South Stream: Gains for Bulgaria, Gains for Europe

At a stakeholders event in Varna, Bulgaria (organized by the Bulgarian Chamber of Commerce), representatives of both domestic and regional industry groups gathered to discuss the benefits of the South Stream pipeline project for the Balkan region.

Speakers from Bulgaria, Serbia and Hungary also helped to introduce the new Balkans Energy Initiative, a multi-country governmental and institutional group formed to help the region find the best way forward in regards of energy policy, including pushing for South Stream. (Natural Gas Europe also provided an analytical backdrop for South Stream in Bulgaria for those in attendance.)

Marton Sipos, Energy Policy, Ministry of National Development, Hungary, said that his country considered infrastructure developments very important, one of which was the South Stream Project.

Referring to the Balkan Energy Initiative, Mr. Sipos offered a parallel in the form of an organization that Hungary was a part of, the Visegrad 4 (V4), which worked with other countries to address areas of common concern in their energy sectors.

This meant that, post 2009, countries in Central & Eastern Europe needed to decide on what infrastructure projects they should focus on, which spurred cooperation among the V4 countries: Hungary, Poland, Czech Republic and Slovakia. Through their banding together they were able to exert more weight as a bigger market, he explained.

“One of the main points is to be in line with the EU internal energy market initiative, but on the regulatory side we also found that to foster infrastructural developments in a coordinated way, with more than one country we are bigger, stronger,” he said.

He recalled that Hungary had felt a need to devise an energy strategy and that Hungarian energy policy was now focused on secure, sustainable supply of energy in the long-term. “We realized that in order to go forward, we cannot do this alone,” explained Mr. Sipos of V4. “We are small countries, the most vulnerable in the region and we all know that the financial crisis has struck us the hardest in Europe.”

The V4, he said, had also founded a gas forum to come up with solutions to regional gas issues.

Of the Balkans Energy Initiative, Mr. Sipos said, “It's not like the V4 in that it's not only working at the Ministry level, but with the chambers of commerce and industry, which creates a bigger field of play; on the other hand, we have a lot of experience to share with each other and to help each other out in a coordinated way.”

President of the Serbian Chamber of Commerce and Industry, Zeljko Sertic, said that the South Stream pipeline project would be one of the largest investments in southeastern Europe in the last 2 decades and held a profound importance for the region's supply of gas.

He commented, “Already now, in its initial phase, South Stream has enormous economic, strategic and energy-related importance for the entire region. The route of the pipeline runs through the heart of the Balkans and the project partner companies are the largest national companies of Russia, Italy, Germany and France.”

According to him, South Stream was truly a link between Europe and Russia – the Balkan countries comprised this link, but they needed to show their coordination.

Igor Elkin, Executive Director, South Stream, Bulgaria, also spoke at the event, providing a rundown of the milestones project had reached in his country. Among the benefits for the $3 billion project in Bulgaria (of the estimated $17 billion total cost), he named the taxes collected by the state, transit fees and as many as 5,000 jobs. According to Mr. Elkin, Bulgarian companies would directly contribute to the realization of the pipeline and the country would be connected to the most significant sources of gas.

He said, “The project is being implemented on the basis of more than 40 years' experience of Gazprom and South Stream is a long term solution for the gas supply in Central & Eastern Europe.”

Mr. Elkin mentioned the importance of the skills transfer that South Stream would bring to Bulgaria, specifically in the form of an educational program that had been initiated.

Before a Q&A session, Nina Mircheva, Communications Manager Bulgaria, South Stream, spoke about an information center on South Stream to share information with the public and demonstrate the methods used in the pipeline's construction. A series of informational meetings with similar aims, she said, was also in the works, entitled “South Stream Together.”

Because of issues like South Stream becoming overly politicized and polarized, she said there was ultimately a need to get out more information on such projects in Bulgaria.

Finally, Energy Policy Advisor Andras Jenei from Hungary's Center for Fair Political Analysis, opined on how Gazprom might be altering its stance a bit on how South Stream might be able to accommodate the European Union's Third Energy Package, in light of likely natural gas transit interruption through Ukraine, which he said was something that was more than likely to happen in time.

He reported, “From the regulatory point of view, Gazprom and Russia are already thinking about how South Stream can operate within the Third Energy Package without going for an exemption like Nord Stream. This is something that indicates a bit of change.

“On the other hand, from a legal perspective this project, especially within legal regulations, I'm absolutely sure that this can be constructed within the Third Energy Package, as is the opinion of many high ranking Russian officials, so overall we should move forward with this initiative.”

Drew Leifheit is Natural Gas Europe's New Media Specialist.