Bulgaria Should Not Link Prices to South Stream

Former Bulgarian ambassador to Russia, Ilian Vassilev, has said that Bulgaria may be making a mistake by agreeing to link its gas prices to the South Stream project.

Mr. Vasilev told Bulgarian radio Radio FOCUS that the government risked making the same mistakes it previously had in gas matters with Russia.

"Over the past 15 years [Bulgaria] seems to assume the same error in the negotiations with Russia on gas supplies," Focus reports Mr. Vassilev as saying. "The Bulgarian team has always lacked internal consolidation – there has always been a team member who is willing to play against the common cause in the negotiations."

He also warned that Bulgaria was not very prepared for such matters, saying it lacked the financial and legal expertise to negotiate gas contracts such as that decided last week on the South Stream project.

Through that deal, Bulgaria will be entitled to an 11.1 per cent discount on gas imports supplied by Russia's Gazprom, but only after it signs a final investment decision (FID) on the South Stream project. However, Bulgaria's ability to pay for its section of the pipeline have come into question recently with media reports speculating that Gazprom will be forced to finance that section due to Bulgaria's inability to pay.

Gazprom is the majority stakeholder and operator of the South Stream pipeline with a 51 per cent stake, which is planned to transport gas through Bulgaria, Italy, Greece and Austria, bringing Russian gas to Europe.