Last week the European Commission allotted nearly EUR 1 million to Bulgaria. The money will enable this country to start working on the idea of future construction of the international gas hub Balkan near the coastal city of Varna. The money will be spent on research, studies and analyses and will help Bulgaria find out whether that project is worth engaging with. Thus, the country's authorities can make real progress on that project, which was until now only an idea supported by former Premier Borissov and the Bulgarian gas lobby.

Even the EU was uncertain until recently what was the point of a possible construction of such a facility on Bulgarian territory. Ex-premier Boyko Borissov's idea caused distrust amidst many local and foreign energy experts and their arguments were very convincing. Firstly, Bulgaria extracts small quantities of gas on its territory and the perspectives to find profitable gas deposits in the Bulgarian section of the Black Sea are vague. A large energy company is still doing its gas prospecting in the Black Sea, but information about possible gas deposits is scarce. Even if that company finds some gas quantities there, experts are yet to prove the economic efficiency of possible gas drilling in the Black Sea. For the time being, Bulgaria cannot rely on that potential gas source to feed the future gas hub.

Bulgaria had the chance to play a key role on the international gas market with the suspended South Stream gas pipeline project. According to that project, Russia had to transfer gas through a pipe on the Black Sea bottom towards Bulgaria's coastal city of Varna and later Bulgaria had to transit gas towards Central and Western Europe. However, after the conflict between Russia and Ukraine and the annexation of Crimea in 2014 the project was suspended. Thus, Bulgaria missed the opportunity to collect substantial revenues from gas-transit fees. Russia and Turkey negotiated quickly to launch an alternative gas pipeline project and now Turkish Stream is on the agenda. However, the pipes of that gas project will not cross Bulgarian territory and Greece is more likely to benefit from the Turkish Stream. In other words, Bulgaria cannot rely for the time being on Russian gas for its future Balkan gas hub.

Moreover, Bulgaria's gas transferring system has not been connected with the gas systems of its neighboring countries yet. The country's authorities have been saying repeatedly that Bulgaria has been working actively on the construction of gas interconnections with all neighboring countries, but so far none of the gas interconnectors has been unveiled. Biggest progress has been registered on the construction of the gas interconnection between Bulgaria and Romania and between Bulgaria and Greece. However, it will take time to launch those gas interconnectors. In other words, it is hard to believe that the Balkan gas hub will receive gas from Bulgaria's neighbors in the next 4 to 5 years. That is why many energy experts wonder how Bulgaria would benefit from the future Balkan hub, since this country cannot rely on sufficient gas quantities that will possibly flow through the Balkan gas hub. Even the intergovernmental agreements with countries from the Caspian region for future gas supplies will not be sufficient for serious business deals.

Last year the European Commission promised to provide financial and expert assistance to Bulgaria which came up with the idea to launch the Balkan gas hub on its territory. Bulgaria already received by the EU nearly EUR 1 million for that project. However, it is still unclear whether the EU sees good potential in that project or it merely assists Bulgaria to make the necessary surveys and analyses about the economic efficiency of the project. Undoubtedly, the EU has enough influence and possibilities to help Sofia boost or delay the fulfillment of that mega energy project. Anyway, Bulgaria received the first financial package for that project and gave the start to the Balkan gas hub and we should now wait for practical results.

English version: Kostadin Atanasov