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Russia, Bulgaria Sign Pipeline Deal

Russia has signed an agreement with Bulgaria to construct a gas pipeline that could increase Western European reliance on Russian energy. As VOA Correspondent Peter Fedynsky reports from Moscow, the deal also competes with a U.S. and European Union pipeline aimed at bypassing Russia.

The Russian-Bulgarian agreement to build the so-called South Stream pipeline was reached in Sofia after intense last minute talks over ownership rights. Bulgarian Prime Minister Sergey Stanishev announced in Sofia that both sides would have an equal share in the company that will own and operate the pipeline on Bulgarian territory.

When completed, the $14.5 billion project is expected to transport Russian gas under the Black Sea through Bulgaria and then in two directions toward Western Europe.

The pipeline agreement came during a visit to Bulgaria by President Vladimir Putin and his chosen successor, the head of the Russia's state energy monopoly Dmitri Medevdev. Mr. Putin said both countries also signed documents on practical issues related to construction of a nuclear power plant in Belene, and an oil pipeline between the Bulgarian port city of Burgas and Alexandropoulos in Greece.

The Russian leader says his country has set aside more than $5 billion in its budget, which Bulgaria may use as credit for construction of the Belene nuclear power plant.

The South Stream project complements the Nord Stream pipeline now under construction for Russian gas deliveries under the Baltic Sea to Germany.

Russian energy analysts view these projects as ways to diversify the country's energy delivery network. However, many analysts in the West fear Russia could use energy to force political concessions from Europe. For this reason, the United States and the European Union are backing the so-called Nabucco project, to deliver Central Asian gas under the Caspian Sea across Bulgaria to Western Europe.

But Anatoly Dmitrievsky, the director of Moscow's Oil and Gas Research Institute, says the Caspian poses more technical challenges than the Black Sea.

Dmitrievsky says the Caspian Sea is not only deep, but also has tectonic movement and volcanic activity.

The analyst says this could be why Bulgaria opted for South Stream with Russia. However, Nabucco could yet be built, which would give Bulgarians two sources of revenue for transit fees across their territory.