Today in Sochi Gazprom CEO Alexey Miller and Executive Director of the Bulgarian Energy Holding EAD Galina Tosheva signed a Cooperation Agreement which was initialed in Moscow on 28 April 2009 during the visit of the Bulgarian Prime Minister Sergey Stanishev, with regard to a gas pipeline for natural gas transit through the territory of the Republic of Bulgaria as part of the South Stream project.

The document stipulates the principles of interaction between the parties in relation to the feasibility study on the Bulgarian section of the South Stream gas pipeline and to the establishment of a joint project company. The feasibility study will contain detailed assessment of all technical, legal, financial, technological, environmental and economic characteristics and indicators of the project.

Each party shall take its own final investment decision to participate in the project based on the results from the feasibility study and in compliance with the parties’ respective national legislation and interests.

The parties shall establish the joint project company on a parity basis for the feasibility study conduction as well as for the design, construction and operation of South Stream section on the territory of Bulgaria and shall sign a shareholders agreement which will stipulate the specific rights and responsibilities of both parties as shareholders. The joint project company shall carry out its activity in accordance with the Intergovernmental agreement of 18 January 2008, Bulgarian legislation and European Union legislation.

Prior to the final investment decision regarding the implementation of the South Stream project, a management committee and joint working group, functioning on unanimity principle, to be created by Gazprom and Bulgarian Energy Holding, will engage in detailed design of technical assignments in the framework of feasibility study preparation for Bulgarian pipeline section.

Background:

For the purpose of diversifying natural gas export routes OJSC Gazprom is exploring the possibility of constructing a gas pipeline across the Black Sea to South European and Central European countries – the South Stream project.

To implement the onshore section of the Project outside Russia, intergovernmental agreements were signed with Bulgaria, Serbia, Hungary and Greece.

The provisions of the above mentioned agreements stipulate establishing joint ventures responsible for the FS development, as well as for the further engineering, construction and operation of the South Stream gas pipeline in the signatory countries provided that the technical practicability and economic viability assessments are confirmed.

The Bulgarian Energy Holding EAD was created in 2008 in the process of reorganization of the state-run Bulgargaz Holding EAD Company. The state owns 100% of the holding.

The Bulgarian Energy Holding manages the assets of companies operating in the sphere of electric power generation, production, transportation, storage and trade in natural gas and other energy carriers.