Bulgaria’s recent gas initiatives under investigation by European Commission

European Commission investigates Bulgarian-Turkish gas supply deal for possible EU competition violations

The European Commission has initiated an investigation into the gas supply deal between Bulgaria and Türkiye, raising concerns of potential violations of EU competition rules. The Bulgarian gas operator, Bulgargaz, has been granted access to gas supplies through Turkey, which has triggered the scrutiny. The investigation was prompted by worries that Bulgargaz might be the sole company in the EU with access to natural gas via Turkish infrastructure, potentially acting as an intermediary for gas secured in Turkey and delivered to the region.

The European Commission’s Directorate General for Competition has requested comprehensive documentation from Bulgargaz, including details of supply agreements with the Turkish state operator BOTAS and information regarding the reservation of capacity on the Turkish-Bulgarian border. Additionally, Bulgargaz has been asked to provide information about any contracts that enable the company to act as an exclusive representative or distributor for gas supply within Bulgaria or elsewhere in the EU.

The deal, initially announced by Bulgaria’s caretaker government earlier this year, has raised concerns about possible competition violations from various quarters. The European Federation of Energy Traders voiced concerns when the deal was first introduced. The subsequent government, led by Nikolay Denkov, initiated an investigation as part of a broader review, citing a lack of transparency and potential significant costs to the country.

While Bulgargaz has not responded to inquiries, it is known that the agreement, valid for 13 years, allows Bulgargaz and BOTASH to share the daily capacity of the Strandzha-Malkochlar border crossing. This previously served as an interconnection for supplying Russian gas to Turkey via Bulgaria. Under the agreement, Bulgargaz can import liquefied natural gas into Turkey and withdraw an equivalent amount of regasified gas. BOTAS can also request gas deliveries to Turkish terminals or other European locations. The Turkish company may also secure capacity reservations through the Bulgarian gas transmission system for its export needs to Bulgaria or neighboring countries such as Romania, Serbia, or Greece.

European Commission to evaluate recent Bulgarian transit tax for Russian gas

In addition to the investigation into the Bulgarian-Turkish gas deal, the European Commission is evaluating transit tax imposed by Bulgaria for the transportation of Russian natural gas to Serbia and Hungary. The new energy contribution took effect on October 13, requiring gas transmission and distribution network operators to declare quantities of Russian gas transported through their facilities and pay a fee of BGN 20 per MWh to customs by November 14. Importers of Russian gas are also subject to this levy.

This transit tax has sparked concerns from Serbia and Hungary, which continue to buy Russian gas through Bulgaria. Their contracts with Gazprom stipulate delivery prices at the entrance to their borders, meaning the new levy falls entirely on Gazprom. This has led to discontent and political commentary in these countries.

In Bulgaria, a dispute has arisen between President Rumen Radev and Prime Minister Nikolay Denkov regarding the excise tax. Radev expressed concerns about the impact on the state gas operator, “Bulgartransgaz,” as it must cover the transit of Russian gas to Serbia, Greece, and North Macedonia. The Prime Minister argued that Bulgaria has the right to impose such a fee, aiming to increase competition in the gas supply sector and limit trade in Russian gas. However, some interpretations suggest that the energy contribution may violate EU rules for uniform decisions on such fees and the imposition of sanctions against Russia, primarily a decision of the Bulgarian Parliament. The situation remains complex and subject to further evaluation.

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