Energy Crisis

Hungary, Serbia say Bulgaria’s tax on Russian gas transit is aimed against their countries

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Published

October 18, 2023

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Published:

October 18, 2023

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The governments of Hungary and Serbia have said in a joint statement that Bulgaria’s decision to introduce a tax on the transit of Russian gas is aimed against these two countries. The move, announced at the start of the heating season, when gas consumption is higher, could revive the energy crisis and threaten the supply of natural gas in Southeastern Europe, with regard to the market’s fragility due to the war in Ukraine.

On Friday, October 13, Bulgaria introduced an excise tax of BGN 20 (USD 10.75) per MWh for the transit of Russian natural gas through its territory, translating to USD 113 per 1,000 cubic meters. The new levy amounts to about 20% of the current natural gas price on the TTF exchange – EUR 50 per MWh. The rate is unusually high.

Bosnia and Herzegovina, Greece, Hungary, North Macedonia, Serbia receive gas from Russia through Bulgaria. Bulgaria has not received any Russian gas since the end of April 2022, when it refused to pay for it in rubles. The new payment mechanism was Russia’s response to the sanctions introduced by the European Union due to its attack on Ukraine. However, Bulgaria continued to transport Russian gas through a pipeline that runs from Russia through the Black Sea, Turkey, Bulgaria, Serbia, Hungary, and BiH.

Hungary and Serbia: Bulgarian tax threatens our countries’ security of energy supply

Deputy Prime Minister and Minister of Finance of Serbia Siniša Mali and Hungarian Minister of Foreign Affairs and Foreign Trade Péter Szijjártó underlined in a joint statement that Bulgaria’s decision to tax the transit of the Russian gas delivered through its territory is a move aimed against Hungary and Serbia, the Government of Serbia said on its website.

The new Bulgarian rule threatens the security of energy supply in Hungary and Serbia, they stressed.

The European Union did not impose sanctions on the delivery of natural gas from Russia and therefore the argument of the Bulgarian prime minister is totally false, according to the statement. The decision, they added, undermines European solidarity and jeopardizes the energy security of both EU member states and candidate countries.

Hungary and Serbia will harmonize their positions and respond to Bulgaria’s controversial decision accordingly, as per the readout issued by Serbia.

Denkov: Now there are alternatives to Russian gas

After the decision was made, Bulgarian Prime Minister Nikolay Denkov said his country has the right to introduce a tax on the imports and transit of Russian gas, the Bulgarian National Radio reported.

Despite the sanctions against Russia, some countries were allowed to import Russian gas “because they had no other options,” he stressed, pointing to Hungary and Serbia. Now there are interconnectors and alternatives and Russian gas should not enjoy any special preferences, in Denkov’s view.

Of note, European countries still import Russian gas. A smaller part comes via Ukraine through pipelines while most of it is liquefied natural gas (LNG), transported by ships. Buyers include Austria, Belgium, Finland, France, Greece, Italy, the Netherlands, Portugal, Spain, and Sweden.

BiH, Hungary, and Serbia could, in the event of an interruption of deliveries via Bulgaria, look for alternative deliveries via Ukraine or European countries. Of course, on the condition that there are available quantities they can buy, and the capacity for transport by ships and pipelines.

FT: The intention to push the Russians out of the European market

The decision to tax the transit of Russian gas, as reported by the Financial Times, came a few days after the Bulgarian government decided to tax the profits of the Lukoil Neftochim Burgas oil refinery with 60%.

Both measures are supposed to push the Russians out of the European market, Bulgarian officials said. They added that the goal was to make the purchase of Russian gas a little less profitable and to force Serbia and Hungary to find another supplier.

Vasilev: We want to reduce Gazprom’s profit

Bulgarian Finance Minister Asen Vasilev said the cabinet’s intention wasn’t to make gas more expensive for consumers in Hungary and Serbia but to make it less profitable for Gazprom to deliver gas through Bulgaria.

Most of Gazprom’s gas contracts are “priced at the point of delivery in a given country”, he asserted, claiming that the fee would most likely have no effect on gas prices in the two countries.

He confirmed that Bulgaria is pressuring Lukoil to start looking for a buyer for the refinery in Burgas.

Comments (1)
Rosie Deus-von Homeyer / November 13, 2023

If the Bulgarian company Neftogaz in Burgas RE-SELLS the Russian gas to Greece, Serbia, and other Balkan countries to gas prices, it agreed with these countries, Neftogaz does not have the right to require transit fees.

In case the transit fees are much too high, we, lawyers speak of ” ADHESION contracts”… Knebelungsverträge auf Deutsch,
because Neftogaz misuses the dependence of other Balkan countries on the transit of gas through Bulgarian territory.

Let the Arbitration Court in Den Hague or the Swedish Commercial Institut in Stockholm to decide ,if the Bulgarian company could charge such high transit fees.

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