RUSSIA: Vladimir Putin Seals Balkans Energy Deals to Boost European Union Supplies

President Vladimir Putin, on his last planned foreign trip as Kremlin leader, sealed pipeline and nuclear power accords with Bulgaria, strengthening Russia's role as an energy supplier to the European Union.
Russian officials and executives signed agreements in the Bulgarian capital Sofia today to build two oil and gas pipelines and a 2,000-megawatt atomic plant, advancing Putin's ambitions to revive Russia's economic clout in southeastern Europe.

``The creation of new transportation routes ensures security, increases stability and provides new capacity for growing volumes of energy deliveries to European consumers,'' Putin told reporters after the signing ceremony.

The president outlined his vision of Russian-built pipelines and power grids branching out across the Balkans during a visit to the region in June. Historic ties with Bulgaria, a fellow Black Sea state that joined the EU last year, give Russia a new point of entry to western Europe's energy markets.

Putin, who steps down as president in May, oversaw the signing ceremony with Bulgarian President Georgi Parvanov. Putin was flanked by his chosen successor, Dmitry Medvedev, who is both first deputy prime minister and chairman of OAO Gazprom, Russia's natural-gas export monopoly.

Last-Minute Deal
Russia and Bulgaria overcame differences at the last minute to agree today on the details of the South Stream gas pipeline, removing a major hurdle for the start of construction. South Stream, a venture between Gazprom and Italy's Eni SpA, will connect Russia directly to Bulgaria via the Black Sea.

``We reached a compromise that protects the interests of both countries,'' Parvanov told reporters after the accords were signed. ```In practice, these are European projects that ensure energy supplies for the Balkan region.''

Under today's agreement, Bulgaria's state-owned gas utility, Bulgargaz AD, will own half of the part of South Stream that runs through the country. The project will rival the EU's so-called Nabucco pipeline linking Turkey to Austria via the Balkans.

``The construction of South Stream will fully meet the growing demand for gas in central and southern Europe,'' Gazprom Chief Executive Officer Alexei Miller said in Sofia. A joint operating company called South Stream AG was registered in Switzerland today, Gazprom and Eni said in a statement.

Russia also signed an accord with Bulgaria and Greece on an oil pipeline that will connect the Black and Mediterranean seas, allowing Russian oil to bypass congested Turkish straits. Construction of the Burgas-Alexandroupolis link has been repeatedly delayed for years.

Pipeline Ownership
From the Russian side, OAO Gazprom Neft, OAO Rosneft and OAO Transneft will control 51 percent of the project, while Bulgargaz and Greece's Hellenic Petroleum SA will each hold 24.5 percent, under the agreement reached today.

In addition, ZAO Atomstroyexport signed the first Russian contract to build a nuclear reactor in the EU. The 4 billion-euro ($5.85 billion) Belene plant will allow Bulgaria to maintain its status as the largest electricity exporter in the power-starved Balkan region.

The National Electricity Co., Bulgaria's state power utility, will supervise the project. France's Areva SA, the world's biggest maker of nuclear reactors, and Germany's Siemens AG will supply safety systems. Construction will begin this year, with the first generator scheduled to come online in 2013.

Bulgaria had to close four of six reactors at its Soviet-era Kozloduy plant in 2007 to meet EU safety standards, cutting its export capacity by 50 percent.

By Elizabeth Konstantinova and Lucian Kim
Read more | Digg story

No comments: