A company controlled by a Russian businessman covered by US sanctions was today selected to build the section of Moscow's latest gas pipeline to the West through EU-member Bulgaria.
"Stroytransgaz consortium DZZD is the winner of the public tender for construction of the Bulgarian stretch of South Stream," South Stream Bulgaria company chief executive Vladimir Inkov told journalists.
Russian billionaire Gennady Timchenko, who controls 63 per cent of Stroytransgaz and is a close associate of President Vladimir Putin, was put on the US sanctions list over Ukraine in March, but has not been sanctioned by the EU.
The South Stream pipeline under the Black Sea, bypassing Ukraine, is one of Russia's major projects to reduce its reliance on Ukraine as a transit country after price disputes in 2006 and 2009 led to interruptions of shipments to Europe.
Bulgarian and Russian officials involved in the tender decision declined to comment on the selection of company owned by a businessman covered by US sanctions.
The results from the tender come amid ongoing tensions over Ukraine, which prompted a recommendation by the European parliament in mid-April that the South Stream project, led by Russian gas giant Gazprom, should not be built.
Five Bulgarian companies are to participate along with Stroytransgaz in the joint venture that will design and construct the 540-kilometre Bulgaria section of the link that will transport up to 63 billion cubic metres of Russian gas per year.
The USD 4.7-billion contract also includes the construction of a gas receiving terminal on the Black Sea, a gas control junction and three compressor stations.
Bulgaria which depends almost entirely on Russian gas deliveries via crisis-torn Ukraine has long backed South Stream as a way to guarantee security of its supplies and the country has objected to EU plans to freeze the deal.
Gazprom's project manager Leonid Chugunov said in Sofia that South Stream "is being implemented strictly within schedule" which would see it begin making deliveries in the second half of next year.
