Monday, 1 September 2014

Why Brussels and Washington boost pressures on Bulgaria to halt construction of the pipeline South Stream attempting to create near Ukraine another Bulgarian bastion against energy supplies to a number of countries in South and South East Europe?

And this "why" is a particularly acute issue amid the civil war- struck "Ukrainian Energy bastion", which threatens not only to default of Europe's energy security, but also causes a significant profits loss for national economy of several countries in South and South East Europe.
Maybe there is no more need to remind you that Ukraine is standing in the midst of events extremely aggravating the problems of European energy security. However, regardless of the public opinion of Europe's majority with the political support from Brussels and our Atlantic allies there was a change of political administration in Ukraine, which recently resulted in erection of like-kind the "Ukrainian energy bastion" in this country. Its goal is a gas-blackmail by threatening to block the channels of Russian gas supplies to Europe that have been properly functioning for many decades.

It stands to mention about the negotiations between the Ukrainian authorities and potential western investors, which, according to the law adopted by the Verkhovna Rada, can join a newly created company - a gas transport operator to be established for managing the Ukrainian gas transportation system. There is American company Chevron among these potential investors, so you can expect to see the star-spangled American banner above the "Ukrainian gas bastion" soon.

What is the Europe's reaction on obtaining control over the transit of Russian gas by an American company? Most of all, obviously, it should raise discontent of Europeans… But in Brussels politicians are still telling us about a monopoly position of Russian gas supplies to Europe and apparently underestimate the consequences of the Ukrainian crisis.

The Ukrainian crisis has provoked an interchange of European economic sanctions against Russia and the Russian counter sanctions. Many European companies has already suffered from these responses of Russia.
Furthermore any of us has to think hard finding out that in Ukraine the law on sanctions also was adopted providing Kiev for a possibility to stop transit of Russian gas to Europe. A great deal of people do not believe that Ukraine will apply anti-gas sanctions in practice. But taking into account the current political situation in Ukraine we cannot exclude any even the most unexpected and inappropriate actions. After all, if the current Ukrainian government unleashed an internecine civil war to assassinate their own people, it is unlikely possible to hope they will take care of people in other countries.

There is a high probability of upcoming severe scenarios of deterioration in Ukraine and expanding scales of heavy consequences too, which are unlikely anyone can adequately anticipate or much less take an effective control over them. Moreover, even if gas transit via Ukraine is not blocked all the same nobody gives assurances of preventing an illegal uptake of Russian gas intended for Europe in winter season.
It seems to be like a natural disaster with almost unpredictable scenario, like the one that is brewing in Iceland, where about thousand recorded recently episodes of earthquake denotes that an eruption is maturing in depths of Bardarbunga volcano. The principal point is the same - if it can happen, how to limit the effects.

There is a discussion about paradox of the Ukrainian crisis, which, on the one hand, overflows with horror of huge economic and human losses, but on the other, although it sounds cynical, the crisis could also result in a beneficial effect. It means that the crisis in Ukraine gives an important signal to our politicians about the threats related with the "Ukrainian gas bastion", is not it? In fact this signal would have to convince our politicians that at least in the current decade, while a real alternative to Russian gas is still absent, it is necessary to use the opportunity to diversify gas supply routes through the construction of the gas pipeline South Stream bypassing half-demolished and soon sinking into a bitter cold Ukraine.

However, our hopes of even such a partly positive outcome are not really justified. There is nothing that can encourage our optimism, since actually we see that a real direction of policy makers in Brussels and Washington has almost nothing to do with our expectations of rational choice, the choice in favor of Europeans! On the contrary, there is an urge over there to use along all possible excuses to prevent the implementation of the South Stream project, despite the fact that its construction was agreed on the level of bilateral intergovernmental agreements a long time ago in 2008.

Bulgaria happens to be in the center of the Brussels-Moscow confrontation over Ukraine. Representatives of the European Commission and even rare visitors - US Senators have repeatedly visited Bulgaria to make Bulgarian government freeze construction of the South Stream gas pipeline, thereby creating another "Bulgarian energy bastion" in the way of gas supplies from Russia.

It's disappointing to see that political pressure from outside is put upon the country - one of equal members of our overall economically powerful European Union, but which, meanwhile, is still very much inferior to other member states in economic development. According to Eurostat figures published in July the level of GDP per capita in Bulgaria is 45% below the average at 28 countries of the EU, while, for example, in Austria it is by 29% higher than the average. And in terms of actual individual consumption per capita in 2013, Bulgaria was in last place behind all 28 EU states.

Appealing to common sense there should be a double larger economic aid for Bulgaria instead of attempts to push this country under even more difficult economic situation.
Besides other countries where alongside with Bulgaria the South Stream gas pipeline is to be laid are not distinct from Bulgaria in economic development and also remain at the level below the average with the exception of Austria and Italy.

Let's imagine for a moment how much all of these countries are interested in gas supplies and new gas infrastructure development and how they worry and with what concern and sympathy they look at political disputes in Bulgaria against the construction of the South Stream pipeline, triggered by the efforts of politicians from Brussels and Washington. It turns out that Bulgaria and all these countries happen to be on the edge of losses of these future economic and social benefits. Initially Brussels dictates their terms to South and South East countries, but there is nothing adequate offered by Brussels politicians to them as a reasonable reimbursement. I doubt that it is a surprise for European business especially working in agricultural sector because they have already tried to get reimbursements to cover the consequences resulted from Russian counter-sanctions.

In the long term, without importing Russian gas ultimately some European countries will have either to start production of shale gas, or to buy LNG or pipe gas from other sources at higher prices. And the coming months unfortunately rather many Europeans may spend in uncomfortable cold homes and offices under the conditions of tightening electricity savings.

Of course not the whole Europe will freeze. Most of the EU will continue getting electricity, gas and heat. These problems will affect the population in South and South East Europe, by other words in countries beyond the "Bulgarian gas bastion", including countries outside the EU. The situation might turn up a real disaster for the region located "beyond the bastion".
The current Ukrainian route provides 60-70% of the needs of the South and South-Eastern region of Europe in gas. In 2013 the EU obtained 69 bcm of gas via Ukraine, including Bulgaria - 2.5 bcm. Turkey imported 13 bcm, Serbia and other Balkan countries outside the EU - about 2 bcm of gas, Moldova together with the Transnistria - about 2 bcm.

Russia covers via the Ukrainian route 84% of Bulgaria's requirements in gas, 34% of Turkey and 100% of Serbia and Moldova. Slovakia and Slovenia is 100% dependent on Russian gas transit via Ukraine. Austria, Greece, Czech Republic and Croatia - on 50%, Italy - on more than 40%.

As you can see, Bulgaria is one of the most dependent on Ukrainian transit countries in the EU and currently consumes 3.4 million cubic meters per day. In case of deteriorating of the situation caused by transit shutdown Bulgaria would be forced to start a gas withdrawal from the only one in the country UGSF "Chiren". But it is filled with gas only by 75%, and these stocks are not enough for the whole winter season. It would be also difficult to ensure the gas supplies to Greece. Therefore, Bulgaria, Turkey and Greece could face with the most severe gas shortages even before Christmas.
It doesn't take too much time to see what will happen.

Feeling better when see that so many people in so many European countries look forward to the results of the negotiations of the European Union, Russia and Ukraine to be commenced again for searching a way out of these "gas bastions." Then why not?

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