Business

In Bulgaria, the uncertainties of a life without Russian gas

published on Friday 06 May 2022 at 07:24

In the entanglement of bright yellow pipes emerging from the ground, Russian gas is being transported in abundance, but Bulgaria, sanctioned by Moscow for refusing to pay in rubles, is now not allowed to touch it.

Apparently, the cessation of deliveries by the giant Gazprom on April 27 has not changed much for the Ihtiman compressor station, located 60 km from the capital Sofia.

The precious product continues to flow. The only difference and size for this Balkan country, which is 90% dependent on Russian gas, now goes exclusively to neighboring Greece or North Macedonia.

Bulgaria, like Poland, paid for their purchases in the currency provided for in their contracts with Gazprom and did not give in to Moscow’s request to open a second account in rubles, in response to Western sanctions imposed in the aftermath of the offensive in Ukraine.

The Russian company retaliated by stopping the gas flow.

In the rest of the European Union (EU), payments are scheduled for mid-May and further suspensions are expected.

– “How are they going to pay?” †

Faced with what it describes as “blackmail”, the Bulgarian government wanted to be reassuring and push for “the other options available” to meet the annual need of about 3 billion m3 of gas.

Skeptically, companies fear supply problems and price hikes in this EU’s poorest country, where inflation is breaking records.

“We are already on the verge of breaking up,” laments Valeri Krastev, owner of a bread factory in the city of Montana (north). “We will have to further increase what we charge customers, but how are people going to pay?”

In May, Bulgaria had to pay 10% more than it paid Gazprom before April, Energy Minister Alexander Nikolov said, while it was necessary to obtain emergency supplies from partners in the EU through a trading company.

The boss of the Federation of Industrial Energy Consumers (BFIEC) does not lose his patience. “I can’t believe they are trying to convince us that this is a good thing,” Konstantin Stamenov said on public radio BNR.

Others have a good heart against bad luck: “Yes, it will be more expensive, but it will not be impossible to work,” confides AFP Krassen Kurktchiev, head of the group of household products and cosmetic care Ficosota, who has already started organizing itself to reduce their gas consumption.

In this Balkan country, traditionally close to Moscow, the resolutely pro-European Prime Minister Kiril Petkov has promised to speed up the search for new sources of supply.

In recent days, he traveled to Greece to inspect the construction works of a new gas pipeline, which will make it possible to receive Azeri gas in large quantities from the Caspian Sea. He also met with Romanian leaders to discuss a joint wind project in the Black Sea.

– 42 days reserve –

The government is also negotiating the purchase of liquefied natural gas (LNG) from the United States and Egypt, which is currently highly sought after in Europe as an alternative to Russian gas.

Bulgaria also has reserves in the depot of Chiren (northwest), which, according to the head of the operator Bulgartransgaz Vladimir Malinov, can cover a large part of the consumption for 42 days.

For now, spring temperatures have softened the blow to Bulgarian households, some of whom still remember the long January 2009 gas outage at the height of winter over a Russo-Ukrainian dispute.

Since then, diversification has been continuously pushed back.

Gazprom’s decision is “a unique opportunity” to finally free itself from Russian energy control, says Martin Vladimirov of the Center for the Study of Democracy in Sofia.

But this process cannot be done in a day, and above all, the expert warns against a maneuver by Russia that would occur behind the scenes to replace the Bulgarian national gas company with more expensive intermediaries. For example, the Hungarian company MET, which negotiated the new deliveries, is close to Gazprom, he says.

“Eventually, we could become even more dependent on deteriorating contract terms” and gas… from Russia, warns Mr. Vladimirov.