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Monday, December 11, 2023

Bulgaria Imposes Surprising Transit Fees on Russian Gas, Stuns Hungary and Serbia

The Serbian President, Aleksandar Vucic, and the Hungarian Foreign Minister, Peter Szijjártó, have strongly reacted to Bulgaria’s decision to impose significant new transit fees of €10.2 per MW/h for natural gas passing through the Bulgarian extension of the Turkish Stream gas pipeline to Western Europe, known as the “Balkan Stream.”

Both Serbia and Hungary, alongside North Macedonia and Austria, rely on the “Balkan Stream” for their Russian gas supply.

Bulgaria expects the new transit fees to generate an additional €1.2 billion in revenue, effectively covering the cost of the Balkan Stream gas pipeline construction in just one year.

Vucic expressed his concern, stating, “This is a major problem for us. It will result in a substantial gas price increase of €100 per 1000 cubic meters of gas. This is a considerable hike, and we will engage with the Bulgarian authorities.” He also indicated his intention to discuss the matter with the Bulgarian President, Rumen Radev.

However, the prospects of resolving the issue through discussions with Radev and the Bulgarian government appear slim since the new legislation was passed by the Euro-Atlantic majority, acting independently of the president and government, particularly on matters related to Russia.

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Venko Sabrutev, a member of the ruling majority, emphasized that Bulgaria has the autonomy to determine the transit fees for its gas pipeline and suggested that Hungary and Serbia explore alternative options.

Deputies from other parties within the ruling coalition declined to comment, citing an inappropriate timing for the matter.

The new fees are seen as part of a pan-European policy aimed at reducing Russia’s income from natural gas sales and other energy products. It reflects a broader effort to employ economic measures to influence Russia’s behavior, especially concerning the conflict in Ukraine.

Hungarian Foreign Minister Peter Szijjártó also condemned the Bulgarian fees, considering them unacceptable and a threat to European solidarity. Hungary had recently raised concerns about the increased oil transit costs through Ukraine as well.

However, Bulgarian energy experts doubt the practicality of the new legislation and suggest it may be more symbolic, indicating Bulgaria’s pro-Western stance. Some within the ruling majority share this informal viewpoint.

Energy expert Kaloyan Staykov expressed skepticism about Bulgaria gaining anything substantial from these new fees, mainly due to the technical challenge of obtaining a certificate of origin for natural gas transported through the pipeline. This is because the gas is a mixture from various sources, making it difficult to implement such charges effectively. Staykov emphasized the need for more thorough research before enacting such legislation.

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