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First step towards building a gas hub in Bulgaria

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Bulgaria does not have any significant gas deposits, nor is it a major gas market, what it does have is big plans in this field, most of all with the project for a European gas hub and an exchange for supplying clients from different European countries. After work on the South Stream gas pipeline project was frozen in 2014, a project that was supposed to bring more than 64 billion cubic metres of Russian natural gas along the Black Sea bed to the Bulgarian coast, the idea of a gas hub in the country faded into an illusion. But since then things have evolved, not necessarily in a positive direction, nonetheless the situation is now different.

Any hopes that oil and gas deposits will be found in Bulgaria’s territorial waters in the Black Sea have so far come to nothing – latest news is that offshore drilling near Bourgas has yielded no result. Be as it may, Bulgaria was not relying solely on having gas of its own to fuel its European ambitions. And never ceased its efforts to build the Balkan hub on the Black Sea coast. The country put a lot of effort into diversifying and increasing the capacity of its gas transmission system and have billions of cubic metres of Russian, Azeri, American natural gas, or gas from any other possible source, flowing along its pipes. A contract has already been concluded with Azerbaijan for the delivery of 1 billion cubic metres of gas annually as of 2020. Work is going ahead on the gas interconnector with Greece which should also provide additional quantities of gas, including liquefied American gas. As a matter of fact liquefied American gas has already been delivered, with all traders being happy with the prices and delivery conditions. Russia and its Gazprom also firmly supported Bulgaria’s gas projects. Not long ago Gazprom completed the construction of Turk Stream gas pipeline along the bottom of the Black sea whose second pipe is to cut across Bulgaria, delivering 15.75 billion cubic metres of Russian gas a year. Something that was not so certain until Russia’s Energy Minister Alexander Novak stated in public, in Turkey, that Bulgaria had been chosen over Greece for the gas pipeline’s route in the direction of central Europe. Until then contacts between the two countries on the matter had been at a company level – between Russia’s Gazprom and Bulgaria’s Bulgargaz. The two companies agreed to build and fuel a gas pipe on Bulgarian territory that will traverse the country from the border with Turkey in the southeast to the border with Serbia in the northwest. The Bulgarian side even held a tender to select a company to build the 747 km. long section, with legal disputes breaking out and continuing to this day, and a very real danger of a longer delay than planned for putting into exploitation the 1.1 billion euro project in 2020. Either way, the supply and sale of gas has been negotiated for 90 percent of the volumes of Russian gas along the pipe, and Bulgaria is counting on getting around 100 million euro a year for transit. It should be said, however, that parallel with the extension of Turk Stream across Bulgaria, the Russian gas giant Gazprom is stopping the transfer of Russian gas along the now unneeded Trans Balkan Pipeline which traverses this country, via Ukraine to Turkey. For transiting this gas, Bulgaria was supposed to be paid over 700 million euro, up until 2030.

It is essential to note that the Bulgarian authorities say they have learnt their lesson after the South Stream fiasco, a project that fell through because it did not comply with European requirements and rules. Minister of Energy Temenuzhka Petkova emphasized that “we shall not be repeating old mistakes”, and that the project has been coordinated with and approved by Brussels. We can only hope that it has been coordinated with and approved by USA as well, for it too intervened to stop South Stream. It that is so, then it can be said that an important and concrete first step towards the main European target has been taken.





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