Experts comments CACDS - Balkans

Ilian Vasilev: "Kremlin's main strategy towards Bulgaria is destabilization"

New Kremlin gas needle for Sofia, hunting for Russian spies, the possibility of a Russian humanitarian center appearing on the Black Sea coast of Bulgaria, as well as other important issues of Russian-Bulgarian relations - in a direct speech to the Ambassador of Bulgaria to Russia at CIAKR-Balkans (2000-2006) .) Iliana Vasileva.

The fate of Turkish Stream 2

By the end of February, the 90-day deadline granted by the US Congress to the Treasury and the Department of State for their publication of a list of legal entities and individuals subject to sanctions for participation in Russian gas projects Nord Stream 2 and Turkish Stream will expire. I keep in touch with the US side on North Stream 2 and, as it seems to me, she already has a clear idea of ​​who they will impose next sanctions on. This applies in particular to those who will buy gas from this pipeline in the future.

As for the Turkish Stream, I do not see any sharp movements here. On the one hand, when you talk to people in Congress about this issue, they have a fairly clear idea of ​​who will be sanctioned. But on the other, they are not the executive power. The White House determines what sanctions and who will be imposed.

Regardless of whether or not the sanction list will be present, there is and still is a strong sense of US pressure on the Bulgarian authorities and companies that participate in Turkish Stream 2, or as it is called in Bulgaria - the Balkan Stream.

In addition to sanctions that could impede the construction of the Balkan Stream, the US has the ability to prevent it from launching. This applies to US manufacturers of turbines or parts - Solar Turbines or General Electric - who are contractually involved in this project. That is, a similar situation may occur as in the case of the delivery of Siemens turbines to the Crimea. And if that happens, without the American compressor station equipment, it will be very difficult to implement this project. Theoretically, this American equipment can be replaced, but then it will be necessary to look for new suppliers, hold new negotiations, announce new tenders, etc., which can take a very long time and lead to unknown results.

Therefore, the recent visit of the Bulgarian delegation led by Energy Minister Temenuzhka Petkova to the United States was very likely just to resolve the issue with sanctions, and to allow the US to complete the Balkan Stream.

The prospects for diversification in the Bulgarian gas market at the expense of US LNG

Another issue discussed during the aforementioned visit was the possibility of diversifying gas supplies to Bulgaria at the expense of US LNG. But to the best of my knowledge, no specific agreement has been reached on the results of Ms. Petkova's stay in the United States. The main reason here is that the Bulgarian gas market is rather small, and is completely clogged with gas, 80% of which is delivered via a take or pay scheme. That is, today there is no big window of opportunity for diversification through US LNG. At the same time, such a window may appear in the future. The fact is that Gazprom (and its main partner in Bulgaria Bulgargaz), because the price of its gas is very high, is gradually losing the Bulgarian market. Today, gas prices on European exchanges are below EUR 11 MWh, and the gas price for Bulgaria is twice as high.

In this context, I would also point out that Gazprom also lost most of its market in Turkey: its gas imports dropped 40% a year there. If we add up all the transport capacities of the Blue Stream, the first and second strands of the Turkish Stream, it turns out that Gazprom can export more than 47 billion m³ of gas to Turkey. At present, their export in this direction is 21, a maximum of 22 billion m³ per year. That is, for today, for the Russians, the economic feasibility of the Turkish Stream is rather dubious and they do not really know what to do with it. They can justify the existence of both strands of the Turkish Stream only when they find a market for the sale of this excess gas to Turkey. And the only opportunity to find such a market is in the north, ie Bulgaria, Serbia, Romania, Hungary…

At the same time, Gazprom's main problem today is not the loss of markets, but the Kremlin. Putting aside the Kremlin factor, Gazprom has ample opportunities to compete in the market. For example, today, due to the aforementioned narrowing of the market, there is a gas production at the level of about 100 billion m³ per year, and the production cost is quite low. That is, under such conditions, Gazprom can very easily be competitive - simply by reducing the price of gas. But he cannot do this because he is not an independent player, but merely one of the main tools for achieving the Kremlin's geopolitical goals. If the Kremlin had left Gazprom to behave as a normal business entity, its profitability would have been at a much higher level. For the time being, Gazprom has no such opportunity.

The possibilities of reducing the gas dependence on the Kremlin

Starting next year, Azerbaijani gas in the amount of 1 billion m³ annually should start flowing to Bulgaria. Another half a billion will be LNG. We also have a valid contract with Gazprom until the end of 2022 for the supply of gas, 80% of which, as already mentioned, goes by the formula "take or pay." That is, it turns out that some time before the conclusion of a new contract for the supply of Russian gas, we will have excess gas. And because of this, negotiations with Gazprom are being delayed now, as the Bulgarian authorities have to find some way out of this situation: either to reduce the level of the "take or pay" formula, or to significantly reduce prices and try to resell Gazprom gas somewhere else markets. From the point of view of corporate logic, Gazprom is not difficult to find a way out of the current situation, but, as mentioned above, the Kremlin is responsible for its corporate logic.

About the possibility of gas export through Bulgaria to Ukraine

Today in Turkey, a large excess of gas is somewhere around 5-6 billion m³. Taking into account this situation, during the meeting with his Turkish counterpart, the Ukrainian president discussed the possibility of supplying Azerbaijani gas to Ukraine: that is, in reverse mode through the Trans-Balkan gas pipeline. And this perspective, I would say, is quite real.

It is also likely that Gazprom (on its own as well as with the hands of its main gas export partner in Bulgaria - Bulgartransgaz) will attempt to block the main capacity of this gas pipeline at the section from the Lozenets compressor station to the Provadiya compressor station, concluded a long-term lease agreement for capacity of more than 50 million cubic meters per day. But if he tries to do so, then, since Bulgaria is a member of the EU and subject to the Third Energy Package, the European Commission immediately intervenes. And I advised my Ukrainian partners that we do not need to think abstractly about this issue: "you can use this option or not." Specific measures need to be taken: for example, Socar and Neftegas conclude a contract and lease gas transportation facilities to Ukraine. And if Bulgartransgaz refuses to provide such facilities, then it will have problems.

Of course, Gazprom will always be able to retain 50% of its pipeline capacity. And that's fine. But the rest, that is, 8 out of 16 billion m³, can be reserved for Ukraine.

About the Anti-Spy Campaign in Bulgaria

All this hunting for Russian spies in Bulgaria is nothing more than the creation by the Bulgarian authorities of visibility for its Western allies and local electorate. First, according to former Bulgarian Foreign Minister Solomon Passy, ​​57 Russian security officers are working at the Russian embassy in Sofia. And the fact that only three were expelled from this list does not greatly affect the overall picture. Secondly, despite the great buzz in the media, the Kremlin's reaction here is very strange. The first time Bulgaria sent a Russian diplomat in October last year, in Moscow, it took a 35 or 40 days pause to take mirror measures. At present, there is still no response to the expulsion of two Russian diplomats at the end of January. It is also rather strange that the Bulgarian socialists and Russophiles are silent on this issue.

I think that their reaction is explained by the fact that the Kremlin is not something that does not want to interfere with the Bulgarian authorities in this matter, but on the contrary, it is possible that it is playing to them. After all, if the Kremlin begins to "raise a wave" of anti-Russian actions in Bulgaria, they begin to say that the Bulgarian authorities are Russophobic, etc., then the local Russophilia will rise against it. And this is not entirely desirable either for the Bulgarian authorities or for its Russian partners in Bulgaria. All that the Bulgarian government needs is a stable situation, at least until June, during which it will be able to complete the construction of the Balkan Stream, which is a direct duty of the Bulgarian prime minister to Putin.

On the other hand, the Kremlin is putting pressure on him, constantly reminding him that he has once again failed such a "profitable" Russian gas project for Bulgaria - "South Stream", and if he still fails this project, then he will be doubly guilty of Russia. But the most interesting thing about the Kremlin's silence is that it was not Bulgaria that stopped the South Stream at the time, and the project was terminated precisely because of sanctions after Russia's annexation of Crimea. Then the situation was as follows. There were two partners in this project: the Italian ENI and Gazprom. Due to Gazprom's significantly limited access to financial markets at the time, he asked ENI to increase its funding share from $ 600 million to $ 1 billion. On November 24, 2014, Sochi's head, Claudio Descalczi, arrived in Sochi. Putin and Miller. At that time, the question was that if Dekaltsi agreed with Miller, there would be a meeting with Putin, cameras, salutes, etc. But this did not happen. Descalczi said he could not justify the deal proposed by Gazprom because it implies a huge increase in the stake and that its shareholders will not allow it, and that if the sanctions continue, he will also have problems implementing another part of the contract - guarantees gas purchases in the promised volumes. And then everything fell apart. And since Putin cannot be guilty - he is a leader, so the scapegoat was made by Bulgaria.

About Russian and NATO centers on the Bulgarian Black Sea coast

The statements of Russian Foreign Minister Lavrov regarding the transformation of the Moscow-owned property of the Bulgarian Black Sea sanatorium and recreation center "Kamchia" into a humanitarian center should be considered first and foremost as an information campaign by the Kremlin. If the Russians really wanted to do something about this object, then Lavrov would certainly not make such statements. His words that the issue of Kamchia would be considered at the Security Council is nonsense, because thanks to this, the issue immediately hit NATO's radar.

It could also be a reaction of the Russian Foreign Ministry to the future NATO Focal Point in Varna. The logic behind this and other speeches by Lavrov is that he thus demonstrates to Putin his work and that of the Foreign Ministry. After all, when the US or NATO create threats or challenges for Russia, the Foreign Ministry must respond to it. The center in Varna is such a challenge, and Lavrov's statement is the Foreign Ministry's response to it. But further this reaction is unlikely to go. After all, despite the fact that Russia has enough opportunities to influence Bulgaria when it comes to NATO, this is a completely different level and the Kremlin will then have to deal not with Sofia, but with Brussels and Washington.

On balancing Bulgaria between the West and Russia

Bulgaria can hold the balance between the West and Russia for quite some time. As General Reshetnikov (former head of the information and analytical department of the SVR of Russia) said: "Borisov is the best option for us because we can negotiate with him." And the same line of reasoning among Americans: "Borisov is not the best option yet, but who is instead"? That is, it definitely suits Americans, and is also not the worst option for Russians. The only difference is that maintaining the Kremlin's contacts with Borisov is not the main strategy. Its main strategy is the destabilization of Bulgaria, regardless of who they will deal with. However, it is constantly accompanied by the narrative that Bulgaria is a failed state, a non-existent member of the EU and NATO, and that its added value in these organizations is zero. And this is one of the main problems of the Bulgarian government today.

Ilian Vasilev, Bulgarian Ambassador to Russia (2000-2006)