Gas Crisis Put Bulgaria in Worst Possible Position

Interview with Bulgarian MEP Atanas Paparizov

From The New Europe (European weekly)

The Russian-Ukraine gas crisis in the middle of the heavy winter put Bulgaria in the worse possible position. Bulgarian Socialist MEP Atanas Paparizov, a member of the European Parliament's Committee on Industry, Research and Energy, in a telephone interview with New Europe Energy and Russian Affairs Editor Kostis Geropoulos talked about EU Energy Security, the Third Energy Package, gas pipelines to Europe and the future of the controversial nuclear power in the member states.

Mr. Paparizov, you're the Parliament's rapporteur on conditions for access to the natural gas transmission network. Does the Russian-Ukraine gas crisis highlight the issue of energy security and increasing the access to European transmission network?

We're pursuing a very intensive, informal trialogue between the Council, the Parliament and the Commission and yesterday evening (March 3) we had the fourth trialogue and we'll have one in Strasbourg and probably three more in order to be able by the end of March to have an agreement on the issue of the Third Energy Package which is crucial to, as you said, developing the European energy gas and electricity market, creating common rules for cross-border deliveries and transmission and thus decreasing the dependence on one supplier because this crisis you spoke about - I'm not sure it is fully resolved between Russia and Ukraine - put Bulgaria in the worse possible position, not just because Russia is the only supplier but because we don't have the adequate framework. For example we were able at the end of the crisis to agree with Greece to have some supplies through reverse flow of gas. Normally a compressor for reverse flow does not cost more than one million Euro. We could have the same approach with Turkey because there is a pipeline and we could build a new pipeline connection between Bulgaria and Greece (Haskovo-Komotini, which will be supportive to the ITGI) and that is already included in the long-discussed Economic Recovery Plan. Even Russia is the major supplier if the routes are diversified and if there is a common European policy, not only for the market but also for energy security, the effect of crisis like the one we had in the beginning of January will be mitigated. Of course there will be problems but not as critical as we had this winter.

So does that mean you're not objecting to Russia's South Stream gas pipeline even though it is from the same supplier, but will provide a different route for Bulgaria?

I'm objecting neither to the South Stream nor to the (Interconnector) Turkey-Greece-Italy (ITGI) gas pipeline nor to Nabucco. All three have their role because the sources are different. If South Stream is using Russian gas, Nabucco and ITGI will be using gas from Azerbaijan and in the future probably from Uzbekistan. It will be very important to use all possible supplies and all possible alternatives because in the other projects like Nabucco and ITGI another type of problems may appear. Especially for the moment I understand that the Turkish company would like not to be simply transiting the gas, not to be simply a transit country, but probably to buy the gas from primary sources and then resell it to us, Greece and Italy. This is not the best commercial solution. From all possible suppliers different problems may exist and that's why the European Union and its member states would be interested to involve Russia, Uzbekistan, Azerbaijan and especially Turkmenistan. If the Azeri gas is not enough, one could use gas from Turkmenistan. One could involve all these countries in some political framework. The European Energy Charter is a good document which could be used for bilateral agreements with the supply countries. In the future we also have to rely on gas from Iran so it's very important to develop not only the physical framework for the gas but the political framework, the agreement, the procedures and so on.

But the Russians have objected to ratifying the Energy Charter in its current form...

But it seems they're not objecting to taking some of the principles in a bilateral agreement with the EU. Unfortunately this agreement has not been discussed for long. The crisis in Georgia in August last year put back the possible discussions with Russia but this issue has to be resolved because Russia would like to be a reliable source of supply. Of course any possible supplier will be considered. At the end one will take into consideration not only the price of gas from a specific supplier but the long-term security of supply so the less developed contractual and legal bases the more efforts on developing alternative sources - liquefied natural gas from Nigeria, from Qatar and so on.

EU Member States speak with different voices and Russia has formed separate agreements with European companies. Can a pan-European energy policy be achieved?

Well, I don't believe that one could speak at this stage of a pan-European energy policy but one could speak of developing step-by-step an all- European energy market based on the same rules, based on the same codes for transparency, based on the same principles of equal access to the pipelines and grids for everybody, not for the big boys only, for the big companies, but for any company. That's what is being done in the Third Energy Package. At the same time, there should be a common policy for energy security which would mean that countries will engage in measures of solidarity when a country has problems. One has to have a policy for framework of grids, of alternatives for transmission of gas and electricity. These issues could be discussed at a European level to ensure security of supplies, to see how the European Union as such could support the efforts of companies -- because of course the market is based on the initiative of companies -- but at the same time this is an oligopolistic market and not always all companies are happy with greater competition, with alternatives of supply. These are issues that have to be resolved through the Energy Package, through the common European Agency of Regulators of gas and electricity. Little by little there could be developed common rules for the gas and electricity.

Do you think there should be rules about Gazprom's expansion into Europe?

In this energy package there is a third-country clause which would require that companies that will be expanding in Europe follow the same rules as European companies, that transmission of gas and electricity are effectively separated from the supply or the consumption. Of course countries like Bulgaria are not favouring total legal unbundling of the different companies because when your transmission company is small it's easier to be bought by the bigger companies. We're trying really to separate the decision making so to open the market to competition but at the same time to allow every member state to have enough possibilities to defend its strategic interests in the specific market.

Are you concerned about the gas prices for Bulgaria?

The prices of gas and the prices of heating were increased on January 1 when the international prices begun to go down because in gas there is a time lag up to six months from the prices of oil or fuel products so it had been decided by the regulator which controls gas and electricity prices in Bulgaria for the heating prices to be reversed back although they were increased in January. Of course we're concerned with gas prices. Now they will fall and oil prices fall, but I think this is because of the economic crisis unfortunately, not because of the long-term tendencies. The longtern tendency is that prices will continue to increase. I hope they will increase gradually and there will be enough competition on the market so that the increase is really based on the increase of prices of basic components and not a decision of the companies that supply it. In fact this package is very much dealing with the issue of consumers and in the cases of increasing prices it will oblige countries to develop the concept of energy policy, to develop the concept how to support people in critical periods in Bulgaria in the winter, in Greece maybe in summer when the heat is very high so people who have difficulties would have a minimum supply of energy. This is something we also very much want to improve in this package and I think the Council is little-by-little agreeing with us (laughs). Bulgaria has closed down two reactors at Kozloduy.

Following the Ukraine-Russia gas crisis, which affected Bulgaria, do you think more nuclear plants should be built to avoid similar problems in the future?

We had the gas crisis during the winter period and some basic infrastructures, some industries at the moment did not have alternative sources of heating and some companies could not use alternatives fuels. But at the same time Bulgaria did not have problems at that time with electricity so that's why the government did not in fact utilise the possibility of Article 36 of the treaty between Bulgaria and the EU as a safeguard measure to reopen units Three or Four or both of Kozloduy ... and there was still electricity for export (to Greece). However, the closure of these two reactors has created a great problem for the energy supplies from Bulgaria. Then the fact that the reactors were closed by political decision 35 reactor years before their possible exploitation creates the problem for sources for their decommissioning and Bulgaria has according to the treaty sources for their decommissioning until 2009.

That's why I asked the Commission if they are preparing a proposal for continuing the support for the decommissioning of these two nuclear reactors till 2013. That does not mean that if Bulgaria has a crisis-because this current economic crisis is also affecting the country - the issue of the safeguard clause of the treaty could not be evoked by the end of the year. But you had also another question: What we do in the future? Yes, we're preparing and building a new nuclear power plant with two reactors in Belene and we will be doing this together with RWE. It will be investing 49 percent of the project and the Bulgarian electrical companywill participate with 51 percent. The reactors are Russianproduced reactors and they will equipped by Areva-Siemens so it is an international effort. Of course we are not very happy with the political decision to close the two reactors in Kozloduy and that's why we're very active here in Parliament to develop the Nuclear Safety Directive so that it becomes a bidding basis not only for new but for existing reactors and the EU has real criteria to access the safety of reactors ... All countries in Europe, regardless to their attitude towards nuclear, should have the right to access that those who utilise nuclear energy are doing so in a safe way. Our position is that we'll develop nuclear energy but in full compliance with the safety and security requirements.

The nuclear debate is going on in EU Member States. Do you think that in order to cut CO2 emissions and meet climate goals, Europe would have to embrace nuclear energy?

I wouldn't say Europe has to embrace nuclear energy because every country has the right of its own choice, but I'm sure that the nuclear will be part of the energy mix. It's very clear that this is the viable energy mix because otherwise it's impossible just to cover requirements-provided one does not increase energy efficiency much more-only with solar and wind energy. I'm not sure that by that time enough biofuels will be developed with such efficiency that they will really reduce substantially the CO2 emissions so I think nuclear is part of the solution.

 

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