Bulgaria to seek additional assurances in Gazprom anti-trust settlement

Written by on May 3, 2017 in Bulgaria - Comments Off on Bulgaria to seek additional assurances in Gazprom anti-trust settlement

Bulgaria’s would accept Gazprom’s proposals to settle the EU anti-trust investigation into the Russian state-owned gas company’s manipulation of Central and Eastern European markets, contingent on some amendments to the list of concessions offered by Gazprom, according to Bulgaria’s official position, approved by the country’s caretaker cabinet on May 3.

At its last sitting – on the eve of the vote in the National Assembly to invest a new government, scheduled for May 4 – the caretaker government approved the document, in order to make the seven-week deadline for comments, issued by the European Commission in March.

EC’s call for comments from stakeholders comes nearly two years after its formal “statement of objections” identified Gazprom as hindering competition in the gas supply markets in eight European Union countries: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. That step was the result of an investigation that went on for several years.

Last year, Gazprom submitted a list of concessions to the EC, hoping to settle the anti-trust charges and avoid paying a fine, which can run up to 10 per cent of the company’s annual global turnover – which in Gazprom’s case could be billions of euro.

The statement from the Bulgarian caretaker cabinet made no mention of the potential fine, focusing instead on the additional assurances sought by Sofia to the current settlement proposal.

These included a request to improve the arbitration mechanism in case of future commercial disputes and additional guarantees that Gazprom will abide by the clauses meant to ensure fair market prices for gas.

Additionally, Bulgaria’s official position was that it was unfair that other companies in Central and Eastern Europe would be given the right to change the point-of-sale to a place on the Bulgarian border, without giving Bulgarian companies the opportunity to deliver the gas to those countries. Bulgaria also sought clarification on a clause that would allow Gazprom to change its point-of-sale to Bulgaria, from the current one at Negru Voda, on the border with Romania.

In raising these points, Bulgaria sought to ensure that Russia would not change its main transit routes, which currently run through Ukraine, with the implicit approval of the European Commission. Gazprom has long made it clear that it would prefer to cut Ukraine out of its transit routes and envisions doing so through the proposed Turkish Stream gas pipeline under the Black Sea.

Any change in the point-of-sale should come only after careful analysis whether this would guarantee sufficient gas deliveries to Bulgaria and its neighbouring countries, the caretaker cabinet said in its statement. Furthermore, direct deliveries to Bulgaria would have an advantage of increasing competition, both in terms of the source of gas and the transit route, the statement said.

Reports in Bulgarian media interpreted that last point as a veiled request that Gazprom agrees to a new pipeline under the Black Sea that would make landfall in Bulgaria, which in recent years has championed the idea of a gas hub near the port of Varna.

Securing Russian supplies directly to the hub – in addition to Azeri gas from the Caspian Sea via Turkey and, potentially, from a liquefied natural gas terminal in Greece – would increase Bulgaria’s chances of seeing such a project come to fruition.

Russia, which cancelled its proposed South Stream gas pipeline (and replaced it with the Turkish Stream project) in 2014, has offered little hope of restarting the project, even in a reduced form. However, Russian president Vladimir Putin, who initially blamed the European Commission and Bulgaria’s failure to issue the necessary construction permits as the reason for South Stream’s demise, has no longer voiced such loud criticism in recent months.

(Photo: gazprom.ru)

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