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UPDATE 2-Russia, Bulgaria to sign South Stream deal soon

Published 04/28/2009, 01:24 PM
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* Final pipeline deal to be signed in weeks-prime ministers

* Russia to consider multi-billion euro loan to Bulgaria

* Putin hopes for Bulgaria's political support on energy

(Recasts, adds quotes, details, background)

By Simon Shuster

MOSCOW, April 28 (Reuters) - Russia and Bulgaria have overcome disagreements about Moscow's proposed South Stream gas route to Europe and will sign a final deal on the issue in a matter of weeks, their prime ministers said on Tuesday.

Prime Minister Vladimir Putin said the deal should make Bulgaria a partner in Russia's global energy agenda, which seeks to scrap the current legal framework for the European energy market and replace it with a sweeping new pact drawn up by Moscow.

"By the middle of next month I think we will be able to sign the agreement (on South Stream)," Bulgarian Prime Minister Sergei Stanishev said through a translator.

"These talks could have been settled even today," Putin added. "I think in the nearest future we will come to an agreement, in the course of a couple of weeks, and I want to emphasise that there are no more disagreements on this issue."

To tighten their energy relationship further, Putin said Russia would consider granting a loan worth several billion euros to help Bulgaria build a nuclear power plant.

Stanishev later suggested a link between the loan and the pipeline deal at a meeting with President Dmitry Medvedev.

But the prime ministers did not say how they had settled the main bone of contention over South Stream -- whether Russia would get to use Bulgaria's existing gas transport network or would need to spend billions of dollars building a new route through the country.

ENERGY CHARTER

At the start of the briefing, Putin fired a volley at the EU's energy charter, which Russia signed in the late 1990s but never ratified and is now seeking to replace.

"The energy charter ... has not played its role," Putin said. "We see no point in even keeping our signature on that document.

"We hope in the long term to see active participation from the Bulgarian side, and for them to stand with us politically and administratively in the future," Putin said, before laying out the new energy pact Russia proposed in Helsinki this month. Europe, dependent on Russia for a quarter of its gas, wants Bulgaria to host a competing gas pipeline called Nabucco that would go around Russia to bring Central Asian gas directly to Europe, a feat that is impossible today.

The competing projects have put Bulgaria and other transit states in the middle of a political tug-of-war between Russia and Europe, both of which are seeking to set the terms for energy supplies on the continent.

This tension -- as well as deeper concerns from Europe about Russia's reliability as an energy partner -- had previously left little hope of Tuesday's talks being successful. [ID:nLR545208]

A gas dispute between Russian and Ukraine in January had cut off supplies to millions of European consumers, with Bulgaria among the worst affected.

NUCLEAR LOAN

At the briefing with Putin, Stanishev said that the financial crisis had urged his country to turn to Russia for the loan, which it needs to finish the Belene nuclear power plant.

"It is a serious sum, several billion euros, but we will consider this possibility and I think we will be able to resolve this problem," Putin said of the loan.

"We have to look for any flexible way to find such resources at such a difficult economic time," Stanishev added.

Later in the evening, Stanishev appeared to draw a link between the nuclear plant and the gas pipeline: "The thing is that South Stream is still just on paper, while Belene is already a reality."

(Editing by Keiron Henderson)

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