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EU preparing meeting with Russia on Bulgaria gas hub – report

EU preparing meeting with Russia on Bulgaria gas hub – report
Sofia, September 19, 2016/Independent Balkan News Agency

By Clive Leviev-Sawyer of The Sofia Globe

The European Commission is working on preparations to host a Bulgaria-Russia-EU meeting to discuss the proposed gas hub near the Bulgarian port of Varna, Bulgarian news website Mediapool.bg reported on September 19, quoting Deputy Prime Minister Tomislav Donchev.

Donchev said that the meeting, which could be held before the end of November, could provide legal clarity on the issue of Russian gas deliveries to the planned hub.

Bulgaria has been assiduously courting Russia as a potential supplier for the hub, but Moscow has thus far rebuffed all advances, saying that it would require "ironclad" guarantees from the European Commission in order to commit to the project.

Russian president Vladimir Putin and officials at state-owned gas company Gazprom have repeatedly said that they wanted to avoid a repeat of the events that led to the cancellation of the 63 billion cubic metres South Stream gas pipeline.

Putin announced the cancellation of the pipeline in December 2014, blaming Bulgaria for failing to issue the necessary construction permits and the EC for putting pressure on Sofia to delay work.

The main objections raised by the EU was South Stream's failure to meet the "unbundling" provisions of the Third Energy Package regulations, which prevent gas traders from owning transportation infrastructure, as well as the issue of third-party access to the proposed pipeline. However, those objections only came into play concerning the onshore sections of South Stream and Bulgaria is hopeful that a pipeline under the Black Sea, terminating at the proposed gas hub, would be acceptable to EU regulators.

Donchev told Mediapool that there was no attempt to revive South Stream as a whole: "This project is dead as regards the route and the business logic, so in this respect Russia is correct in saying that Bulgaria has not raised the issue of reviving South Stream. I agree with the Russian position that South Stream is not possible. What will happen is a three-way meeting, hosted by the EU, to clarify the legal scenarios for offshore gas deliveries under the Black Sea."

Russia is keen to eliminate all gas deliveries through Ukraine when Gazprom's current transit contract expires in 2019, but its chief focus for new European delivery routes has been on building the Turkish Stream pipeline (the direct successor of the South Stream pipeline, making landfall in Turkey instead of Bulgaria) and doubling the capacity of the Nord Stream pipeline in the Baltic Sea.

The Nord Stream expansion has proven problematic thus far for Gazprom, with several Eastern European countries led by Poland, as well as Italy, objecting to the proposed pipeline, which would be entirely under the sea before reaching its destination in Germany – a similar scenario to the one Bulgaria is proposing for its gas hub.

Securing Russian supplies through a new pipeline would boost the odds of the gas hub being built, as it would add another source of gas for the planned facility. Currently, Bulgarian officials are counting on gas from Azerbaijan (via Turkey) and liquefied natural gas from terminals in Greece, as well as the existing Transbalkan transit pipeline from Russia (which passes through Ukraine and Romania), to supply the hub.

But Donchev acknowledged – the first time a Bulgarian official did so in public – that the long-term viability of the existing transit route was questionable. "Increasing deliveries through the Transbalkan pipeline is in the hub's conceptual project. We already have the infrastructure, but it is difficult to forecast in the long term what quantities will be arriving via that route, given the categorical declaration by Gazprom that it would shut down or reduce deliveries through Ukraine starting in 2019," he said.

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