Bulgaria’s Controversial Gas Agreement Faces EU Scrutiny

Authored by FRE/RL Staff via OilPrice.com,

• The agreement signed in January 2023 between Bulgargaz and BOTAS is being scrutinized by the EU.

• Analysts had raised fears that the deal might allow a “back door” for Russian gas imports into Bulgaria.

• Bulgaria’s Energy Ministry and Bulgargaz confirmed receiving a request for information from the European Commission regarding the gas deal.

The European Commission is investigating a deal allowing Bulgaria to access gas supplies via Turkey over a possible breach of the bloc’s antitrust rules.

The agreement, signed in January 2023 between Bulgaria’s state gas company Bulgargaz and Turkey’s state supplier BOTAS, was hailed by the then-caretaker government in Bulgaria as a “historic” deal.

But analysts expressed fears that the deal was unprofitable and would damage the country’s financial interests. They also warned that it could be used as a “back door” for Russian gas imports in Bulgaria after Moscow stopped supplying gas to the EU and NATO member soon after the start of the Kremlin’s full-scale invasion of Ukraine.

On October 20, the European Commission confirmed reports that it had sent a request for information to Bulgargaz regarding the agreement.

“Our role is to ensure compliance with European regulatory standards in the internal energy market. In case of indications of noncompliance, including of a possible breach of the EU antitrust rules, the commission will not hesitate to take appropriate action,” a spokesperson for the commission told RFE/RL.

“The commission is following very closely this issue and we are in touch with the relevant stakeholders and authorities.”

Bulgaria’s Energy Ministry confirmed to state broadcaster BNT that the European Commission had requested information regarding the deal between Bulgargaz and BOTAS.

Bulgargaz also confirmed that it had received a request for information regarding natural gas deliveries, without specifying for which contracts.

“Bulgargaz is preparing and will provide the information within the deadline agreed with the European Commission,” it said in a statement.

News of the investigation was first reported by Independent Commodity Intelligence Services (ICIS), a private company for market data and analysis, which said on October 19 that the commission had launched a probe into the deal.

The report said that the commission had asked Bulgargaz to provide information on the agreement with BOTAS and contracts under which “Bulgargaz may be acting as an exclusive agent or distributor for the supply of gas in Bulgaria or elsewhere in the EU.”

The report came amid concerns that the Bulgarian state company may be the only EU-based company with access to natural gas via Turkish infrastructure and its agreement with BOTAS might potentially block other companies from using the same import route.

Although it became cause for political tension in Bulgaria, there are few details about the deal as the agreement itself is confidential.

The deal was agreed in January 2023 by the caretaker government appointed by the President Rumen Radev, who hailed it as a “historic” deal that would allow Bulgaria to have access to Turkish liquefied natural gas (LNG) terminals and the country’s pipeline network for the next 13 years.

But analysts warned that the deal could open a “back door” for Russian gas imports after Moscow stopped supplying gas to Bulgaria in April 2022.

A new government in Bulgaria that was formed following April general elections also criticized the agreement.

Prime Minister Nikolay Denkov said that the deal was “nontransparent and unprofitable,” and Energy Minister Rumen Radev, who shares the same name as the president although the two are not related, said that it could cost billions without resulting in any benefit.

“The Turkish company BOTAS gets access to the Bulgarian and European markets without the opposite being true,” he said in August.

Bulgaria has relied mainly on natural gas supplies from Azerbaijan and LNG terminals in Greece and Turkey since Russia stopped supplying gas after Sofia refused to pay in rubles — a condition imposed on “unfriendly countries” as a way to sidestep Western financial sanctions against Russia’s central bank.