Bulgaria freezes work on South Stream pipeline

“We discussed South Stream and the EC’s [European Commission] request regarding EU legal procedures. I pointed out the project will go forward only after we resolve all the issues which Brussels has”, he said.

“I have ordered to stop construction until the procedure is agreed with Brussels”.

The commission has taken legal action against Bulgaria on grounds that public tenders for South Stream contracts broke EU rules.

It has threatened other action on grounds that Bulgaria’s agreement with Russia violates EU law on competitors’ access to the pipeline.

Bulgaria’s official statement added that one of the US senators, Republican John McCain, highlighted the issue of Stroygazmontazh.

Bulgaria gave the Russian engineering firm a South Stream contract in May despite the fact it is on a US blacklist. “Senator McCain expressed hope that …sanctioned companies would not participate [in the project]”, the Bulgarian statement said.

The EU commission welcomed Oresharski’s decision.

“This is an important step in response to the concerns raised,” a spokeswoman told EUobserver on Monday. “The European Commission has called for a discussion on South Stream at the upcoming European Council [on 26 and 27 June] so that a common EU approach can be taken".

Bulgaria’s energy minister has said it will be built once the legal disputes are tidied up.

But its fate is becoming increasingly tied to the Ukraine crisis.

Russia’s ambassador to the EU, Vladimir Chizhov, also on Monday, told the Itar-Tass news agency “it is hard to shake off the feeling” that the commission is “blocking” the pipeline “for purely political purposes”.

He added that it represents a "creeping shift to economic sanctions against Russia".

South Stream is to go from Russia, under the Black Sea, via Bulgaria, to Italy.

It is to pump 63 billion cubic metres (bcm) of gas a year, equivalent to half of current Russian exports, and to start working in 2015.

But its critics say it would increase EU energy dependency on Russia and harm Ukraine by bypassing its gas transit network.

EU energy commissioner Gunther Oettinger told press last week the commission is unlikely to back down unless the crisis abates. “With civil war-like conditions in eastern Ukraine and without Moscow's recognition of the Kiev government, we will certainly not arrive at a political conclusion of our negotiations,” he said.

Oettinger held talks with Russia and Ukraine's energy ministers in Brussels on Monday.

Officials say they were due to speak about Ukraine gas prices, not South Stream.