by Krassen Nikolov
Bulgaria will stop the transit of Russian gas through the Balkan Stream unless Gazprom finds a new way to pay following the imposition of US sanctions, caretaker Energy Minister Vladimir Malinov said on Tuesday.
"This is a bilateral relationship on a contractual basis. Bulgartransgaz will strictly implement its contract and will not allow natural gas to be transited if the service is not paid for," the Energy Minister said.
He admitted that the Russian company that booked the capacity through the Turkish Stream extension through Bulgaria (Gazprom Export) and made the payments through Gazprombank would have to find a solution if it wanted to continue to receive the service.
Bulgaria is still waiting for a concrete proposal from Gazprom Export on how the payments will be made.
"There is still time, and at the moment, all payments that were due have been made," Malinov explained.
He did not answer the question of the financial impact on Bulgaria and Bulgartransgaz if the transmission were stopped. Gazprom has reserved almost the entire capacity of the Balkan Stream pipeline until 2039. The pipeline runs through Turkey, Bulgaria and Serbia to Hungary.
On 21 November, the US Treasury announced the imposition of sanctions on Gazprombank and its subsidiaries, threatening the transit of Russian gas through Bulgaria. This is the bank with which almost all state and private companies that supply or transit Russian natural gas do business.
The US sanctions mean that all companies Gazprom does business with will have to find an intermediary. The task is challenging because the intermediary may be subject to secondary sanctions.
Bulgaria does not use Balkan Stream gas but earns more than €150 million a year from transit. Stopping the transit of Russian gas would be a severe blow in winter for Serbia, Hungary and, to a lesser extent, Austria.
The Russian company has paid for the transit until the end of November, and Bulgaria’s next payment is expected at the end of December.
Martin Vladimirov, an energy expert at the Center for the Study of Democracy, predicts that even if an attempt is made to circumvent the sanctions, it is unlikely to succeed because the intermediary also risks sanctioning.
"Bulgaria must stop the flow of Russian gas on 20 December. Now, the gas pipeline through Bulgaria fully serves Gazprom’s interests. The Bulgarian company Bulgartransgaz also indirectly owes another 250 million euros to Gazprombank for constructing the gas pipeline, so this payment should also be stopped," Vladimirov said.
Energy expert and former Bulgarian ambassador to Moscow Iliyan Vassilev told Euractiv that Bulgaria is unlikely to stop the transit of Russian gas.
"The reason is that we are talking about supplies that can hardly be replaced and are critically important for countries like Serbia and Hungary," Vassilev said. According to him, the most likely outcome will be a temporary exemption from US sanctions.
Such a solution will be found in any situation because, in the last two and a half years since Russia’s war in Ukraine began, neither Serbia nor Hungary has taken steps to reduce its dependence on Russian gas, Vassilev said.
Asked what would happen if Bulgaria were to cut off the Balkan Stream gas, Vassilev replied that the consequences for Serbia and Hungary would be "thermonuclear". "These two countries would hardly be able to find a substitute for these significant amounts of Russian gas, especially Hungary," Vassilev added.
At the end of November, Hungarian Foreign Minister Peter Szijjarto admitted that sanctions ’could lead to major difficulties in the region’. He said the government in Budapest would coordinate with Bulgaria and Azerbaijan.
*first published in: Euractiv.com
By: N. Peter Kramer
