Bulgaria preparing to halt Russian gas transit, citing US sanctions

Gazprombank has been under US sanctions since November 21. Bulgaria warned it would halt the transit of Russian gas to Serbia and beyond if Gazprom doesn’t come up with another way to pay for the service.

Geopolitics are again jeopardizing the supply of gas to Serbia, Hungary, North Macedonia and Bosnia and Herzegovina, and even Turkey. The United States imposed sanctions on Gazprombank on November 21, blocking the payment for the transit of the Russian fuel.

There are still no alternative solutions, and the deadline is December 20, Bulgarian Minister of Energy Vladimir Malinov said. Bulgartransgaz will strictly implement its contract and it won’t allow the transport of gas unless the service is paid for and until the issue is resolved, he warned. It is up to Gazprom, the supplier, to inform Bulgaria how it would pay for the transit through the Balkan Stream, which gets the gas through the Black Sea and Turkey via the TurkStream pipeline.

Malinov said Bulgartransgaz is fulfilling its obligations on time and that he expects the same from Gazprom, pointing out that the Russian company has booked almost the entire capacity. Bulgartransgaz or Bulgartransgas is the state-owned transmission and storage system operator.

Countries buying gas could be allowed to pay for transit themselves

Conversely, TASS reported, citing an anonymous source from Bulgargaz, that it is too early to speak about halting the transit of Russian gas through Bulgaria. It would be “an extreme measure” and it is not yet under consideration, the article adds.

The situation is unpleasant but not at all critical, and there is still time to work out the payment issue, according to an unnamed person from Bulgargaz

The situation is not at all critical, though it is unpleasant, and there is still time to work out the payment issue, the person said. Otherwise, the contract contains a dispute resolution mechanism including penalties for delays. Anyway, the countries receiving Russian gas can probably pay for the transit themselves, according to the source.

US sanctions against Gazprombank are jeopardizing Turkey’s energy security, Russian Ambassador to Turkey Alexei Erkhov said. He stressed that the share of Russian gas in consumption in the country is higher than 40%.

Balkans turning to LNG, Azerbaijan, aiming to diversify supply

Russia has responded to sanctions against western countries, imposed after it invaded Ukraine in early 2022, by declaring them hostile and demanding payments for pipeline gas to be made only in rubles and through Gazprombank. The supply to Bulgaria ended as a result, but the country continued with transit.

However, the Kremlin abolished the two said conditions last week, after the new sanctions.

In the meantime, Hungary asked the US for a sanctions waiver.

Bulgaria attempted to roll out a 20% tax on Russian gas transit last year. It backed away amid the negotiations on its entry into the Schengen Area and mostly under pressure from Hungary.

Notably, the agreement on deliveries of Russian gas to the European Union through Ukraine is expiring at the end of this year. Balkan Stream could remain the only pipeline source. Russia is still delivering liquefied natural gas (LNG), by sea.

Serbia, Hungary, BiH and North Macedonia are counting on the Alexandroupolis LNG Terminal in Greece, the new interconnectors between Greece and Bulgaria (IGB) and Bulgaria and Serbia as well as on deliveries of gas from Azerbaijan. In addition, there are plans for gas pipelines connecting North Macedonia with Greece and Serbia.

Serbia and Romania, which is due to become the biggest gas producer in the EU in 2027, intend to build a gas link of 1.6 billion cubic meters in annual capacity.