South Stream Not Legally Stopped, Certain Activities to Continue
Given the pressure piling on Sofia to progress with projects to increase energy security in South-Eastern Europe, and the recent decision of the European Commission to send a statement of objections to Bulgarian Energy Holding (BEH), Bulgaria is increasingly under the spotlight.
While the Commission’s preliminary view suggests that BEH may have breached EU antitrust rules by hindering competitors access to key infrastructures in Bulgaria, Bulgarian Minister of Energy Temenuzhka Petkova has reiterated that interconnectors with Greece and Turkey are key to realise the Southern Gas corridor.
We spoke about Bulgarian intentions to become a gas hub, the prospects of a revival of the South Stream project, the Bulgarian relations with Turkey, and the European funds for Bulgarian gas projects.
“The amount of the funding is too early to estimate, but the need is for several hundred million euro” commented the MEP, who is also member of the Delegation to the EU-Russia Parliamentary Cooperation Committee.
Recently, Bulgaria’s Prime Minister Boyko Borissov spoke about energy projects with the German Government. On that occasion, he also expressed satisfaction with the European support for the implementation of the projects. Do you know which were the projects discussed by Borissov and German Federal Minister of Foreign Affairs Frank-Walter Steinmeier? Do you think the meeting will speed up these projects?
With the cancellation of the Nabucco and South Stream gas projects, Bulgaria and South-East Europe regionally have returned to the situation of some 10-15 years ago when the only route and source for external gas supply was Russian gas via the Trans-Balkan pipeline. But this time the situation is coloured with growing mistrust in the reliability of our external gas trade and gas transit partners. On the other hand, we are just a few years from the perspective of the Southern gas corridor, the new LNG terminal on the Aegean sea cost, exploiting our own gas resources in the Black sea, which are all projects of common regional and European interest.
Prime Minister Borissov discussed the role of Bulgaria in this new geopolitical gas map in the region, the possibilities for expediting realization of projects in coordination with the countries concerned and the European Commission. The vision of Bulgaria for building a gas hub in the South-East region of the Europe and cross border interconnectors to neighboring countries were certainly in the focus of the conversations between the Bulgarian Prime Minister and the German Federal Minister of Foreign Affairs.
The German and European support for implementation of these projects, expressed after the meetin, is not only an acknowledgment of the priority the projects deserve, but also it implies better regional cooperation and coordination at EU level. When the European family works together, we have so much to gain.
Sometimes, a desired orchestrated approach seems to break down. An example. Despite the announcement made by Russian President Vladimir Putin to cancel the South Stream gas pipeline, Bulgaria’s Regional Development Ministry has reportedly recently opened a tender for the Bulgarian part of the offshore section of the South Stream gas pipeline. What does it mean?
The South Stream project is now in a very strange situation. On one hand, President Putin announced its unilateral cancellation in Ankara on 1 December 2014, confirmed by the Gazprom Chairman Alexey Miller. On the other hand, almost four months later there is no official notification for the cancellation of the project neither at governmental level, nor at corporate level. I will not speculate on what is hidden behind that but, in these circumstances, the project cannot be considered legally and contractually stopped and some activities under the contract obligations have to continue.
This is the case with the tender opened recently by the Bulgarian Regional Development Ministry. It concerns development of a methodology for determination of the compensations for the beach easement that should be established at the place where pipes come on land from the sea. It also includes an assessment of the construction rights on the sea bed in Bulgarian territorial waters.
I hope the results of this 30,000 Euros tender can also be used for the construction of connecting pipes to the gas fields in the Black sea that are now in the exploration phase.
Bulgaria has been active in supporting a revival of the Nabucco project. According to several experts, the pipeline connecting the Turkish-Bulgarian border to Austria via Romania and Hungary, could be realised. When will we know something more about it? What are the events we should look at?
The Nabucco pipeline project used to be the main project of bringing Caspian gas to EU. Now we have the Southern Corridor with its TANAP and TAP projects that shall deliver Azeri gas to Italy via Turkey and Greece. With the expected further expansion of the Caspian region gas capabilities, the question about how this gas will reach Central-East and South-East countries remains open.
The so called Nabuco-West project is one good option, Slovakia recently started to promote a new Eastring project, an eastern South-North corridor also exists in the plans of an interconnected Europe. But all these possibilities need much greater coordination and involvement at EU level at least to avoid the mistakes and fate of the Nabucco project.
That’s why the proposal in the Energy Union Strategic Framework to create the High-level Energy Forum deserves appreciation.
Let’s follow the establishment of the Forum and its first steps with the hope that a well-coordinated and concerned gas infrastructure map, that is agreed by all Member States, will guide further development in ensuring the energy security of the continent.
In this context, what are the problems with the reverse gas flow interconnector between Bulgaria and Turkey? What are the main hurdles and how Europe can help Bulgaria in this sense?
The interconnector between Bulgaria and Turkey (ITB) has been on the table of discussions for a long time and such a project definitely could alleviate our full dependence on gas supplies from the north. But our Turkish partners put the development of the project in a wider context of solving some regional problems - for example flooding of the region by rivers in the spring time. This has led to prolonged and difficult negotiations. The existence of the Nabucco project clearly overshadowed the interconnector negotiations for a considerable time period. One should not exclude the geopolitical factors and interests that could influence the decisions on this interconnector. At the present time we are witnessing a new wave of activity and of good will.
What do you mean? Could you please elaborate?
In my opinion, negotiations on the ITB will now be influenced by the Bulgarian – Greek interconnector and most importantly, by the possibility of building the Turkish Stream and the questions it poses on the future use of the Trans-Balkan pipeline.
Because of that, of the many possible ways for the development of the ITB project, the energy dialogue should continue between the two neighboring countries and with the European Commission, to find the right place for the interconnector on the European gas infrastructure map.
Do you think that the High Level Meetings and the regional approach can help Bulgaria and Romania to speed up discussions on the reverse flow at Negru Voda?
I have not yet heard of such discussions on the reverse flow at Negru Voda. It certainly is a question for the future of the Trans-Balkan pipeline in a wider context that I have mentioned already.
In a recent conference, European Commission’s Brendan Devlin said that Bulgaria lacks the political will to build interconnectors. Mr. Devlin mentioned the pipeline from Sofia to Nis in Serbia and the interconnectors with Greece. What is your take on this?
I am sure Mr. Delvin was simply expressing his personal opinion on the lack of political will to build interconnectors with Serbia and Greece. The political will that the present Bulgarian government visibly demonstrates to pull the country out of the present energy vulnerability cannot be questioned.
The commissioners represent the political body of the Commission and, as such, I think they should express the political statements as the opinion of the Commission on certain political matters.
On that occasion, during that conference, you said that projects are not progressing because of the lack of public funds. What is Bulgaria asking of the European Commission in terms of funding?
In times of economic crisis, a lack of public funding is not a surprise. Certainly the state-owned companies that formed the consortium for building of the interconnectors could not allow themselves to allocate the needed funds in a timely manner during the recent economic difficulties.
Having in mind the fact that same financial situation continues, the Bulgarian government is within its rights to apply for additional funding from the EU to complete the interconnectors with our neighbors and the other energy projects from the list of the projects of common interest.
President Junker’s investment plan provides good opportunities for obtaining such additional funding. The amount of the funding is too early to estimate, but the need is for several hundred million euro.
How can the Bulgaria become the gas hub you were referring to before?
The geographical position of Bulgaria on the Balkan peninsula, the well developed ring shape of the internal gas infrastructure system, the possibility to bring to one place gas from Russia either through the existing pipeline or the South Stream, gas from Black sea sources either Bulgarian or Romanian, Caspian gas through the Southern corridor, gas from the Aegean cost LNG terminal and possibly Mediterranean gas in the future, all naturally suggests that Bulgaria could be turned into a gas hub.
In any case, South-East Europe needs such a gas hub and it is recognised in the Energy Union Strategic Framework communication. With the advancing of the reversible gas interconnectors in the region the idea of this regional gas hub becomes more understandable and achievable.
Are there any events that we shall look at to better understand the gas developments in Bulgaria? Is there one single project we should look at?
The events that deserve attention in the region are the developments related to the recently announced Turkish Stream. This project, if brought somehow to reality, will change the directions of gas flows alongside the geopolitical influence in the region. European solutions need to be within our own territory.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci