Page 12 - EurOil Week 04 2023

EurOil POLICY EurOil

OPINION: Bulgaria sets itself a tough task

with Burgas-Alexandroupolis pipeline revival

BULGARIA THE current energy deficit in Europe caused Burgas’s gas consumption level is not that high,
by Russia’s military intervention in Ukraine and Bulgaria would have to buy additional crude
The current energy pushed energy-poor Balkan and Eastern Euro- oil on the global market, deliver it to Greece, and
deficit in Europe caused pean countries to seek alternative sources of pay transfer fees.
by Russia’s military crude oil and natural gas. Countries like Bul- Also, the oil-carrying tankers are supposed
intervention in Ukraine garia and Serbia have already inked agreements to cross Turkey’s straits, which continuity may
pushed energy-poor with Azerbaijan, Turkey and Hungary to receive be subject to potential political disputes between
Balkan and Eastern additional volumes of natural gas and crude oil. Sofia and Ankara in future. In such scenar-
European countries to However, it is insufficient to meet the growing ios, Ankara may halt or limit the passage of oil
seek alternative sources energy consumption. tankers through its maritime territories. More-
of crude oil and natural As such, amid the EU’s embargo on Rus- over, additional infrastructure works for the
gas. sian oil and gas, Bulgaria is looking to revive pipeline revival would require significant state
a trans-Balkan oil pipeline project stretching investments, creating additional challenges for
from the Greek port of Alexandroupolis on the Bulgaria.
Aegean Sea to Bulgaria’s Black Sea port of Burgas The initial pipeline agreement clearly out-
to secure non-Russian crude oil supplies for its lined the Russian supply sources and benefi-
only oil refinery on the Black Sea, controlled by ciaries, whereas the renewed agreement still
Russia’s Lukoil. needs to specify these factors. Indeed, Bulgaria’s
The renewed debates regarding the post- enthusiasm for reviving the long-awaited pipe-
poned pipeline project intensified amid the ris- line project is attributed to its efforts to decrease
ing fees for oil transits through the Bosphorus dependence on Russian fossil fuels. Therefore,
strait. Indeed, the growing discontent in the Bulgaria is desperately seeking alternative
Balkans with the EU’s embargo on oil and gas sources to supply its oil refineries with necessary
led to Sofia asking for and being granted a two- raw materials, just like Serbia does. For example,
year exemption from the EU’s ban on Russian as of today, Serbia’s NIS, partly owned by Russia’s
crude imports until 2024. Hence, given the cur- Gazprom (51%), operates two main oil refiner-
rent level of negotiations between Athens and ies and is eyeing the opportunity to build a 128
Sophia, a new agreement will likely be signed in km-long interconnector via Druzhba pipeline
the coming weeks. with the support of Hungary to import more
The initial oil pipeline project emerged in Russian crude oil. Considering that the Druzhba
2007 and entailed the delivery of approximately pipeline is exempted from the EU’s embargo list,
50mn tonnes of Russian crude oil to Greece via it eases Belgrade’s access to Russian crude oil via
Bulgaria annually. The project’s cost was esti- Hungary.
mated at around €1bn and intended to shorten In light of the global energy and economic
the oil export route to Greece and avoid the Bos- crisis and regional disputes such as Greece-Tur-
phorus strait. key and the Bulgarian government’s dissatisfac-
Russia’s leading energy companies – Trans- tion with Ankara’s deep engagement with the
neft, Rosneft, and Gazprom — secured 51% ethnic Turkish political figures in the country,
of the pipeline project via the established Bur- the final consensus on the Burgas-Alexandroup-
gas-Alexandroupolis Pipeline Consortium joint olis pipeline is likely to happen in the middle
venture, though the project has never been fully of 2023. As such, Ankara’s recent decision to
implemented, as Bulgaria abandoned it in 2012 increase tariffs for oil tankers using the Bospho-
officially following a local referendum over envi- rus and Dardanelles passages that quintupled to
ronmental concerns, in fact, due to the US pres- $4 per tonne of oil gave a strong boost to the pro-
sure to prevent the country from deeper energy ject. The new tariffs enabled Turkey to increase
cooperation with Russia. its revenue from transit fees from $40mn to
Nevertheless, Bulgaria urgently needs to $200mn annually.
secure enough non-Russian crude to keep oper- While the talks with Greece regarding the
ations running at the 196,000 barrels per day pipeline project proceed, Bulgaria apprehends
(bpd) Black Sea refinery, providing over 75% of that it has a limited time to find a permanent
the fuels for the local market. However, Bulgaria’s solution to ensure oil flow to the country to
plans to revive the 300 km-long pipeline and its replace Lukoil. Failure to implement the project
extension north to the ports of Varna and Con- by 2024 would have harsh repercussions for Bul-
stanta would be economically unprofitable and garia in terms of the energy deficit and economic
problematic in terms of logistics. For example, crisis in light of deepening anti-EU rhetoric. ™

P12 www. NEWSBASE .com Week 04 26•January•2023