Bulgaria Ratifies Agreement On Nabucco Pipeline Project

March 2010 Vol. 237 No. 3

The Bulgarian parliament has ratified the inter-governmental agreement on the Nabucco gas transport project, implicitly confirming its preference for Nabucco over Gazprom’s South Stream.

The previous Bulgarian government had joined South Stream in 2008 but Russia’s January 2009 gas supply cut-off (which targeted Ukraine, but hit Bulgaria the hardest) caused even the Russia-friendly parties in Bulgaria to lose confidence in the country’s reliability as a supplier.

Meanwhile, Bulgaria and Greece are finalizing construction of an inter-connector between their respective gas transmission networks. The link can serve to supply Bulgaria in emergency situations with gas volumes from the Turkey-Greece-Italy inter-connector. Bulgaria and Romania are scheduled to link their networks in 2011, creating additional supply options in emergencies.

The Nabucco consortium has scheduled an open season from July to October. If successful, this should be followed by the final investment decision by the end of the year. Half of the pipeline’s transport capacities must be tendered out in the open season. Nabucco will offer long-term transportation contracts of 20-25 years to reassure financial investors.

Surprisingly, the U.S. State Department’s Special Envoy for Eurasian energy affairs, Richard Morningstar, seems to back allowing Gazprom to become a user of the Nabucco pipeline. At a meeting in Washington he suggested inviting Gazprom to use part of the Nabucco pipeline’s capacity for Russian gas.

“It may make sense to invite Russia as a supplier country into the Nabucco pipeline. Russia could perhaps supply gas through Blue Stream to Turkey [for Nabucco]. This would make it possible for Russia to participate in the project, not as a controlling party, but as one participant; and considering the global financial situation, this would be a fully rational way to proceed. If we talk about this to the Russians candidly, we may receive interesting answers,” he said.