South Stream Bulgaria, the company in charge of the project for the Bulgarian
section of the South Stream gas pipeline, has raised its capital to 397.6
million levs ($272.3 million/203.3 million euro), the country's energy ministry
said on Tuesday.
"This move on the part of the management of South Stream
Bulgaria constitutes a violation of a protocol decision by [interim energy
minister] Vassil Shtonov dated August 11 to suspend all actions on the project
until it is aligned to European legislation," the ministry said in a press
release.
The energy ministry added it will refer the case to the
prosecuting authorities.
South Stream Bulgaria is a 50/50 joint venture
set up by Russia's Gazprom and state-owned Bulgarian Energy Holding
(BEH).
Prior to the increase, its capital stood at 15.588 million levs,
divided into 15,588 shares with a par value of 1,000 levs each, according to
trade registry data.
According to the energy ministry, the capital hike
itself does not constitute the launch of construction of the gas pipeline on the
Bulgarian territory but allows for the continuation of preparatory works on the
project.
Construction works on the project will begin after advance
payments have been made to the project contractors, which can happen only after
the two executive directors of South Stream Bulgaria have signed the relevant
decision, the ministry added.
The capital hike was entered into the
commercial register on August 18, the same day that Shtonov said BEH has opted
out of the capital increase.
Also that day Shtonov said he has instructed
BEH to discontinue all tendering and contracting procedures on the gas pipeline
project until it is aligned with EU legislation.
South Stream Bulgaria’s
management has submitted an application for increasing the company’s capital on
August 12, according to the press release.
Later on Tuesday, BEH issued a
statement saying that in its capacity as a shareholder in South Stream Bulgaria
and in compliance with the respective instructions from the interim energy
minister it has duly notified Gazprom and the executive directors of the project
company and has taken all necessary actions to halt activities related to the
South Stream project.
The halt will last until all issues related to the
procedure for the award of a contract to design and build the local section of
the pipeline have been conclusively clarified, BEH said.
Also on Tuesday,
South Stream Bulgaria released a statement, saying that, on recommendation from
the European Commission, it has put on hold all procurement and contracting
activities related to construction of the local section of the
pipeline.
"Currently, the company is carrying out preparatory activities
related to the implementation of the project in compliance with national and
European legislation," the statement added.
The South Stream gas
pipeline, spearheaded by Gazprom, will carry gas from Russia to central and
southern Europe via Bulgaria, Serbia, Hungary and Slovenia. The offshore section
of the gas pipeline will run from Russia's Black Sea shore across the Turkish
exclusive economic zone and will make landfall on the Bulgarian coast at Pasha
Dere.
In June, the Bulgarian government halted the construction of the
pipeline on the country's territory until the project is brought in line with EU
law.
On July 31, however, then regional development minister Desislava
Terzieva signed off on South Stream Bulgaria starting preliminary implementation
of construction and assembly works on a receiving terminal at Pasha Dere as well
as on a compressor station in the Varna area.
Earlier this month, the
regional development ministry said the cleared activities can harm state
interests and lead to complications considering that the European Commission has
launched a penalty procedure against Bulgaria on the issue. It also said at the
time that it had received and submitted to the Supreme Administrative Court 12
appeals against the construction permit.
According to the relevant
Environmental and Social Assessment, the Pasha Dere receiving terminal and the
Varna compressor station do not form part of the project, but have been
identified as associated facilities.
The Bulgarian onshore section of the
planned gas pipeline will stretch for 540 kilometres (km). South Stream is
approximately 236 km in length from the border between the Bulgarian and Turkish
exclusive economic zones to the Pasha Dere coastal location approximately 11 km
south of Varna.
The total value of the South Stream pipeline is estimated
at some 16 billion euro ($21.4 billion). Commercial operation is scheduled to
start by the end of 2015 with the pipeline reaching its full capacity of some 63
billion cubic metres per year by 2017.