Bulgaria and Russia signed an agreement for the construction of the South Stream gas pipeline
on Friday in the presence of Presidents Georgi Purvanov and Vladimir Putin. The signing followed a decision made by the Bulgarian Council of Ministers at an extraordinary meeting earlier the same day and made public by Prime Minister Sergei Stanishev. Stanishev told the press that the participation of the visiting Russian President Vladimir Putin in the Thursday night talks between Bulgaria and Russia helped a lot to make progress, BTA reported.

Bulgaria's interests are fully defended because the company that will develop and operate the pipeline on its territory will be with 50 per cent participating interest of Bulgaria and 50 per cent participating interest of Russia. Until Thursday, the Russian side insisted to have 51 per cent of the project company, the Prime Minister recalled.

The equal share will make sure that the Bulgarian interests will be respected in all decisions, including those concerning dividends, Stanishev commented.

The project company will be registered in Bulgaria. The bilateral agreement will be followed by a multilateral, with future users of the natural gas to be carried by the South Stream pipeline, said Stanishev. He added that this, too, was a Bulgarian requirement.

Stanishev commented that Bulgaria's entry in the South Stream project enhances this country's weight on the European energy map.

He added that Bulgaria's participating in this project will ensure additional quantities of natural gas for the Bulgarian economy when demand for this fuel is sure to go up.

The PM said Friday that the Bulgarian part of the project will cost some 1,400 million euro. Among all benefits, the Bulgarian State will receive some 220 million euro from VAT. Considering the expected profit margin, the Bulgarian part of the pipeline will recoup in 15 years, added Economy and Energy Minister Peter Dimitrov.

South Stream is a Russian-Italian project for a gas pipeline to transport Russian natural gas to Italy. The 900 kilometre long offshore section of South Stream is to start from the Beregovaya compressor station at Russia's Black Sea coast, and to run to Bulgaria's Varna. An Italian project map shows that from there the pipeline branches to the Southwest through Greece and the Ionian Sea to southern Italy, and to the Northwest through Romania, Hungary, Slovenia and Austria to northern Italy. The maximum depth of the offshore section will be 2,000 m.

South Stream is not one pipeline but a system of new pipelines planned to carry 30 billion cubic meters of gas to Europe annually. It will transport not only Russian, but also Central Asian and Kazakh gas. The project worth is estimated at some 10,000 million euro.