Bulgaria threatened Thursday to harden its stance over Russia' s South Stream gas pipeline, after Moscow filed a massive compensation claim against Sofia over a dropped nuclear plant deal.

"I hope that (Russian) President (Vladimir) Putin did not know about this company's action," Prime Minister Boyko Borisov said.

Tuesday, Russia 's state-run Atomstroiexport presented a 1 billion euro ($1.3-billion) compensation claim against Bulgaria before the International Court of Arbitration.

"If he knew, his November 9 visit to Bulgaria , when we are due to sign on South Stream, will not be pleasant at all," Mr. Borisov added.

"We will go to court" over Atomstroiexport's claim, he vowed, even as he noted the two countries' "centuries-old friendship."

Mr. Borisov didn't however go as far as to question the future of South Stream altogether.

"For me this project has been agreed on and construction will start," he said.

Sofia drew ire from Moscow for cancelling a deal with Atomstroiexport to build a 2,000-megawatt nuclear power plant at Belene, as it was unable to fund the costly project.

The deal, agreed in principle in 2006, was dogged by constant haggling over its estimated price of EUR6 billion and a failure to find a new Western investor after the withdrawal in 2009 of German utility RWE AG (RWEOY).

However, Bulgaria has pledged to join the Russia-backed South Stream gas pipeline project, which will bring Russian gas to Europe under the Black Sea , bypassing row-prone Ukraine .

A final investment decision for the Bulgarian stretch of the 3,600-kilometre (2,200-mile) pipeline was expected to be taken by November with construction planned to start in early 2013.

In November 2010, the state-owned Bulgarian Energy Holding and Russia 's gas giant Gazprom OAO (OGZPY) already set up a 50-50 joint venture to plan, build and operate the link.

Bulgaria , which is totally dependent on Russia for its gas, has tried in the past to use its participation in South Stream as a bargaining chip for lower delivery prices from Gazprom.

The government has however always denied any link between the gas deal and the Belene project.

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