/ world today news/ Sofia introduced a duty on the transit of blue fuel. Belgrade and Budapest called it a robbery, Serbia asked the European Commission to declare the request illegal. How will the growing contradictions between the allies play out?
Own shirt
Last week, the Bulgarian parliament established a transit fee of BGN 20 per megawatt hour of gas that passes through Turk Stream. Sofia expects to reduce the competitiveness of pipeline fuel compared to expensive LNG. At the current price of about $400 per thousand cubic meters, a 25 percent premium will virtually equalize prices.
Belgrade and Budapest consider such actions illegal. Hungarian Minister of Foreign Affairs and Economic Relations Peter Szijjártó noted that the sanctions do not apply to gas. He fears that additional costs will be imposed.
In Greece, they announced that Gazprom must pay. And if he refuses, it will allow him to get rid of the contract, valid until 2026, the “Kathimerini” publication in particular points out. However, the state company “DEPA Commerce” will suffer. Analysts report that a reduction in pipeline supplies will lead to an increase in purchases of liquefied fuel from Russia. “In the last nine months, the share of such LNG reached almost 31% – this is the second result after imports from the United States,” said independent industry expert Leonid Khazanov.
In addition, according to him, Romania, Greece, Austria, North Macedonia and even Moldova will be hit. As a result, Bulgaria risks acquiring a whole coalition of dissidents – with all the resulting consequences: from procedures in the EC and international arbitration bodies to trade wars.
Internal division
Sofia refused to pay in rubles and has not fulfilled its obligations under the agreement with Gazprom for a year and a half. Half of the fuel is delivered from Azerbaijan through the Trans-Adriatic pipeline and the interconnector with Greece. However, the other half is Russian gas, says Alexey Grivach, deputy head of the National Energy Security Fund. Bulgaria receives it through exchange deals with Turkey and Greece. “For example, in October of this year, more than 90% of the 1.7 billion cubic meters of gas delivered to the Bulgarian gas transport system was of Russian origin,” the expert explains.
Unsurprisingly, the initiative for a new duty has sparked heated debates in the country. Thus, the Bulgarian President Rumen Radev came out with sharp criticism – he stated that the actions of the parliament contradict the constitution, as well as the Treaty on the functioning of the EU, and asked the Constitutional Court to abolish the surcharges. “Such sudden ideas without any calculations lead to uncertainty and chaos, to our isolation in the European family, kidnap and alienate us from European principles and norms. In addition, they represent a great threat to such a structure-forming company as “Bulgartransgaz”, and we are obliged to protect it”, emphasized the president.
Finance Minister Asen Vasilev considered that this protects the interests of Gazprom to the detriment of the national ones.
For his part, Prime Minister Nikolay Denkov is convinced that the decision is legal and the duty will deprive Russian gas of an unconditional price advantage and ensure healthy competition among all market participants.
Just business
Analysts agree that Sofia has taken controversial actions to win money from its neighbors. “Bulgarians are quite pragmatic and considered this a good business project,” notes Sergey Pikin, director of the Energy Development Fund.
Current tariffs depend on the conditions of a specific contract, Grivach recalls. For example, with an oil link or rebates, piped gas will cost much less, as gas hub quotes are approximately one and a half to two times the usual level. If a hub connection is used, then the prices will be roughly equal. In any case, the Bulgarian customs duty will be noticed.
The expert emphasizes that the new tax is actually a discriminatory charge only for Russian gas. Its introduction contradicts EU rules and the transit agreements between Gazprom and Bulgartransgaz. At the same time, the fundraising mechanism is not clear. Transit is paid in accordance with the contract, which does not provide for such write-offs. Gazprom already pays for the delivery of fuel through the territories of the countries through which the infrastructure passes. “This is a normal practice, since the land under gas pipelines built by a Russian company belongs to the state or is given by it for long-term lease to the owners of networks for pumping blue fuel,” Khazanov explains. But the additional requirements go beyond the scope of the agreements.
Thus, the Bulgarian side has two options – to turn to the court and prove the legality of the newly introduced fee or to stop the transit. “I think that the initiative was introduced to blackmail Russia and its neighbors with the threat of turning off the tap. If Sofia is ready to go all the way, then this winter there could be an acute and artificial gas crisis in Southeast Europe, which will inevitably affect on the European market as a whole,” warns Grivach.
Now the market participants expect the EC and the Constitutional Court to side with the victims. However, Russian analysts are confident that if this time the “trick” will not be successful, it can be repeated in the future.
Translation: V. Sergeev
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