11-09-07 Sofia has balked at the proposal of natural gas major Gazprom that the Russian state-controlled company is granted a majority stake in the joint venture it will co-create with the local Bulgargaz to install and operate the stretch of the South Stream gas pipeline on Bulgarian territory.
The Bulgarian side fears possible Russian ownership claims over the gas mains in case of a majority participation, a government source said.

An interdepartmental working group set up by the Bulgarian government is already discussing the parameters of the future bilateral agreement on the South Stream project and on the joint venture that will be incorporated by Gazprom and Bulgargaz after the document is signed. It is expected that the two sides will put pen to paper by the end of 2007. It was announced back in May that Bulgaria will join a major Russian energy project.
Gazprom later specified that it planned to build a transit gas pipeline connecting the Begerovaya compressor station near Novorossiysk and the Bulgarian Black Sea port of Varna before forking out in two directions, north through Hungary to reach Austria, and south through Greece and on to Otranto, a port near the south-eastern tip of Italy.

It will be proposed that Bulgargaz Holding control a majority stake in the future company, said Bulgarian deputy economy minister Galia Tosheva, adding that the project is still in its infancy. The cost of the 900 km pipeline is seen at around EUR 10 bn. It will include a section that will be laid 2,000 m below sea level.
Initial estimates indicate that the pipeline section on Bulgarian territory will cost EUR 1 bn. If state-owned Bulgargaz is allocated a majority stake in the pipeline operator, it will most likely have to raise the bulk of the necessary financing.

In the course of the South Stream negotiations, the Russian side seems to be employing the same strategy that it used to secure a 51 % stake in the Burgas-Alexandroupolis oil pipeline.
Greece and Bulgaria, the other two participants in the oil pipeline project, ceded the majority stake in exchange for Moscow's commitment to provide the necessary oil volumes. However, at the last trilateral meeting, Russia asked Sofia and Athens to either provide oil supplies in proportion to their 24.5 % stakes in the project or sell their interest to oil-producing companies.

Gazprom was about to launch a feasibility study for the South Stream project. The Russian gas monopoly and Italy's ENI have already agreed to start an investment study of the project before June 2008.
The two partners have already collaborated on the Blue Stream gas project.