Bulgaria Ties Final Investment Decision on South Stream to Terms of New Gas Deal with Gazprom

Bulgaria Ties Final Investment Decision on South Stream to Terms of New Gas Deal with Gazprom

Bulgaria's final investment decision on the construction of the South Stream gas pipeline will hinge on the terms of a new gas supply deal with Russia's Gazprom Export, the government in Sofia said.

Bulgarian economy minister Delyan Dobrev has been mandated to grant his consent to state-owned Bulgarian Energy Holding (BEH) for the adoption of the final investment decision on the construction of the pipeline's local section, the government said following its regular weekly meeting on Wednesday.

BEH will adopt the decision provided that the new gas deal, set to run from 2013, is deemed satisfactory in terms of the issues considered critical by the Bulgarian company, the statement said.

The local section of the gas pipeline will be approximately 540 kilometres long with three compressor stations and a technical annual capacity of 63 billion cubic metres.

If BEH is unable to raise the full amount of its share of project funding, Gazprom will do so as this will not result in a change in the size of BEH's stake in South Stream Bulgaria - the company incorporated to implement the project in the Southeast European country in which Gazprom and BEH hold 50% each. In that case BEH will repay Gazprom the money with dividends from the operation of South Stream Bulgaria.

South Stream, a project initiated by Gazprom and Italy's Eni, is expected to carry 63 billion cubic metres of Russian natural gas per year under the Black Sea to Europe, starting in 2015. Slovenia, Bulgaria, Serbia, Croatia, Hungary and Greece are partners in the onshore section of the pipeline.

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