies to the EU.

"We proposed to build a pipeline system directly from the Russian coast to the Bulgarian coast and ensure stable energy supply to Bulgaria and southern Europe, and minimise and remove any transit risk," Mr Putin said after the deal was signed. "[The] material benefit for Bulgaria is obvious," he added, referring to the €2.4 billion sum that the country could stand to gain from the pipe each year.

The €10 billion pipeline is planned to run from Russia under the Black Sea, cross Bulgaria from east to west and then branch to Serbia and Hungary and to Italy under the Adriatic. Italy's energy company Eni is a partner in the project.

It is expected to transfer between 30 billion and 63 billion cubic metres of Russian natural gas each year. Bulgaria currently transports 17 billion cubic metres of gas annually to its Balkan neighbours.

South Stream is seen as a rival to the EU-sponsored Nabucco project, which will link Caspian Sea deposits with Europe and will also run across Bulgaria. It will provide an alternative supply for the Black Sea country, which is now entirely dependent on Russian gas.

Mr Borisov said he supports both projects and the European Commission earlier said that it does not consider them as rivals.

Mr Putin said other EU companies could join South Stream. Gazpron announced that German firms were interested in the project, and Electricite de France (EDF) agreed in June to acquire at least a 10 percent stake in it.

Mr Putin said that extending South Stream to Central Europe would make it unnecessary to increase the capacity of Nord Stream, the sub-Baltic pipeline from Russia to Germany that is already under construction.

"If something prevents us from doing this, we'll look at several options – to either enlarge our capacities in Northern Europe or to build another pipeline parallel to Blue Stream to Turkey and to Greece and Italy from there on," he said, referring to a pipe already linking Russia and Turkey under the Black Sea.

Mr Putin also criticised EU legislation that separates production and supply from network ownership. "Big players such as Gazprom and some European companies would not be allowed to build new gas infrastructure projects and infrastructure development would stall," he said. He warned against letting small and inexperienced companies "wedge into the major transit pipelines, putting an additional burden on the current prices".

Mr Borisov published the gas talk minutes on the Bulgarian government website in an evident move to pre-empt suspicions of his having conspired with Mr Putin away from his people and Europe. Dealing with Russia is a tough job for the former bodyguard, who has risen to prime minister on pro-European rhetoric and who likes to pose as a darling of EU leaders.

Mr Borisov's critics note that he has silently walked away from his initial threats to cancel all Russian energy projects in Bulgaria, which include construction of a second nuclear plant in the country and a planned oil pipeline to bypass the congested Bosphorus Strait in Turkey by linking the Bulgarian Black Sea port of Burgas with Alexandroupolis on Greece's Aegean coast.

Bulgaria wants Russia to lower its latest price offer of €6.3 billion for the plant that is to be built near the Danube port of Belene by €1.1 billion, economy minister Traicho Traikov said. The government says the initial Russian price of €4 billion was unrealistic as the cost would almost double when the essential auxiliary infrastructure and interest on loans for construction of the plant were included.

Mr Borisov squarely rejected the Burgas-Alexandroupolis project citing popular concerns that it would pose an unacceptable oil spill risk to the lucrative tourist industry down Bulgaria's southern Black Sea coast.

Mr Putin replied that, while it has discussed the 280km project with Bulgaria for years, Russia has built a 2,000km oil pipe to its Pacific coast and a brand new terminal on it.

"We know and we understand your point, there is nothing to be afraid of," he said, according to the minutes. "We'll implement similar projects with other partners in the same region," he added referring to the Black Sea.

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