Minister Traicho Traikov: pipeline from Turkey to Bulgaria may be the start of Nabucco.

In the end of July 2010, Bulgaria agreed to participate in the construction of Russia’s South Stream pipeline. Despite the new agreement, the country’s officials still remain committed to the European Union-backed Nabucco project.

Just as Bulgaria inked the Russian pipeline’s roadmap, the country’s Minister for the Economy, Energy, and Tourism Traicho Traikov arrived in Vienna for talks with Reinhard Mitschek, director of Nabucco Gas Pipeline International GmbH. The Minister also met with the leadership of Austria’s OMV oil and gas concern. 

During his discussions, Minister Traikov talked about laying a pipeline from Turkey to Bulgaria, which would eventually be integrated into the Nabucco project. According to the Minister, the construction of that pipeline segment will be the first practical step in bringing gas from the Caspian region to Bulgaria and the other countries in Europe. 

When the government of Boyko Borisov came to power in the country in August 2009, Bulgarian officials called for the revision of the nation’s major energy infrastructure projects, among them the construction of the South Stream pipeline with Russia, the laying of the Burgas-Alexandroupolis oil pipeline, and the building of the Belene atomic station.

In June of 2010, Alexei Miller of Gazprom was of the view that Bulgaria was not interested in the construction of South Stream. The Russian-Bulgarian relationship improved during the visit to the country of Russia’s Deputy Prime Minister Viktor Zubkov. In exchange for Russia’s promises to reduce the cost of natural gas supplied to Bulgaria and to dispense with the use of intermediary trading firms, Bulgaria entered into the agreement with South Stream.

In July, Russia and Bulgaria agreed on a formal map of South Stream’s construction. The country also signed the protocol on the deliveries of Russian gas. According to Russia’s Energy Minister Sergei Shmatko, the agreement provided for favorable pricing arrangements extended to Bulgaria’s consumers. Russian officials further agreed to eliminate the use of intermediaries in the gas supply process. All agreements reached between Bulgartransgaz and Gazprom were the result of long and painstaking negotiations by officials in both companies. The new contracts will enter into force in June 2011.

Under the existing arrangement, Gazprom supplies gas to Bulgarian Overgaz Inc., which is a 50-50 venture of Overgaz Holding and Gazprom Export. Under Overgas’ contract with Gazprom Export the company receives 2.5 billion cubic meters of gas per year. Another 600 million cubic meter per year is supplied from Gazprom Germania.

South Stream, dubbed as the most expensive pipeline in the world, is planned to lie under the Black Sea and connect to states in Southern and Central Europe.

As per original designs, the pipeline will surface on Bulgaria’s shores. The pipeline’s annual capacity target is 63 billion cubic meters. When Bulgaria temporarily pulled itself out of the South Stream project, the South Stream consortium considered an alternative route through the territory of Romania. 

At this time, the consortium has secured intergovernmental agreements for constructing the overland section of the pipeline. Countries that have given green light to South Stream include Austria, Bulgaria, Croatia, Greece, Hungary, Serbia, and Slovenia.

The Nabucco pipeline project, considered for a long time to be South Stream’s archrival, is aimed at supplying the gas from Azerbaijan and Turkmenistan to the European market. The pipeline would pass around Russia’s territory. Nabucco’s participants include Austrian OMV, Bulgarian Bulgargaz, German RWE, Hungarian MOL, Romanian Transgaz, and Turkish Botas.

Industry analysts are in agreement that the fortunes of the Nabucco project are not as bright as those of South Stream. While Nabucco is being planned as a pipeline to deliver gas from the Caspian region to Europe, no hard commitments have yet been secured by the countries represented in the consortium from either Azerbaijan, Turkmenistan, or Iran.