The Bulgarian PM Plamen Oresharski announced on Sunday, 8th of June that the construction of Russia’s strategic South Stream Pipeline has been suspended. The South Stream Pipeline, being financed by Russia’s state giant Gazprom, would ship gas from Russia to Europe via Western Balkans. Gas was to be pumped starting from 2015.
After meeting with three US senators, Oresharski declared: “We discussed South Stream and the EC’s [European Commission] request regarding EU legal procedures. I pointed out the project will go forward only after we resolve all the issues which Brussels has”.
According to the Wall Street Journal, issues of concern are dealing with how the contracts for the Bulgarian portion of the pipeline were not transparent and could therefore violate EU competition laws on competitors’ access to the pipeline. Furthermore, the continuation of the construction would involve dealing with Russian individuals who are hit by sanctions by the U.S.
On his meeting with Oresharski, Senator McCain high-lighted the issue of the Russian Company Stroygazmontazh. Bulgaria had indeed given the Russian engineering firm a South Stream contract in May despite the fact it is on a US blacklist. Senator McCain expressed his hope that “…sanctioned companies would not participate [in the project]” and looks forward to “less Russian involvement”.
But no doubt the suspension of the construction work also has to deal with the Ukraine crisis, with the US and the European Commission pressuring on Bulgaria to halt work on the South Stream. As stated by Ben Aris, editor of Business New Europe: "America has decided that it wants to put itself in a position where it excludes anybody it doesn't like from countries where it thinks it might have an interest […] Europeans are very pragmatic, they are looking for cheap energy resources - clean energy resources, and Russia can supply that. But the thing with the South Stream is that it doesn't fit with the politics of the situation”. Reactions from Moscow came without delay. Russia's Energy Ministry said that he has not yet received any official notifications from Bulgaria about the halt.
On Monday 9th, the Russian ambassador to the EU Vladimir Chizhov accused the European Commission of imposing “creeping sanctions” on Russia: “It is hard to shake off the feeling that the European Commission's blocking of the start of work on the construction of Bulgaria's key section of South Stream has been done for purely political purposes" affirmed Chizhoz to the Russia's Itar-Tass news agency.
The suspension was undoubtedly at the center of intense discussions on Monday 9th, when officials from Kiev, Moscow, and the EU attended talks in Brussels in an effort to resolve Kyiv's gas debt to Russia. The Bulgarian Energy Minister Dragomir Stoynev tried to reassure its Russian partners that Bulgaria had not given up on the project: “If we look at the situation strategically and without emotions, the South Stream project looks irreversible and important for both Europe and Bulgaria”, said Stoynev in a statement on a visit to China.
The European Commission spokeswoman Sabine Berger welcome on her side the decision to suspend the construction work by Bulgaria and called for a discussion on the issue at the next European Council, on June 26-27th.
Stuck in a dispute between the EU, Russia and Bulgaria, Serbia might as well have to halt the South Stream construction work. In a statement released yesterday, Serbia’s Deputy Prime Minister Zorana Mihajlovic declared that : “Bulgaria is the center. Until Bulgaria finishes negotiations with Brussels and the European Union and Russia, the project is suspended. Either way, the first and second scenarios mean there will be a delay in the construction in our country”.
While the Serbian PM Aleksandar Vucic later denied such plans for a suspension, the near future of the South Stream project looks uncertain. A reminder that energy politics is always at the heart of geopolitics.