13 november, 2010 19:30  

Prime Ministers Vladimir Putin and Boyko Borissov speak to the media following bilateral talks


Transcript of the media conference:

Vladimir Putin: Mr Prime Minister, ladies and gentlemen,

First of all, I would like to thank Mr Prime Minister again for inviting me to Bulgaria. We've done a great job coordinating bilateral agreements to prepare them for signing today. We are engaged in a constructive and friendly dialogue, discussing in detail a wide range of issues of our bilateral cooperation. Today we have focused on trade and the economy. Our cooperation in these areas has been very successful. Bilateral trade grew by over 50% in the first nine months of this year, offsetting the sag we saw during the recession last year. Our commercial cooperation is now seeing steady development.

We are cooperating through a number of large-scale projects in different areas, including energy, intended to revitalise our economic cooperation. One such project is the South Stream pipeline, crucial for Europe. Our partners from Western Europe have shown interest in this project; leading Italian and French companies have already joined it. Gazprom and Bulgarian Energy Holding have embarked on a feasibility study for the Bulgarian section of South Stream. Today they have made a very important step in implementing this bilateral agreement – they have signed the charter and the shareholders agreement for their joint venture.

We've also taken up another major issue, the possibility of constructing a nuclear power plant in Belene. We have committed ourselves to adopting the engineering plan for this nuclear power plant by the end of the year. We understand and respect the position of the Bulgarian government and prime minister, who insist on getting more European countries involved in this project. We are eager to do this and are negotiating this issue with our European partners.

This project is enormous and will require much investment, but Russia is eager to create favourable conditions for our Bulgarian partners, providing loans, equipment and fuel as well as the disposal of spent nuclear fuel. We plan to contract local companies to carry out general construction work, which is expected to account for anywhere between 25% and 30% of the total investment, and get leading European international companies involved in other areas of the project. We will certainly continue consultations with our Bulgarian partners to revise the plan where Bulgaria considers it necessary.

Today we have also focused on cooperation in culture and education. Clearly, these are some of the most important areas since our nations are interconnected through a multitude of strong spiritual and cultural links. We have taken this relationship to a very high level in recent years, including major programmes during the Year of Russia in Bulgaria and the Year of Bulgaria in Russia.

We are also cooperating in tourism. Bulgarian resorts have always been popular with Russians. Hundreds of thousands of Russians spend their holidays on the Bulgarian coast of the Black Sea. Between January and August of this year 320,000 Russian tourists visited Bulgaria. This number is expected to reach half a million soon. Russian companies invest a great deal in Bulgarian tourism infrastructure. Russia is eager to continue interacting with Bulgaria to promote mutual tourism.

In closing, I'd like to say how satisfied I am with these talks and the preparations made for them. Thank you for your attention.

Boyko Borissov (as translated): Thank you Mr Prime Minister. I would like to say that the agreement signed by (Bulgarian) Minister of Foreign Affairs, Nickolay Mladenov and the state secretary of the Russian ministry concerns 20,000 Russians and 40,000 Bulgarians employed in the Soviet Union, Russia and Bulgaria. It matters tremendously to 60,000 people.

As for the South Stream project, I would like to stress once again that we are outpacing the roadmap by several months – two months, to be precise. The map was signed on the basis of an intergovernmental agreement.

We talked with Commissioner Oettinger (Energy Commissioner Gunther Oettinger of the European Commission) yesterday to confirm that the agreement is in compliance with European legislation because, as Prime Minister Putin said, South Stream is a project that concerns all of European in both scope and importance. We came to an accord and I am grateful to Prime Minister Putin as our partners have agreed to have South Stream project accounts opened in the Bulgarian Development Bank, whose capital is 100% Bulgarian.

I would like Mr Putin to repeat, once again, that Bulgarian archives for 1939-1944 will be returned to Bulgaria. As he said during our plenary meeting, such cultural and historical valuables as this should be kept in the country they belong to. The State Duma – Russian parliament – is due to pass the relevant bill but, irrespective of whether it does or not, I hope that Prime Minister Putin will promote the return of these archives to a Bulgarian museum.

As for the Belene nuclear power plant, we have agreed that the experts will continue working for Bulgaria to have the lowest-cost and, at the same time, the safest power plant in Europe – and why not in the world?

As for gas prices, we hope to receive Prime Minister Putin’s answer as soon as possible because we have spoken many times about their great impact on the competitiveness of the Bulgarian economy.

If you want to ask more questions about matters we have not touched upon…

As far as the Burgas-Alexandroupolis oil pipeline, I have again been clear on our position. It will upset the environmental balance. This is both the expert and public opinion.

I am grateful to Prime Minister Putin for seeing our point. We will have to assess the impact of the pipeline on the environment, and we will have experts continue working to substantiate their opinions.

Question: Bulgarian National Television.

Mr Putin, Mr Borissov, both parties have made mutual compromises during these talks to reach these agreements. I would like to quote Bulgarian media outlets: has Bulgaria announced its capitulation and will gas prices really be reduced?

Vladimir Putin: Sorry, I don’t quite see what compromises you mean.

Question: It was the matter of one of the parties meeting the other halfway to sign the documents. In particular, has a compromise been made concerning natural gas prices to implement the South Stream project?

Vladimir Putin: The South Stream project is not connected with gas prices in any way. I want to call your attention to something we are all well aware of. The transit of Russian natural gas to the Balkan and other European countries stopped at the turn of 2009 due to a crisis with Ukraine, our principal transit country. We are suggesting that a pipeline be built from the Russian shore to Bulgaria to fully guarantee unbroken supplies to Bulgaria and all of Southern Europe. That’s what this is about: to reduce transit risks to the lowest possible or eliminate them entirely. To this end, upgrading the infrastructure is the main thing. More than that, Bulgaria evidently stands to gain materially. Presently, it receives from Russia approximately 600 million euros or dollars – I’m not sure which – for the transit of a small amount of gas to other countries. Now, if we build the South Stream, Bulgaria will get almost 2.5 billion merely for the pipeline crossing through it. This money can be used to bring gas to consumers at lower prices.

I want to call your attention to a matter concerning not only Bulgaria but all European consumers of Russian natural resources, including energy – gas, in this instance: the cost of Russian natural gas makes up only a third to a half of the consumer price. Local taxes and intermediary profit account for the rest. This is also something to consider and re-evaluate.

However, we have arranged with Mr Prime Minister that we will monitor gas prices, and businesses will also monitor them and agree between themselves on acceptable prices. I would like to raise another issue. Russia, its government or businesses – Gazprom in this instance – do not set prices at will and by administrative means. Gas prices are tied to oil prices, which are formed at the world exchanges with market tools. Gas prices are based on these world prices. There is a price formula determining the end result, but again, it is not a price set by Gazprom, but one determined by the global and European energy market.

However, our partners stay in contact and have been instructed to focus attention on prices to guarantee both parties’ vital interests.

Boyko Borissov: I’d also like to answer this question if you’ll allow me. There has been a lot of speculation in the media, but I didn’t expect such a question here. Let’s set them straight. 

My counterpart, Mr Putin, and I have talked as friends, but we’ve also been tough when we had to. We’ve never tried to link separate projects together. We’ve never used any mediators. That’s a point I’d like to stress. Here’s one concrete example: Mr Berlusconi has never discussed the South Stream project or any other issue with me, this despite the fact that we all get along very well indeed – me and Mr Berlusconi; Mr Putin and Mr Berlusconi. So (all that talk in the media) is nothing but speculation.

I think Mr Putin and I have effectively defended our reputations as strong-willed people.  No one’s giving in to the other. We have pragmatic, mutually beneficial relations. We don’t have to start the ball rolling because our country’s relations have been evolving for hundreds of years now. But we have a relationship based on pragmatism and a mutual benefit for our two countries.

It’s true that, with Mr Putin’s consent, our conversations have been recorded using shorthand. And you’ll be provided with the transcripts. We’re absolutely open to the Bulgarian media. And I hope we’ll be able to maintain that stance at all forthcoming discussions.

When you go over (the transcripts), you’ll see that we considered a wide range of issues. There is no point mentioning them all now, as you’ll have them in the transcripts.

The signing of today’s agreement will make it possible for the Bulgarian government to avoid settling loans 15-20 years from now and paying subsidies to foreign companies that work on energy projects in Bulgaria. As a result, the Bulgarian governments that come after us will be getting 2.5 billion a year to replenish the country’s treasury coffers.

What would Bulgaria’s budget look like if we got an additional 2.5 billion in public revenue now? We’ve made sure our agreement will yield a profit in the future. We’re also working toward developing the Nabucco project. Bulgaria stands to benefit from this agreement. And I hope that neither side will take Mr Putin’s visit as a Bulgarian surrender (to Russia). Again, the relations between our two countries are pragmatic and mutually beneficial.

Question: I’ve got a question for both prime ministers. Getting back to the talks on the price of Russian gas: As we know, the European Union has prepared a third energy package, which dramatically changes the entire mechanism of requirements for European energy purchases. I’d like to know how you, Mr Putin, and you, Mr Borissov, feel about that energy package. How does it affect the gas price talks? And whether it may have any effect on the implementation of the South Stream project? Thank you.

Vladimir Putin: The solution suggested by the European Commission has been guided by good intentions, aimed at liberalizing the natural gas market. But it’s hard to predict what kind of implications these proposals could have, once implemented. 

What is this energy package all about? It comes down to preventing major pipeline operators from pumping natural gas or other fuel through pipelines they run. But this would allow outsiders -- companies that may have nothing to do either with gas production or delivery – to use those pipelines for their own needs, meaning further markups on the selling price. This is the main threat the energy package presents.

Also, it will hinder the development of Europe’s own energy infrastructure. If large operators, such as Gazprom, are deprived of the right to build new facilities, the development of the infrastructure will inevitably slow down. It’s not just Gazprom that could find itself in such a position, but major European producers, as well. This will lead to infrastructural limitations on energy deliveries to the European market, a situation conducive to price spikes. So I believe these proposals need at least to be carefully reviewed by the expert community.

Boyko Borissov: As for the demands of the European Commission, I mentioned that we talked with the EC representatives yesterday, for a reason. They are here with us today. We coordinate with them those issues that concern us as a member of the European Commission. In the winter of 2008-2009 Sofia and all of Bulgaria were freezing for lack of gas, and there was no way to get more gas elsewhere. So, Bulgaria is very interested in pumping gas through two pipelines. Along with Mr Putin, I hope that the experts of the European Commission will take these facts into account.

Vladimir Putin: I’d like to add a few things, to return to what I’ve already said in replying to the first question. All of these decisions, these energy package ideas are prompted by the desire to liberalize the market and reduce prices. This is easy to understand. But, as I’ve mentioned, when the end consumer has to pay for gas, the cost of Russian gas as a product amounts to a third, or at best, 50% of the final price; 50% or more of the price is the markup of our European partners and added taxes.

It is possible to minimize expenses, reduce the markup and ease the tax burden in this area. It is possible to follow this road. Therefore, we should carefully consider all of this. I also think that not all consumers in Europe understand that the bigger they are the less they pay for the gas consumed. The cost of our gas in the end price for major consumers is about 50%. This percent is much bigger for smaller consumers, including home owners. Major investors, major participants in this economic activity have the opportunity to influence the decision-making government agencies. I think that in principle it would be fair to share this burden between all participants in the market and all consumers and not to limit the development of the energy infrastructure in Europe.

Boyko Borissov: I’d like to say that we have agreed with Gazprom that there will be no mediators in any future contract that we sign. You understand that at best, 50% of the price of gas is a profit, the middleman’s markup.

Question: The newspaper Trud.

Can we find out the final cost of the Belene Nuclear Power Plant? What shareholders, what Bulgarian companies will take part in this project? And when will construction be launched? 

Vladimir Putin: The Bulgarian party insisted on its Russian partners specifying the end figure. We are ready to do it here and now.

Question: Here and now?

Vladimir Putin: Yes.

Response: Please do!

Vladimir Putin: I cannot – it’s impossible unless we agree to it with Bulgaria.

Boyko Borissov: You see, I have repeatedly raised the price issue concerning the final cost of the Belene nuclear plant because Bulgaria had an extremely bitter experience with the Tsankov Kamyk reservoir. It is a typical example. There are many contracts which announce a price while the supplements specify sums bloating the basic contract price two-, three- or even fourfold. That is why we have said many times in public that the signed contract with the previous government amounts to 3.99 billion euros. But this is not the final price because it does not take into account the inflation index, infrastructure expenditures, and interest on contract loans. Considering long-term loan interest payments, which affect the price, the previous government was wrong when referring to the final cost. We demanded that experts representing both countries set the final cost with loans and interest included: we need to know how many billions the Belene plant will cost in fifty, sixty or any other number of months and after the next reactor is ready...

The plant is being built on a turnkey basis, in other words it can begin operating as soon as it is finished. How much will it cost? Who will invest in it? What loans can we expect? How much will we pay? These are serious calculations, and I want these questions to be analysed in a serious way for us to determine the final cost and announce it.

Vladimir Putin: I informed Mr Prime Minister that we have drawn up an ambitious programme in Russia to develop the nuclear power industry.

First, approximately 30 major nuclear power units were built in the USSR throughout the Soviet years, and we intend to build 18 major units before 2015.

Second, we are actively working abroad: China will possess six nuclear power plants and India 16 units, including the two that have just opened. We have a contract with Turkey, your neighbour, to build there too.

I have said already that we offer very good, current and competitive technology. Our basic competitors in Europe, Japan and the United States cannot rival us for the quality of equipment though they charge more. The higher charges mainly depend on their different system of labour remuneration and the differences in energy production, transport, etc. We are more competitive in these respects while guaranteeing top quality. I have also said that we are not greedy – we attract foreign partners, mainly from Europe, in the fields where they are indisputable leaders, and we cede about 25% of the overall volume to them.

We have announced our final costs to the Bulgarian party today. Now it’s the Bulgarian experts’ turn to run estimates and give us a response.

Question: You stressed many times that energy cooperation – the construction of the South Stream pipeline, nuclear plants and the oil pipeline – is the central topic of today’s talks. But isn’t there anything else to bring our two countries together? What other cooperation can we expect in other fields soon?

Vladimir Putin: To finish our discussion on energy, I can say that, apart from what we have mentioned already, Russia continues to invest in the Bulgarian energy industry. Our LUKoil Company has already invested a billion dollars to update an oil-processing plant and is planning to invest a billion and a half or two billion more. Gazprom Neft is ready to begin geological prospecting on the Black Sea shelf at the Romanian border.

We have spoken today about cooperation in education and personnel training. We have also discussed cultural contacts, as I have mentioned. The Year of Russia was held in Bulgaria and the Year of Bulgaria in Russia. Now we are considering the prospects for Russian Culture Days in Bulgaria. This is a separate project, and we and our partners have much more to do on it yet.

We have also discussed military technical cooperation. There are some problems there to be addressed together. They concern manufacturing licenses for special-purpose equipment and military technology of Soviet design.

We have talked about the opportunities for transport cooperation. One such project should be finished by now – I mean the Varna-Port Kavkaz railway ferry line. We have discussed cooperation in aviation and the servicing of Russian helicopters in Bulgaria.

There are other fields of partnership, as well. They all essentially make a broad range of all-round interaction between our countries and businesses.

Boyko Borissov: I would like to add something to what Prime Minister Putin has said. I mean our offers for the maintenance of Russian fishing vessels in our shipyards. We have also offered our construction companies’ services to build roads and other projects for the upcoming Olympics in Sochi.

One of today’s signed agreements is of great importance and concerns 20,000 Russians and 40,000 Bulgarians formerly employed in our two countries.

We are working to extend cooperation in healthcare.

Look up what we have signed in the transcript – licence arrangements, the archives I have mentioned, property in the other partner’s territory, and much else…

Thank you, colleagues.

Now, I have given Mr Putin a Bulgarian Shepherd dog, and he wants me to show it to you.