Bulgaria, Russia set up joint venture to build gas pipeline

A shareholder agreement and the articles of association of the 50-50 company were signed between Bulgarian Energy Holding (BEH) and Russia's gas giant Gazprom, and hailed by Putin as "a key step towards the implementation of the pipeline."

"I would like to highlight the common European importance of South Stream. Italy and France already joined in the project and other western European companies are also ready to join," Putin told a press conference.

Bulgarian Prime Minister Boyko Borisov also hailed South Stream as "a true European project," adding that all agreements signed Saturday were reviewed in advance with EU Energy Commissioner Gunther Oettinger.

The South Stream Bulgaria company will plan, build and operate the Bulgarian stretch of the 3,600-kilometre (2,200-mile) pipeline to carry Russian gas to Europe via a 900-kilometre link under the Black Sea, bypassing the current major gas supply route in Ukraine.

The South Stream pipeline, built jointly by Gazprom and Italy's ENI, will have a capacity to feed an annual 63 billion cubic metres of gas to Europe with first deliveries expected at the end of 2015.

Bulgaria, which is almost 100-per cent dependent on Russian gas deliveries via Ukraine, has generally supported both South Stream and its rival EU-flagged Nabucco pipeline project to bring gas to Europe from central Asia and the Middle East.

Bulgaria will receive some $2.5 billion of transit fees from South Stream, Borisov noted Saturday, adding that both Bulgaria and Russia maintained a "pragmatic, mutually beneficial" approach in the talks.

But he also quickly added: "Of course we work on Nabucco with the same speed... so that Bulgaria will indeed become an energy hub in the Balkans."

During all talks with Russia on South Stream over the past year, Borisov was trying to use participation in the project as a bargaining chip for lower delivery prices from Gazprom.

But Putin failed to show on Saturday any clear signal that Gazprom might agree to lower the prices.