Russia to Finance Bulgarian Section of South Stream Pipeline

Gazprom chief executive officer Alexey Miller has said that Russia would finance the whole construction of South Stream gas pipeline on Bulgarian territory.

On vist to Bulgaria, Miller told reporters that "Russia is ready to finance the construction of the whole pipeline on Bulgarian territory, and for that purpose we have provided 3.1 billion euros (4.0 billion U.S. dollars)," following a meeting with Bulgarian Prime Minister Plamen Oresharski and Minister of Economy and Energy Dragomir Stoynev.

Miller said that Bulgarian contributions to the project would come from gas transit fees in the future.

"South Stream will be financed on a project basis, there will be no government guarantees and Bulgarian taxpayers' money will not be spent," Stoynev confirmed.

Miller said that, "no doubt," first gas would flow to Bulgaria in December 2015.

"The project has been implemented with certain delays from schedule ... We are however certain that the deadlines for the start of construction will be met," Miller assured.

He said preparations for the start of construction should be accelerated. The prime minister has assigned additional tasks at the administrative level, as this year the final assessment of the environmental impact and the final engineering design should be prepared, Stoynev said.

South Stream, a pipeline transporting Russian gas to Southern and Central Europe bypassing Ukraine, will be laid across the bottom of the Black Sea from the compressor station "Russkaya" at the Russian coast to the coast of Bulgaria near Varna.

Stoynev said that South Stream remained a key priority for the country. The 540-kilometre (336-mile) Bulgarian stretch of the pipeline, which is expected to cost 3.1 billion euros ($4.0 billion), starts at Varna after emerging from the Black Sea.

"We will speed up work on South Stream as it is important to diversify our natural gas delivery routes and have direct deliveries from Russia without passing via third countries," Stoynev pledged on Monday.

"We need to have final detailed site development plan, environmental impact assessment and front end engineering design by the end of this year and apply for construction permit," he added.

Gazprom and the state-owned Bulgarian Energy Holding have established 50-50 joint venture to build and operate the Bulgarian section of the pipeline.