The government signed all major energy projects proposed by the top-level delegation ran by Russian President Vladimir Putin in Sofia on Jan 17-18. The government has recently announced 2008 as the year of Russia in Bulgaria promoting various cultural events at bilateral level. The Russian delegation in Sofia tackled the following large-scale economic undertakings:

·          South Stream project for transit of natural gas from Russia to Southeast Europe and Italy through the Black Sea and the territory of Bulgaria with possible extensions to other countries. Although it has been reported that a final agreement is not likely to be reached during the visit of Putin, the government signed a framework deal with the Russian team for setting up a joint company to run the project on the territory of Bulgaria . The company will be registered in Bulgaria with equal stakes of 50% for both sides. The precise routes and markets are not determined yet but the target capacity of the pipeline is set at 30bn cubic metres of natural gas that is comparable to the EU-backed Nabucco project for transit of natural gas from the Caspian Sea and Middle East sources to central Europe . The South Stream and Nabucco projects should not be seen as rivals however as they are targeted at different end-user regions and are well below the long-term forecast demand for gas imports in Europe . The government of Bulgaria wants to receive guarantees that the new pipeline will not be used as a substitute for transits carried out through the existing pipeline, which is fully owned by the Bulgarian state utility Bulgargaz, but it is not announced yet whether such guarantees are given by the Russian side, Finally, the South Stream project will also depend on arrangements with countries that will also affect the precise routes of the pipeline to Europe. At this level, construction costs on the territory of Bulgaria are estimated at EUR 1.4bn with annual transit fee receipts of about EUR 200mn to be shared by the joint company. The total length of the new pipeline on the territory of Bulgaria will be at least 300km;

·          Construction of 2,000MW nuclear power plant in Belene . The two sides signed a final agreement valued at EUR 4bn. Russia ’s AtomStroyExport will supply and install the equipment but will not participate in the ownership structure of the plant. The deal is accompanied by long-term arrangements for supply of nuclear fuel and storage of used fuel;

·          Construction of Burgas-Alexandroupolis oil pipeline. The project is reconfirmed during the visit of Putin but it will face strong resistance from the municipality of Burgas, which will hold a referendum on the issue over concerns that possible oil leaks would demolish the tourist business in the Black Sea region;

·          Setting up a new railway ferry line from Bulgaria to Russia that will be expected to service a large share of local and EU transports to Russia . The plan is approved in principle but is still in early phase of development;

·          Licences for arms production. No compromise is reached on this issue as Russia reportedly wants to have a final saying on all Bulgaria ’s exports of arms based on Russian technologies. The main problem is reportedly related to machine guns Kalashnikov and Bulgaria ’s arms exports to Georgia;

·          Plan for joint actions in support of tourist co-operation is signed. The deal is expected to simplify and speed up issuance of tourist visas to Russians.