Bulgaria warns of new gas crisis

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Bulgarian Economy and Energy Minister Dragomir Stoynev warned yesterday (6 November) of a possible repeat of the 2009 gas crisis as a result of the intensified conflict between Russia and Ukraine.

Stoynev said that the pretext for a new gas crisis was Kiev's outstanding debt of some $900 million (€666 million) to Russian gas exporters Gazprom. The Bulgarian minister added that the real reason there could be a gas crisis was Ukraine's plan to sign an association agreement with the EU at the 28-29 November Vilnius summit.

"I am concerned about the development of the talks between the two countries. I strongly hope the nightmare in the winter of 2009 will not be repeated. Such a risk exists at this stage," the minister said after the regular meeting of the Council of ministers, as quoted by the news website Kapital.

In the winter of 2009, a payment dispute between Russia and Ukraine left part of Europe without gas, showing the vulnerability of several EU countries as they depend on only one gas supplier (see background).

In late October, Moscow accused Kiev of holding debts of $882 million and warned that it may halt gas supplies. Ukrainian Energy Minister Eduard Stavitsky admitted that his country was late in paying for the gas, but said he hoped that the problem would soon be solved.

But despite Russia’s assurances that the conflict was not political, this week Kapital reported that the pressure from Moscow may have been due to Ukraine’s plans to sign an association agreement with the EU. The news website referred a warning from Russian Prime Minister Dmitry Medvedev that Kiev would no longer be able to rely on loans from Moscow if it signed the deal.

Hidden motivations?

Kapital, a reputed economic media, also said that Stoynev may have had a hidden motivation for voicing fears about Ukraine’s handling of the gas controversy. His warnings may be interpreted as an argument in favour of Bulgaria’s surprising decision to symbolically start the construction of the South Stream gas pipeline, a Gazprom-favoured project intended to bring gas to Europe bypassing Ukraine.  

On 4 November, the village of Rasovo in the Montana municipality of Bulgaria, near the border with Serbia, hosted a ceremony for the welding of the first joint of the South Stream pipeline.

Gazprom’s CEO, Alexey Miller, was in Bulgaria for the occasion, watching the event from Sofia via video together with Bulgarian Prime Minister Plamen Oresharski.

“With the South Stream transit risks are gone forever,” Miller was quoted as saying.

The Russian gas will arrive in Bulgaria via an offshore pipeline to Galata, near the city of Varna. The South Stream pipeline will stretch 2400 km and by 2019 could have a 64 billion cubic metre annual capacity (bcm/y), delivering natural gas to Bulgaria, Serbia, Hungary, Slovenia, and Austria and Italy in one direction and Croatia, Macedonia, Greece and Turkey in a second.

According to observers, the ceremony of the first welding was a public relations stunt, intended to impress Kyiv. Many uncertainties over the project remain and the Commission says it has not seen any blueprints of the project yet.

Some Bulgarian opposition centre-right forces claim that the South Stream project will further increase Bulgaria’s energy dependence from Russia, and that by staging the ceremony the government of Oresharski has taken the side of Russia ahead of the Vilnius summit.

Ukraine has in the meantime signed a landmark deal with US major Chevron to develop shale oil and gas in western Ukraine. The government said that Chevron would spend $350 million on the exploratory phase of the project and that the total investment could reach $10 billion over the 50-year agreement.

Asked by EURACTIV to comment, Marlene Holzner, spokesperson to Energy Commissioner Günther Oettinger said that the payment dispute between Ukraine and Russia of which the EU executive was aware was going on for “quite some time”.

“We really trust that all our partners will honour their commitments and that they will deliver the gas as they did in the past”, she said.

Asked if the Commission has in the meantime received new information about the South Stream pipeline, Holzner said:

“No, the situation has not changed. We are in discussion with our member states [to whom] we have offered, if we have the plans and all the intergovernmental agreements, that we would help them to have a very coherent line. It’s my understanding that we’re still in that discussion, and that there hasn’t been any change or any news that I can share with you”.

She added that with such a “huge” pipeline project such as South Stream, the EU state concerned normally gives some sort of guarantees saying to the investor that it would help getting all the necessary procedures and the environmental impact assessment, and that all this becomes part of an inter-governmental agreement.

Holzner said that what the Commission wanted is that EU states don’t do this bilaterally, but that the Commission would also be involved.

On the issue of Russia asking an exemption from access of third parties to the infrastructure, she said that Russia should present the plans to the Commission directly and say on what grounds they want the exemption. “That has not happened”, Holzner said.

Asked about the state of play regarding reverse flows which would improve the energy security situation of Ukraine, Holzner said that this country was already getting gas from reverse flows from Hungary and Poland, but regretted that it was not getting such supplies via Slovakia.

“On that precise issue, we are negotiating. Ukraine says rightly that it is EU legislation that provides for that,” Holzner said. 

On 31 December 2008, Russia stopped supplying gas to Ukraine over a payment dispute. Russia said Ukraine was stealing natural gas destined for Europe for its own needs. Ukraine denied the charges, but said it needed "technical gas" to pump fuel through the pipeline system. 

On 6 January, supplies to Romania, Bulgaria, Greece, Macedonia, Serbia and Croatia were completely halted. It also emerged that several countries, including Bulgaria, did not have enough reserves to make up for a supply cut. 

But at a later stage, the conflict left Europe with no supply of Ukrainian gas. At this point, the EU agreed to send observers to monitor the supply of gas earmarked for Europe. 

At a summit in Moscow on 17 January 2009, Russian President Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko struck a deal, saying that the crisis was over. The EU reacted cautiously.

Three days later, on 20 January, supplies to Europe began to flow again. European Commission President José Manuel Barroso welcomed the resumption of deliveries, after a two-week standoff that left millions of Eastern Europeans without heating in the middle of winter. But he also warned that long-term lessons should be drawn from the crisis. 

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