SOFIA, Jan 18: Bulgaria and Russia signed a deal on Friday to build the 10 billion euros ($14.7bn) South Stream pipeline to carry Russian gas to Europe, giving Moscow an even greater say on European energy supplies.

The landmark deal was signed at a ceremony attended by Russian and Bulgarian presidents Vladimir Putin and Georgy Parvanov.

It was agreed after intensive last-minute talks between the two former Cold War allies and came about “thanks to the personal intervention of President Putin,” Bulgarian Prime Minister Sergey Stanishev said.

The South Stream pipeline, being built by Russia’s Gazprom and ENI of Italy, will first cross the Black Sea into Bulgaria and then split into two arms, one going northwest to Austria and the other south to Greece and then west to southern Italy.

Gazprom chief Alexey Miller said the gas giant was also closer to clinching a deal with Serbia on the takeover of its state-controlled oil monopoly NIS.

“We’re close to a final agreement,” Miller told AFP.

“We’re in the process of wrapping up negotiations with the Serbian side and a draft intergovernmental agreement is being drawn up,” he said.

Earlier this week, Serbian media said Belgrade was hesitating to give Gazprom full control of NIS because its offer was felt to be insufficient.

In December, Gazprom offered 400 million euros for 51 per cent of NIS. It also promised to invest 500 million euros in the company and ensure passage via Serbia of the South Stream pipeline.

With capacity to transport up to 30 billionn cubic metres (one trillion cubic feet) of gas annually, South Stream will strengthen Moscow’s grip as the leading supplier to Europe.

The cost of building the pipeline is estimated at 10bn euros, with the Bulgarian stretch amounting to 1.4bn euros, Premier Stanishev said.

“Joining the project will increase Bulgaria’s importance on the European energy map,” he said.“It’s important that both sides have reached a compromise. As it stands, the agreement reflects the balance of interests and allows us to move on this difficult topic,” said Russian First Deputy Prime Minister Dmitry Medvedev, the man Putin wants to succeed him in the Kremlin, in comments reported by Russian news agency Ria Novosti.

South Stream rivals EU plans for its own pipeline project, Nabucco, which will transport Central Asian gas from the Caspian basin to Europe but bypass Russia. The strategic aim of Nabucco is to reduce the EU’s dependence on Russian gas.

Given its strategic position, however, Bulgaria is looking to participate in both projects, since it stands to pocket hefty transit fees for the transportation of gas through its territory.

Sofia’s talks with the EU on the Nabucco have stalled recently.

Premier Stanishev said that both sides had agreed to a stake of 50 per cent each in the company that will operate the stretch of the South Streem pipeline running through Bulgarian territory. —AFP