BULGARIA: Addicted to Russia’s Energy

By Claudia Ciobanu Reprint | | Print |

Claudia Ciobanu

BUCHAREST, May 4 2007 (IPS) - A member of the European Union since Jan 1 2007, Bulgaria still takes its cues on energy from Russia.

Bulgarian Prime Minister Serghei Stanishev, Greek Prime Minister Kostas Karamanlis and Russian President Vladimir Putin signed an agreement for the construction of the Burgas- Alexandroupolis oil pipeline in Athens Mar. 15. The agreement will have long-term consequences.

Russian companies will own 51 percent of the project, which will provide an alternative route for oil transport to the overcrowded Bosphorus Strait.

When Burgas-Alexandroupolis is completed, it will carry each year between 35 million and 50 million tons of oil from the Caspian Sea and Russia, to be sold in Europe, the United States and Asia.

According to the new plan, the oil brought by tankers from the Black Sea port of Novorossiisk in Russia will be left in the Bulgarian port Burgas. From there, it will be transported through the pipeline to the Greek port Alexandroupolis, to be picked up again by tankers transporting it towards the Mediterranean.

The Bulgarians and the Greeks have been trying to conclude this contract since 1993. Both countries are dependent on Russia for energy, and the new pipeline would considerably increase the quantities of Russian oil that can be delivered to European markets.

For 14 years, the Russians hesitated to seal the deal, claiming they were not sure it made economic sense for them, until they were given the majority stake in the project.

The new pipeline will give them access to the Mediterranean, thus increasing EU’s energy dependency on Moscow. Russia is currently supplying a third of Europe’s oil and 40 percent of its gas.

President Putin declared in Athens that the pipeline would raise world energy security and that construction should start as early as possible. “The global market is interested in it because it gives an opportunity to look at increasing deliveries from the Caspian region,” Putin told the press after the signing of the deal.

In his turn, Greek minister for development Dimitris Sioufas commended the agreement. “The importance of this project for all is obvious – for Greece, for its citizens, for our country and for Bulgaria, which through the construction and operation of this pipeline will get onto the global energy map.”

Burgas-Alexandroupolis will turn Greece and Bulgaria into European energy hubs, by making them the countries where oil brought from the East meets Western buyers.

“Bulgarians are concerned that the country will become dependent on Russian energy and get threatened, just like Western Europe was threatened by Russia last winter,” Petar Apostolov, a former engineer at Kozlodui nuclear plant in Bulgaria told IPS.

Apostolov thinks the current Bulgarian government is “pro-Kremlin” and it easily awards energy contracts to companies from the Russian Federation. “The Burgas-Alexandroupolis deal and the construction of Belene nuclear plant prove this,” says the engineer.

The new Belene plant is meant to replace two reactors shut down at Kozlodui nuclear plant at the call of the European Union for not meeting safety requirements. Apostolov says the Bulgarian government put a Russian company, rather than a Czech one, in charge of Belene, without publicly explaining why, and “with no obvious advantage for the Russian offer.”

But Bulgaria would be energy dependent on Moscow even without these deals. The country imports more than 95 percent of its gas from Russia. In 2006, after having its supplies cut off temporarily as a warning sign, Sofia agreed to pay 45 percent more for its gas imports from Russia.

Not only is Bulgaria a “safe haven” for Russian companies, but it also has a geographic location which makes it an ideal partner for any Russian project of building energy infrastructure connecting East to West.

In addition to Burgas-Alexandroupolis, Russia wants to include Bulgaria in Blue Stream II, a similar proposal, but for a gas pipeline. While the former project has just received the final pass, the latter is still being negotiated.

Gazprom’s Blue Stream II would connect Turkey to Hungary, passing through Bulgaria, Serbia and Croatia.

However, Bulgaria is not being wooed only by the Russians. The European Union needs Sofia to construct Nabucco, a gas pipeline connecting Turkey to Austria, through Bulgaria, Romania and Hungary.

Nabucco and Blue Stream II are directly competing projects. Both would link Turkey to Central Europe, bringing gas from the Caucasus to the West. The cost of construction for each has been estimated at a minimum of five billion euro.

Bulgaria has already committed itself to being a member of the consortium established for the building of Nabucco. But, as in the Hungarian case, its government has continued to negotiate with Russia, to the discomfort of the EU.

“We all talk how bad Gazprom and Russia are,” Bulgarian minister for economy and energy Roumen Ovcharov said. “But this talking did not stop France from signing a 30-year contract for Russian natural gas, nor did it stop Germany from doing the same, as well as Austria.

“What should Bulgaria do?” he added. “Stop talking to Gazprom and be left without gas?”

Bulgarians are right in saying that there is no choice but to deal with Russia for energy. In spite of the tough talk of the EU, many of the member states continue to make their separate deals with Gazprom. Asking Bulgaria to do otherwise would be hypocritical.