* Bulgaria has a month to reply to formal notice from EU
* EU heads of government to debate energy security this
* Sofia says South Stream must not be held hostage to
* Ukraine urges EU to block South Stream
(Adds Bulgarian reaction, Ukraine comment)
By Barbara Lewis and Tsvetelia Tsolova
BRUSSELS/SOFIA, June 3 European Union
authorities have asked Bulgaria to suspend work on Gazprom's
South Stream gas pipeline on the grounds that the
project breaks EU law, a step that threatens to inflame tensions
between Russia and the 28-country bloc.
The latest move against Moscow, announced by the European
Commission on Tuesday, follows progress late on Monday towards
resolving a pricing row that has threatened to disrupt Russian
gas shipments via Ukraine.
As conflict rages following Russia's annexation of Ukraine's
Crimea region in March, Russia has forged ahead with its giant
South Stream conduit that would pump gas to the EU, bypassing
But the European Commission, the EU's executive arm, says
South Stream breaks EU rules that prohibit gas suppliers from
also controlling pipeline access and it has put on hold the
approval process for the project.
Bulgaria, historically close to Russia and heavily dependent
on its gas, has decided to start construction as a national
"Whilst discussions with the Bulgarian authorities are
taking place and until there is full compliance with EU law, we
have asked the Bulgarian authorities to suspend the project,"
Commission spokeswoman Chantal Hughes told Reuters.
She also said the Commission had sent the Bulgarian
authorities a letter of formal notice asking for information, a
preliminary measure that could eventually lead to full
infringement proceedings and possible fines.
Bulgaria's energy minister, a staunch supporter of the
project as a means of bolstering energy security and creating
jobs, said he did not believe Bulgaria would be sanctioned and
called for dialogue to continue with Brussels.
"I do not see grounds for drama ... it is just a matter of
time and a dialogue with the European Commission to find the
best solution," Dragomir Stoynev told reporters.
Stoynev said the project, aimed at transporting 63 billion
cubic metres of gas per year under the Black Sea through
Bulgaria to central and southern Europe by 2018, should not be
held hostage to the standoff between Russia and Ukraine.
"I appeal for solidarity from the European Commission.
Bulgaria, and other member states through which South Stream
passes, they cannot be hostages of this conflict between Russia
and Ukraine," he said.
Commission spokesman Antoine Colombani described the matter
as urgent and said the EU executive would also act against any
other member states that work with Russia on South Stream if
they break EU law.
The Commission was also concerned that downstream contracts
between South Stream Bulgaria and subcontractors were allowing
preferential treatment for Bulgarian and Russian bidders,
Last month, Sofia picked a consortium led by Russia's
Stroitransgaz, owned by sanctions-hit businessman Gennady
Timchenko, to build the Bulgarian section.
While Russia seeks alternative routes for its gas exports,
which provide roughly one third of EU gas needs, the European
Union is looking for other ways to improve its security of
In Kiev, Ukrainian Prime Minister Arseny Yatseniuk called on
the EU to block South Stream.
"We consider the South Stream project as one that aims to
increase Europe's dependence on energy (from Russia), remove
Ukraine as a transit country and increase Gazprom's influence in
Europe. So we call on the EU to block South Stream," he said.
The Commission published a strategy paper last week that
member states will debate later this month.
The paper underlined that any new infrastructure must comply
with EU rules on a single energy market, including the so-called
Third Energy Package, which prevents companies that supply gas
from owning the infrastructure through which it is distributed.
(Additional reporting by Pavel Polityuk in Kiev; Editing by
Dale Hudson, Jane Baird and Matthias Williams)