EASC: ‘Turkish Stream’ and Belene raise concern about impact on Bulgaria’s energy security

Written by on November 14, 2019 in Bulgaria - Comments Off on EASC: ‘Turkish Stream’ and Belene raise concern about impact on Bulgaria’s energy security

Currently, two energy projects raise concern about their impact on Bulgaria’s energy security – Turk Stream and the Belene Nuclear Power Plant, the Sofia-based Euro-Atlantic Security Center (EASC) said in a position statement.

It released the statement following a meeting of the EASC general assembly on November 12, during which a debate on the energy security of Bulgaria was held.

The main elements of energy security include secure suppliers, affordable prices, and a sufficient level of diversification to achieve three main objectives, the statement said.

These were flexibility of the energy system and the ability to respond quickly to supply-and-demand balance disruptions; competition between suppliers to ensure the lowest prices based on the market principles; and uninterrupted supply, ensured by the possibility of replacing one source with another at any time, given a problem with the original supplier.

Currently, two energy projects raise concern about their impact on Bulgaria’s energy security – Turk Stream and the Belene Nuclear Power Plant.

The EASC said that Bulgaria had signed in record short time a contract for the construction of the continuation of the “Turk Stream” through its territory, the statement said.

In less than six months all procedures were carried out, all permits were issued, a contract was signed, and a first dig was made. The value of the contract amounts to over 1.1 billion euro. The length of the pipeline is 474 km. Under the contract, the construction will finish for the record 250 calendar days for the linear section.

“However, there is no funding for the project and only Russian gas will flow through the pipe. Bulgartransgaz does not have the resources to build this infrastructure. Neither Bulgartransgaz, nor the parent company the Bulgarian Energy Holding can take a loan for such a big amount.

“Therefore, the terms of the contract provide for the investment to be paid from the transit revenue within 10 years after the pipeline is put into exploitation. This means that debt service will depend on the gas quantities transferred and the price thereof.”

If Gazprom decides not to use the pipe and it remains empty, Bulgartransgaz will accumulate debt that it will not be able to service, the EASC said.

“It is logical for the lender to try to acquire the company and its assets upon default. This situation creates prerequisites for a disproportionate increase in Russian influence in the political and economic life in our country, as well as the risk for complete dependence of the Bulgarian gas operator Bulgartransgaz on Gazprom. At the same time, the envisaged binding gas supply contracts will make it impossible to diversify with supply of liquefied natural gas.”

The state of the Belene Nuclear Power Plant project is also worrying, the EASC said.

Following the mid-2018 proposal by the Cabinet to resume the project, the National Assembly passed a decision prohibiting the government from providing any guarantees or payments on this project and stressed that the project implementation should happen “on a market basis (with no mandatory energy purchase contracts, no preferential prices, no contracts for difference, no corporate and / or other non-market mechanisms to guarantee the investment) and no state guarantee.”

In recent months, the government has given a number of signals that it will attempt to resume the project and attract Russian and Chinese investors.

“In this context, it is important to preserve the decision of the National Assembly,” the EASC said.

“Otherwise, if the Bulgarian government gives guarantees for the Russian investment, we risk the Bulgarian energy sector to become fully dependent on Russia.

“At the same time, we should not underestimate the fact that in the field of nuclear energy it is not so important who owns the reactors, but who owns the technology and can process the nuclear waste from the operation of these reactors,” the statement said.

(Illustration: Hendrik Tammen)

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