October 07, 2008

Bulgargaz and Gazprom to set up JV for South Stream pipeline

RIA Novosti cited Mr Alexander Medvedev deputy chairman of Gazprom's Management Committee as saying that Gazprom and Bulgargaz, the Russian and Bulgarian state controlled gas distributors will sign an agreement for the creation of a company to design the section of the trans Black Sea South Stream gas pipeline that will cross Bulgarian territory.

The report added that both he countries signed in January 2008 an intergovernmental agreement on the project, splitting evenly the project company equity and opting for a Bulgarian domicile. The Bulgarian Russian agreement has been submitted for review by the competent ministries. It will also have to be ratified by parliament.

According to the text of the agreement posted on the website of the Bulgarian economy ministry, Gazprom is named as the operator of pipe on Bulgarian territory. In addition to the bilateral agreements with Bulgaria, Serbia and Italy a further multilateral intergovernmental accord will also be signed with the countries lying on the route of the facility.

Ms Galina Tosheva deputy economy minister of Bulgaria said recently the undersea section of the pipeline will be built and operated by a different company where Bulgaria will have no stake. The talks in which Gazprom was involved had made progress and that investment was deemed risky.