* Bulgaria entangled in diplomatic tussle over South Stream
* Opposition leader says will push for transparent process
* Opposition likely to win in Bulgaria election
(Adds quote, details, background)
By Tsvetelia Tsolova
SOFIA, June 11 Bulgaria's main opposition party
would cancel a contract awarded to a consortium led by Russia's
Stroytransgaz, a company owned by sanctions-hit businessman
Gennady Timchenko, to build the Bulgarian section of the
Russian-led South Stream gas pipeline.
That position was laid out on Wednesday by Boiko Borisov,
the leader of Bulgaria's GERB party which is tipped to win a
national election that could be as held as early as July.
Bulgaria has walked a diplomatic tightrope over the fate of
the South Stream project, which has thrust the small Balkan
state into the centre of a standoff between its former Cold War
ally Russia and the European Union over energy supplies.
The project is led by state-controlled Russian gas exporter
Gazprom, intending to pump natural gas across the
Black Sea to Europe and bypass Ukraine, with which Russia is
currently locked in an acrimonious dispute over prices - as well
as a broader battle over political influence since the ouster of
Kiev's pro-Russian government earlier this year.
Bulgaria, the European Union's poorest member state, is
almost entirely dependent on Russia for its energy supplies and
would be a major beneficiary of the pipeline.
But it is loathe to risk punishment by the EU, a bloc it
joined in 2007 and which has joined with the United States in
imposing sanctions against some Russian individuals and entities
over its government's actions in Ukraine.
A company joint-owned by Gazprom and the Bulgarian state
chose the Stroytransgaz consortium for a construction contract
worth more than 3.5 billion euros ($4.8 billion) in May. But
Prime Minister Plamen Oresharski's government has since bowed to
pressure from Brussels to stop construction.
The fate of the contract is now also hostage to Bulgarian
domestic politics, as Oresharski's government will likely
collapse in a matter of days or weeks and its likely successor
said on Wednesday it would cancel the deal if elected to power.
"The contract will be cancelled. We will carry a new
procedure based on European rules, which will be transparent and
clear," GERB leader Borisov told national radio in an interview
Borisov, Bulgaria's prime minister until he was toppled by
street protests in early 2013, said he supported the pipeline if
it was built according to the EU's rules, but he has accused the
government of mishandling the project.
Oresharski will address parliament on Friday to spell out
the government's position on the project.
Timchenko was included in a list of Russian officials and
businessmen targeted by U.S. sanctions over Russia's annexation
The European Commission has asked Sofia to suspend work on
South Stream pending a decision on whether the project complies
with EU law. Separately, Washington has warned that Bulgarian
companies working on the project could be hit by sanctions.
Oresharski's government faces a no-confidence vote in
parliament on Friday and is expected to resign soon, after the
ruling Socialist party lost heavily to GERB in the European
Parliament elections in May.
Once the government resigns, Bulgaria's president is
expected to appoint a caretaker government until the election.
"If the tensions between the EU and Moscow over Ukraine
ease, and if Bulgaria complies with EU demands for the tender
and other concerns the EU has for the pipeline, then it (South
Stream) may happen," said Ilian Vasilev, an energy consultant
with Innovative Energy Solutions and a former Bulgarian
ambassador to Moscow.
"The chances however are small for the time being," he said.
"An interim government appointed by the president is certain to
keep work on the project frozen until all issues with Brussels
($1 = 0.7345 Euros)
(Writing by Matthias Williams; Editing by Mark Potter)