Despite upbeat statements from Bulgarian and Russian officials, there was little tangible progress announced in the wake of Russian energy minister Sergey Shmatko’s one-day trip to Sofia on September 18.

Visiting Bulgaria less than three weeks after a tense meeting between Bulgarian Prime Minister Boiko Borissov and his Russian counterpart Vladimir Putin, when Borissov asked for more time to assess joint energy projects with Russia, Shmatko could only secure an agreement to set up two working groups on the South Stream gas pipeline project.

One would work on the shareholder agreement of the 50-50 joint venture between state-owned Bulgarian Energy Holding and Russia’s gas giant Gazprom, which was agreed in May 2009, and the other would draft the tender criteria to pick the consultants that would assess the exact costs of the pipeline and its route over Bulgarian territory.

"We did not discuss whether something should happen or not, but how to speed up South Stream," Shmatko said. The planned pipeline, with a maximum annual capacity of 63 billion cu m, would pump gas from Russia under the Black Sea into Bulgaria, where the pipeline would split, one branch taking gas into Greece and the other into Central Europe via Serbia and Hungary.

"We have confirmed our readiness for a pragmatic approach and mutual benefit, as well as an open and transparent dialogue," Shmatko told reporters after meeting Borissov and Bulgarian Economy and Energy Minister Traicho Traikov.

Borissov appeared content to have received an assurance that South Stream did not set out to compete against the European Union-backed rival project Nabucco, which was expected to cost less than the Gazprom-backed pipeline, but would struggle to secure enough gas to be viable, according to analysts.

"It was important for us to hear that Nabucco and South Stream are not rivals," Borissov said. "We equally participate in both. The benefit for us is that the Russian gas will come to our border."

Lingering concerns
Even without clear deadlines for their tasks, the two South Stream committees are a step forward, which is more than the other two Bulgarian-Russia joint projects can boast.

The fate of the nuclear power station at Belene remains in the balance, even though it is the only project where a binding contract has been signed. Should Bulgaria scrap the project, it could owe as much as 800 million euro in damages to Russia’s Atomstroyexport, Russian business daily Vedomosti said.

That would be a small price to pay compared to the 10 billion euro cost, estimated by Bulgaria, Vedomosti quoted Traikov as saying. The cost issue is not the only threat to Belene, but it is indicative of the divide between the two sides, with Shmatko quoted by Russian daily Kommersant as saying that his ministry’s calculations gave a different result. He did not give a number.

Although Russian media interpreted Shmatko’s visit as a successful one in pushing Belene back on the agenda, all it accomplished was for Russia to agree to "a legal and financial audit" of the project, something that Bulgaria planned to do anyway.

One way for Russia to revive Belene would be to buy into the project company’s shareholding, but the issue transcended purely economic reasoning and required a political agreement, Bulgarian daily Dnevnik said. Shmatko declined to comment on whether Russia’s state-owned electricity company Inter RAO UES was in talks with Germany’s RWE, which owns 49 per cent in Belene, to buy an unspecified part of RWE’s stake, Dnevnik said.

Earlier on September 18, Bulgaria’s Finance Minister Simeon Dyankov told Bulgarian National Television that the idea of Russian firms joining as shareholders had merit, but said that the Cabinet was pursuing other options as well. Bulgaria is interested in selling part of its stake, retaining a blocking quota of between 20 and 30 per cent in the project, he said.

A deal in that sense would diversify the sources of funding, with Bulgaria re-affirming its position that it did not plan to commit Budget funds or issue state guarantees for the project.

Forgotten pipeline
With most of the spotlight on Belene and South Stream in recent months, the project that took more than a decade of talks to bring to life – the Bourgas-Alexandroupolis oil pipeline – now looks the least likely to go ahead. Strongly opposed by nature conservation groups and local residents, who fear that even the smallest mishap could irreparably damage the lucrative tourism industry on Bulgaria’s southern Black Sea coast, the pipeline received only token attention during the visit.

Shmatko agreed to respond in depth to Bulgaria’s environmental concerns in the near future, saying that he understood the anxiety of Bulgarian officials, but hoped that a quick solution could be found, according to Dnevnik.