Bulgaria OKs joint venture with Russia on South Stream

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The Bulgarian government gave its formal approval on Wednesday to the launch of a joint venture with Russia to build and operate the Bulgarian stretch of the planned South Stream pipeline.

Sofia gave the go-ahead for the state-owned Bulgarian Energy Holding (BEH) to set up a 50-50 joint venture with Russian's Gazprom which will build and operate the Bulgarian stretch of the 3,600-kilometre (2,200-mile) pipeline, the government's press office said in a statement.

South Stream is to carry Russian gas to Europe bypassing Ukraine, with the first deliveries expected at the end of 2015.

Government approval was needed before the joint venture could be set up at a special ceremony in Sofia on Saturday, to be attended by Russian Prime Minister Vladimir Putin.

Originally, the joint venture had been scheduled to start work in February 2011, but the launch date was brought forward. In late October, BEH and Gazprom signed an agreement to begin a preliminary technical and economic feasibility study for the Bulgarian stretch of the project.

South Stream is being built by Gazprom and Italy's ENI and will have the capacity to carry as many as 63 billion cubic metres of Russian gas to Europe under the Black Sea.

Bulgaria is almost entirely dependent on Russia for its gas and observers expect it to try and use its participation in the project as a bargaining chip in talks for lower prices from Gazprom.

© 2010 AFP

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