SOFIA (Reuters) - Bulgaria’s state gas company signed a 1.1 billion euro ($1.2 billion) contract on Wednesday with Saudi-led group Arkad to build a gas pipeline to carry mainly Russian natural gas.
The Balkan country is rushing to build the 474-km pipeline linking its southern border with Turkey to its western border with Serbia to secure a link to the Russian-backed TurkStream pipeline to Serbia, Hungary and Austria.
Russia, which is building the TurkStream to bypass Ukraine to the south, said in July that its second leg, with an annual capacity of 15.75 billion cubic meters will pass via Bulgaria to central Europe.
“This is the so-called Balkan Stream,” Bulgarian Prime Minister Boyko Borissov said at signing of the contract by state gas group Bulgartransgaz.
“We will win from transit fees, this pipeline will remain Bulgarian once it is paid off and mainly our neighbors from North Macedonia, Serbia and Hungary will have alternative gas.”
Borissov said 90% of the pipes for the project had already been delivered to Bulgarian ports and Sofia wants to have the first 308 km of the pipeline ready by January, a timetable which many industry observers say will be extremely hard to achieve.
Borissov said that the pipeline, along with a gas interconnector with Greece will keep Bulgaria on the gas map and not be bypassed by all major routes in southeastern Europe.
The Arkad-led group contract comes a day before representatives of the European Union, Russia and Ukraine meet to discuss the future of Russian gas transit to Europe via Ukraine when a 10-year deal expires in January.
The contract became possible after a Bulgarian court cleared legal obstacles and brought to an end a tussle between Arkad and a consortium of a Luxembourg-based unit of Russia’s pipe maker TMK, Italy’s Bonatti and Germany’s Max Streicher.
Observers said the court development was likely to mean that the two bidders had agreed to share the contract.
Reporting by Tsvetelia Tsolova and Angel Krasimirov; Editing by Toby Chopra and Alexander Smith