Since Prime Minister Boiko Borissov took office in July 2009, Bulgaria has come under relentless pressure from Russian officials to speed up work on construction of joint energy projects. On South Stream, in particular, the talks have stalled repeatedly over a number of sticking points.

Despite some analysts’ concerns that Gazprom could hardly afford to spend any money on the South Stream pipeline under the Black Sea and in the Balkans at the same time that it plans to build the Nord Stream under the Baltic Sea, the Russian gas company has continuously pushed to speed up work on preparing construction.

Bulgaria was not the only laggard raising Gazprom’s hackles, however, judging by reports in Russian media.
On April 9, the head of Gazprom’s international business department, Stanislav Tsygankov, openly took a shot at Italian energy firm Eni, Gazprom’s main partner in the South Stream project.

"There is nothing constructive in their approach, no tangible proof of work," Tsygankov was quoted as saying by Russian news agency Interfax. Eni failed to co-ordinate with Gazprom, thus "progress on South Stream is negligible because of the absence of adequate work from the Italian partners," he was quoted as saying.

Gazprom’s rapid damage control measures saw spokesperson Sergey Kupriyanov deny the existence of any tension between the two companies and Tsygankov himself said later in the day, as quoted by Interfax, that Gazprom expected "progress on project and a new impulse in its practical implementation."

The sudden outburst came just days before a scheduled visit by Eni chief executive Paolo Scaroni to Moscow on April 12. Following Scaroni’s trip, Eni said that it intended to speed up work on the joint venture and confirmed its full commitment to the pipeline and the partners’ intention to complete the feasibility study for the offshore section.

Reports in Russia, however, claimed that despite Gazprom’s attempt to marginalise the impact of the comments made by Tsygankov, the relationship between the two companies was terse and little progress was expected in the coming months.

Daily Vremya Novostey said, quoting an unnamed source at Gazprom, that the Russian company did not expect any progress on South Stream as long as Scaroni remained chief executive of Eni. Scaroni was scheduled to step down at the end of the year, but Gazprom had no guarantees that the management change would give the pipeline project a renewed impetus, the daily said.

Destination confirmed
In a separate development on April 9, Gazprom chief executive Alexey Miller said that there were no plans to exclude Bulgaria from the South Stream projects, as Russian media speculated in February, following meetings between Gazprom and Romanian government officials.

Although negotiations were underway concerning a branching out of South Stream that would pass through Romania, the underwater stretch of the pipeline would go ashore in Bulgaria, Interfax quoted Miller as saying.

In February, following a meeting between Romanian Economy Minister Adriean Videanu and Alexander Medvedev, the deputy chairperson of Gazprom’s management board, reports in Russian media suggested that Bulgaria’s insistence on renegotiating its current deals with Gazprom could result in a redrawing of the pipeline’s route.

Miller’s remarks came at the launching ceremony for Nord Stream, which, together with its southern twin, are meant to bypass Ukraine. Strained relations between Moscow and Kyiv have caused supply disruptions in January 2006 and January 2009, which left Bulgaria – reliant almost exclusively on supplies of Russian gas – stranded in the cold.
Nord Stream is due to be completed in 2013 and South Stream is envisioned to start operation in 2015, a target that Miller described as "difficult" despite the project progressing on schedule.

Sticking point
The main sticking point on South Stream between Gazprom and Bulgaria is the Russian giant’s insistence to treat the gas contracts renewal process as part of the negotiations on the amounts that Bulgaria would receive through South Stream. Bulgaria wants the issues examined separately and fears that bundling the issues could result in lower quantities being pumped through Bulgaria to Greece, Macedonia and Turkey, which would mean lower transit revenue for Sofia.

Following the last meeting in February, Bulgaria’s Economy and Energy Minister Traicho Traikov said that the two sides were "having talks about starting the negotiations, not the actual negotiations [on the contracts]."

On the list of Bulgarian demands, according to reports, was an increase in the transit fees – now at $1.7 for the transit of 1000 cubic metres of gas for 100km, worth about 100 million leva a year – paid by Gazprom. Traikov said in February that the fees were half the amount Gazprom pays other countries.