PM Borisov’s pet project – the Balkan Gas Hub has risen in prominence after his talks with President Trump. Not sure the US President got into the story behind Bulgaria’s pretense to become a regional gas hub, but good intentions and promises were in abundance. The adopted Strategic Partnership Framework document states that “our shared goal is for Bulgaria to become a true gas hub and a key source of regional energy security, free of monopolists, foreign or domestic, and operating on market principles.” Nothing specific or imminent insofar as LNG contracts boosting gas liquidity for the Balkan Gas Hub is concerned. The bottom line – Russian gas will continue its monopoly unabated. The Bulgarian State trader Bulgargas has no intention of replicating Polish, Greek, Ukrainian, Baltic,
The effect of LNG and newly sourced gas in the Southern Gas Corridor will spread across the CEE and the SEE and put the heat on Russia’s gas monopoly. In other words, if hidden and overt preferential treatment for Gazexport is revoked, this will result in lower prices or market shares for the incumbent monopoly. Reverse supplies via the Trans-Balkan Pipeline could start as early as January 1st, 2020, bringing gas from Turkey, Greece, and the Southern Gas Corridor to clients in Romania, Moldova, Ukraine, and Slovakia even before Turk Stream gas crosses the Bulgarian border. Demand for Nord Stream-2 south and eastbound gas exports via Opal and Eugal gas pipelines should wane with lower price differentials amid rising competition from the Southern Gas Corridor and LNG.
Sanctions on their own won’t stop Nord Stream-2, the market, and the EU directives can obliterate the effect sought by the Kremlin and turn what President Putin perceives as an asset into a liability. Gas pipelines are not a threat – politicians like Putin certainly are. The national security line in addressing the issues starts from the basics – Is Russia a threat? Perceptions matter. For many politicians in old Europe, located in offices at a safe distance from Russia, the threat notion is vague, remote, and academic. They do not discern Putin’s Russia as a threat. Perception matter. For many politics in old Europe. For the Austrian business, born and bred in brokering deals between Russia and Eastern Europe, this is routine and legitimate “business”.
The Turk Stream is not only about bypassing Ukraine. It is a direct response by Gazprom to challenge the Southern Gas Corridor and natural gas from the Caspian Sea. The race to secure parallel routes, block transmission and storage capacities have been part and parcel of the strategy to protect market shares and pre-empt competitors from the gas market in South East, East and Central Europe, where Russia used to sell more than 70 billion cubic meters. The CEE market has long been considered ‘isolated’ thus doomed to be captured. Yet it remains critical for Gazprom’s revenue base as regional gas prices also include a monopoly premium. Natural gas prices for Moldova, Ukraine and Bulgaria are over $220 per thousand cubic meters, while at gas hubs in “old Europe”
Russia launched the Nord Streams as a political endeavor to bypass this Ukraine and forge a strategic alliance with Germany to subjugate Eastern Europe. Germany was not the only partner, Austria also joined in. Ample proof in the outspoken Russian lobby among Austrian politicians and businessmen. Germany has its Schroeder; Austria has a long list of his kins – from Straße to Schussel. German politicians have their own business plan, calculated financial benefits at the expense of Eastern Europe. Their symbiosis with the Russian oligarchy is striking, with more evidence and proofs, as Russian oligarchs Timchenko and Rothenberg build and receive billions in inter-related project orders for gas infrastructure, connecting the Yamal gas fields to the Baltic ($ 4 billion), to the Black Sea ($ 15 billion). The
Loss of Ukrainian gas transit does increase the risk of military conflict. In October 2013, I came across an anonymous blogger’s note about Russia forming a separate air assault brigade to stop shale gas development in Eastern Ukraine . It was several months before the Ukrainian revolution of 2014 , and I dismissed the news as fake. However, after the start of combat activities in the Ukrainian provinces of Donetsk and Luhansk, the note made a lot of sense. Coincidentally or not, the gas supply system of Gazprom was ready for the war in Ukraine. For many years Rostov-on-Don and two more provinces of Southern Russia were receiving gas through Eastern Ukraine. In 2007, Gazprom commissioned a bypassing pipeline enabling “to directly supply gas to Russian
The German government is continuing to insist that the Nord Stream-2 is pure business, no politics. Having read the feasibility study commissioned by the Nord Stream-2 consortium and executed by Arthur D. Little in 2017, one should not second guess the real motives of both the Russian and the German governments – there is a list of jointly agreed countries that stand to gain and by extension that stand to lose. What is missing in the study is the list of countries that are bound to lose. The consultant has been asked to assess the economic impact of the project – “the activities and investments, related to the Nord Stream-2 project on those countries that are either directly involved in the project, or have contributed with materials or
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Last week deputies and members of the Energy Commission voted on the amendments to the Energy Act which launches the Balkan gas exchange, thus pushing the process of liberalization of the gas market. This belated action is due in part to the pressure from the European Commission as Bulgaria remains a blank spot on the EU gas market. The gas exchange and the trading platform are a key element in the overall concept of the Bulgarian gas hub, the crown jewel in the efforts of the Bulgarian government in the gas sphere over the recent years. The liberalization of the gas market is closely related to the existence of a trading platform and the goal of attracting sufficient gas liquidity for distribution through the “hub”. The
Once Russian gas is dried out in the Ukrainian gas transportation system the country is in trouble. Bulgaria and Poland may come to help, rather than Germany and Brussels. No one is guilty that on December 31, 2019 the current transit contract between Naftogaz of Ukraine and Gazprom of Russia ends. As the same time two highly controversial bypassing projects will soon become operational – North Stream-2 and Turkish Stream. That will end an era of the decades long Ukrainian gas transportation business of approximately 90 bcm per year from Russia to Europe and Turkey. Taking into account the hurdles the notorious North Stream-2 is facing the physical transit may not end completely but commencing on January 1, 2020 there will be no more long-term commitments on