Poseidon, a joint venture of Greek Depa and Italian Edison, was to control a 50 per cent stake in the new 170km gas connection between Bulgaria and Greece, Bulgarian Energy Holding (BEH) said.

The holding company, which lumps together Bulgaria's top energy assets, would team up with Poisedon for the construction of the gas line.

The project was estimated at around 120 million euro.

The parties involved signed a memorandum of understanding in May 2009.

Through an extension of the existing gas pipeline running through Turkey, Greece and Italy, the link would diversify Russian deliveries from the Caspian region.

The new gas route linking Stara Zagora, Dimitrovgrad and Komotini was expected to reduce dependence on Russian gas supplies by 20 to 30 per cent, according to experts.

The document was signed, despite a freeze on energy projects imposed by the incumbent Cabinet of Prime Minister Boiko Borissov, on the grounds that it would bolster the country's energy security.

The joint company would be incorporated within six months, and own and operate the new pipe under a scheme similar to the South Stream gas pipeline where Russian gas giant Gazprom will control 50 per cent.

The new gas link would have a capacity of 3 billion cu m which was expected to increase to 5 billion at a later stage.

The funding would be secured by stockholders in the project company, with Bulgaria's BEH expected to contribute 40 million euro.

Bulgaria had already applied for 45 million euro in European funding under the recovery package.

British firm Jacobs Consultancy was picked as project adviser.

Source: Dnenvik.bg