Bulgaria’s gas dependence on the Kremlin slowly loosens

In red, the Interconnector Greece-Bulgaria (IGB), also known as the Stara Zagora-Komotini pipeline. The TAP pipeline is in yellow. [IGB website]

This article is part of our special report Pipeline gas diversification becomes reality.

With the implementation of the IGB (Greece-Bulgaria) interconnector, Bulgaria could reduce its dependence on imported Russian gas by 50%, but the project, declared a priority more than ten years ago, continues to be delayed. EURACTIV Bulgaria reports.

Nearly two years ago, Bulgarian Prime Minister Boyko Borissov announced that the launch of the Trans-Adriatic Pipeline (TAP) should take place in “synergy” with the start of IGB, the interconnector Greece-Bulgaria, which would bring one billion cubic meters of Azeri gas per year to the country.

But at the end of 2020, it turns out that the construction of the Gazprom-favoured ‘Turkish Stream’ through Bulgaria is going much faster than the interconnector with Greece, despite the fact that Turkish is a Russian project, while the latter brings the country real diversification of supplies and, as a result, protection of national security.

In mid-November, TAP officially began supplying Azeri gas through the Southern Gas Corridor, via Greece and Albania to Italy. Bulgaria’s connection to the pipeline is under construction, but there is no official prediction of when it will start operating.

This has caused dissatisfaction in neighbouring Romania, but also in Ukraine, which also hopes to obtain gas from sources other than Russia.

Ukraine has lost billions in transit fees because Bulgaria began receiving Russian gas solely from the Turkish Stream route as soon as the pipeline reached the Bulgarian border in 2019.

The Greece-Bulgaria gas interconnector, also known as Stara Zagora-Komotini, would also allow US gas imports from LNG terminals in Greece. But the future of the 182 kilometre pipeline, which was declared a priority by Bulgaria and Greece in 2009, is still unclear.

“The importance of TAP is significant because it is directly related to the possibility of alternative supplies of natural gas from Azerbaijan to Europe and in particular to Bulgaria through the interconnector Bulgaria-Greece,” Ivan Hinovski, a well-known energy expert  from the Bulgarian Energy and Mining Forum, told EURACTIV Bulgaria.

The 1 billion cubic meters of gas per year which Bulgaria expects from TAP represents about 33% of the country’s consumption. Separately, through the interconnector, Bulgaria could receive up to half a billion cubic meters of gas from the LNG terminal in Alexandroupoli. Thus, the country can reduce its gas dependence on Russia by up to 50%.

But it does not seem in a hurry to do so, says Hinovski.

“Unfortunately, the Greece-Bulgaria interconnector, which is key to these deliveries and which has become a field of heated geopolitical games, has been delayed too much, for which Bulgaria has been criticized by the European Commission and Romania in particular,” he says.

“For now, the expectations are that it will be ready in the second half of 2021, when natural gas supplies from Azerbaijan can be expected to start,” Hinovski commented.

The price of the gas from TAP will be negotiated on a market basis, but the contract with Azerbaijan will reflect the formula for price indexation according to generally accepted criteria.

“Unfortunately, the prices and the formula for its indexation in this contract are kept secret. But in general, today the prices of all contracts for the supply of natural gas in Europe and in the world follow the principle of monitoring the prices of international gas exchanges,” explains Hinovski.

“So personally, I do not expect any ‘surprisingly’ large deviations from the prices of previous contracts with Gazpromexport. But more importantly, in this case we are definitely talking about increasing the energy security of the country.”

According to him, Bulgaria’s relationship with TAP has been delayed for too long, which was “the goal of certain geopolitical games in the region, despite the powerful intervention of American policy.”

Hinovski says that the pace of construction of two gas pipelines currently being built in Bulgaria is beyond compare. On the one hand, Turkish Stream is breaking records, while on the other, IGB is advancing at a snail’s pace.

“Turkish Stream is being built at a record speed, which raises suspicions of reverence for Russia and protection of a number of corporate interests in Bulgaria and Russia against the background of the forthcoming expiration in 2022 of the contract with Gazpromexport for natural gas supplies,” says Hinovski.

Another obstacle that experts have warned about is the overdue liabilities of Sofia District Heating for natural gas, which already exceed BGN 148 million (€76 million). This  puts at risk the payments for winter supplies from Gazprom and the issuance of a bank guarantee for the start of natural gas imports from Azerbaijan for Bulgaria from 2021.

The Azerbaijani side requires a bank guarantee for its supplies, according to the contract from 2013. And the banks set as a condition for the guarantee to solve the problem with the debts of Sofia District Heating.

With a stumbling block like Sofia District Heating, which takes natural gas from the state gas sector without paying, the implementation of a strategic project for Bulgaria is in question.

EURACTIV Bulgaria is still waiting for answers to questions posed to the country’s energy ministry.

[Edited by Benjamin Fox]

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