UPDATE 1-Bulgarian minister makes passionate case for South Stream pipeline

Thu Apr 17, 2014 10:50am EDT

* South Stream is strategic, priority project for Bulgaria-minister

* Pipeline construction in Bulgaria to start this year

* Bulgaria to fight for Gazprom-led project to go ahead (Adds official quotes, details)

By Tsvetelia Tsolova

SOFIA, April 17 (Reuters) - Russia's South Stream pipeline project must not be blocked for political reasons and Bulgaria plans to start construction this year despite the standoff between the West and Moscow over Ukraine, Bulgaria's energy minister said on Thursday.

The future of the 2,400-kilometre (1,490-mile) pipeline from Russia via the Black Sea to southern Europe, avoiding Ukraine, has been cast into doubt since Russia's annexation of Ukraine's Crimea region.

In an emotional news conference in Sofia, Dragomir Stoynev accused fellow European Union members of a politically-motivated attempt to scupper the project, and urged the bloc to understand the effect that doing so would have on its members.

The outburst underscored the difficulty that the EU and the United States face in coming up with a united response to Russia's intervention in the Ukraine.

Bulgaria is both an EU and NATO member but has close links to Moscow and is almost entirely dependent on Russian energy supplies, making it wary of punishing Russia with tough economic sanctions.

Bulgaria, which meets almost all of its gas needs with imports from Russia's Gazprom via only one route through Ukraine, would be a major beneficiary of the pipeline.

"South Stream is a long-term infrastructure project of strategic importance. Now they (the European Parliament) want to stop South Stream. How are we to develop? This crisis at the moment shows that we do not have security of natural gas supplies for Bulgaria," Stoynev told reporters.

"Bulgaria is part of the European family, meaning that we must comply with European policies. But solidarity is one of the key principles on which the European Union was set up. The European Commission should take into account of the negative effects for each member state of its future actions," he added.

The Ukraine crisis has intensified EU efforts to reduce energy dependence on Russia, while Moscow has long sought to curb its reliance on Ukraine as the main pipeline route for sending Russian gas to Europe, its biggest market.

The European commissioner for energy, Guenther Oettinger, said in March that discussions with Russia over South Stream's regulatory approval in the European Union were on hold.

But Stoynev said Bulgaria will fight for the project, urging the EU to consider diplomatic measures to solve the Ukraine standoff. He also said Bulgaria should be compensated in the event that the standoff sparked an energy supply crisis, complaining that the EU had not done so during a previous row between the Ukraine and Russia in 2009.

"Can you tell me what compensation Bulgaria got in 2009 from the European Commission, when the effects of 14 days of cut supplies caused losses of 500 million levs (250 million euros)? I will tell you - Zero. And now you want us to sit still, to keep our heads down?" he said.

Stoynev also suggested that instead of blocking South Stream, European Commission could instead decide to stop Russian gas imports via the North Stream to west Europe.

"Why, for example we do not cut gas supplies through North Stream? This is one concrete measure. Why? But it seems that South Stream should be sacrificed and we have to put up with it. No, Bulgaria, this government will stand up for the national interest."

Bulgaria has yet to connect its gas network with neighbouring countries to diversify its gas supplies. It has speeded up work on a gas link with Greece, through which it would be able to get Azeri gas when Shah Deniz II field becomes operational in 2019.

South Stream would carry around 60 billion cubic metres (bcm) of gas a year to Europe towards the end of the decade, enough to meet more than 10 percent of its annual demand.

The South Stream consortium is led by Gazprom. One of Gazprom's main partners in the project, Italy's Eni, has said the future of South Stream has been put in question by the escalating dispute over Ukraine. The EU has also postponed clearing the project.

"Tell me, are we wrong? Are we wrong to demand the security of supplies for Bulgarian industry? Or we have to give up everything, to stop developing, to stop creating jobs?" Stoynev said. (editing by Matthias Williams and Jason Neely)

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