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Russian gas giant Gazprom's long-term contracts with Kyiv to transit its product via Ukraine to the EU expire next year and the supplier of 34 percent of Europe's gas is looking for new ways to feed its main market.
Many of us have heard about one big gas pipeline project — Nord Stream II, with its projected capacity of 55 billion cubic meters (bcm) which would divert almost all Russian gas now going through Ukraine directly to Germany via the floor of the Baltic Sea, thus completely leaving the former Soviet republic out of the loop.
But there is another less publicized pipeline, Turkstream, linking Caspian Sea gas supplies with southeastern Europe via Turkey with a capacity of 32 billion cubic meters. In May, it was announced that a second branch of the pipeline would be directed to the EU's poorest country, Bulgaria, which is pitching itself as an honest broker in the region's gas business.
According to the plan, Bulgaria's Black Sea port of Varna will store and transport gas from Russia and the Caspian Sea to neighboring Romania, Greece and Serbia. Gazprom also wants to extend the pipeline right through Bulgaria to Austria's Baumgarten hub, which would require it to comply with EU rules on third party access, an issue that previously helped derail a similar project known as the South Stream pipeline.
A natural choice
The Bulgarian part of the pipeline would have a capacity of 15 billion cubic meters, could start operation in late 2019, and would be built at a cost of €1.4 billion ($1.6 billion).
"The inclusion of Bulgaria into the joint Russian-Turkish TurkStream project might come as a surprise after the fiasco of the South Stream project, but taking into consideration Bulgaria's geopolitical position, there is nothing surprising about it," the Warsaw-based political scientist Jan Mus told DW.
"For the pipeline to reach Central Europe, Bulgaria is the natural choice, avoiding politically and geographically troublesome Macedonia. Moreover, Sofia is much more pragmatic in its approach to Russia than Poland or Romania," Mus continued.
Russia waits on Brussels
But Moscow is wary of repeating the abandoned South Stream experience and Nord Stream II is creating a few headaches of its own. In this context, Russian Energy Minister Alexander Novak has said Russia will commit to the project only if Brussels is on board.
Read more: Bulgaria torn between Russia and the West
The signals from Brussels appear positive. "Diversified gas supplies to Bulgaria and the region of southeast Europe are of utmost importance to a successful energy union, as energy security is one of its five pillars," European Commission Vice President Maros Sefcovic told DW.
Endorsing German Chancellor Angela Merkel's support for the creation of a gas hub in Varna, he went on: "The European Commission fully supports Bulgaria's ambitions for connecting gas supplies which will contribute to diversified and competitive gas markets," he said.
The interim results of a feasibility study were presented in Brussels on June 12 and Bulgaria's gas transmission system operator Bulgartransgaz has indicated that the project should be implemented in two stages — first, through a new entry point from Turkey; second, through a new entry point near Varna, on the Black Sea coast where the hub will be situated.
The final report will be published at the end of July and in September an investor meeting in Varna is scheduled to follow.
"I have discussed this personally with Prime Minister Borissov and Minister Petkova," Sefcovic said. "Our estimates show that in view of the important role of gas in the EU's energy mix in the short- to mid-term as a backup fuel to intermittent renewables sources, the EU's gas needs will remain stable over the next decade. Hence, there is a need to preserve the existing gas transportation routes into the EU, including via Ukraine. The Bulgarian gas hub is conceived as offering more diversity rather than limiting it unnecessarily."
All on board
The European Bank for Reconstruction and Development is also ready to support the plan. "In Bulgaria we need to see more gas connectors and close cooperation with Greece as the basis for a hub," a bank spokeswoman told DW.
But some EU officials have also expressed concerns that Sofia may choose to send the gas onto Europe to earn transit fees rather than allowing it to be traded at a new gas hub.
Read more: EU 'positive' on Russia-Ukraine gas talks
"Bulgaria does not yet meet the EU's conditions for becoming a gas hub, but they know exactly what to do," according to Klaus-Dieter Borchardt, director of the Internal Energy Market at the European Commission's energy department.
"If there is real willingness to establish a hub and not only transit Russian gas as back in 2013/2014 with South Stream, there is now a real possibility and in my talks to the Bulgarian government I got the feeling that this government is determined to create this Balkan gas hub in Bulgaria. As long as this is the case, the Commission supports and assists Bulgaria," he told DW. Adding, "Ukraine could also get its gas supply from the hub and later, when becoming an exporting country, sell to the hub."
Sefcovic warned that any new pipeline infrastructure in Bulgaria would come under "very, very close" scrutiny to ensure it complies with EU rules. "But the most important thing is to have a choice, to have options and to become the trader, not a mere transit."
"I have sympathy for the Bulgarians here," Jonathan Stern, senior research fellow at the Natural Gas Research Programme of the Oxford Institute for Energy Studies, told DW.
"They took the view with the Commission that, if you want us to have interconnectors, you pay for them. They say 'the Russians are willing to build pipelines in our country and will pay, we're a small gas market and can't afford to pay for new pipelines,'" Stern added.
It's all Greek to me
The 182 kilometer (115 mile) Interconnector Greece-Bulgaria will have a transportation capacity of 3 billion cubic meters per year (bcma) of natural gas, with the possibility to upgrade to 5 billion cubic meters per year.
The Bulgarian energy ministry said in March that 10 companies from countries like Turkey, India, Russia, Greece, Germany and Bulgaria have requested to participate in the tender process to supply pipes for the project, which has an estimated cost of €220 million.
Another source of diversification of gas supplies will be the nearly completed Azerbaijani Shah Deniz II gas field in the Caspian Sea, which will deliver 6 bcma of gas to Turkey and a further 10 bcma to markets in Europe via a route known as the Southern Gas Corridor by 2019.
In 2016, Sofia agreed with the government of Azerbaijan for 1 bcma of gas, or about 30 percent of Bulgarian domestic consumption, to be delivered to Bulgaria by 2020. Bulgartransgaz has a long-term contract for 25 years with Azerbaijan's state oil company SOCAR.
Small fish, big pond
Despite the fanfare, some believe Bulgaria is unlikely to become a gas hub overnight like NBP in the UK and TTF in the Netherlands, if at all.
It would require a big liquid gas market, in turn requiring high demand, many different supply sources, different participants and regulated third party access to all pipelines, Stern believes.
"And Bulgaria fulfills few or none of these requirements. Basically it's a small gas market dominated by Russian gas with some Azeri gas and some LNG [liquid nitrogen gas] from Greece," he says.
"I understand that the whole project is presented by Bulgarian elites as a great success, but the truth is that Moscow and Ankara will dictate terms, while Sofia's influence on the course of action will remain limited," Mus concludes.