Bulgaria and Turkey shake hands on gas link

By bne IntelliNews March 21, 2012

bne -

Bulgarian Prime Minister Boyko Borisov met with Turkish counterpart Recep Tayyip Erdogan in Ankara on March 20 to finalise talks on a gas interconnector between the two countries. The short pipeline - which will link the pair's gas networks - aims to increase energy security in the region by reducing dependence on Russian imports.

"Today Erdogan and I shook hands on the political will and firm determination to make the interconnector," Borisov told reporters. "We will build interconnection for diversification with Turkey. This is a big success for our relations. And we hope to finalize the project before May."

The EU is a possible financier for the project. If built, the pipeline would be about 80 kilometres long and run from Turkey's northwestern Thrace region to Bulgaria's southern city of Haskovo. The pipeline would deliver gas to Bulgaria from Azerbaijan in case of unexpected shortages or emergencies. Sofia is reported to have already reached a preliminary agreement with Baku to buy at least 1bn cubic meters of gas annually.

Borisov added that the project will be run by state-owned gas companies Bulgargaz and Botas, whilst the two countries' respective ministries of economy and energy will sort out the fine print.

The deal is expected to be finalised after Turkey speaks with the Russians to "clear the road map" for the pipeline. However, Moscow's blessing is unlikely to be given willingly, given Bulgaria - worried over its almost total dependence on Russian energy - has stepped back from some energy projects in recent months.

In December, Sofia backed out of the Bourgas-Alexandroupolis oil pipeline, after months of prevarication, while on March 15 Prime Minister Borisov announced that Bulgaria is likely to cancel the planned Belene nuclear power plant, which Russia is contracted to build. Like most of Europe, Bulgaria has also been pushing Gazprom for a discount on gas prices.

The sudden drive away from the east has also taken its toll on the Bulgarian cabinet, with Minister of Economy and Energy Traicho Traikov dismissed the same day. Borisov claimed that excessively slow progress in implementing plans to diversify energy sources, including the construction of the gas interconnector with Turkey, was the reason for the dismissal. On his last day in office, Traikov announced plans to build an liquified natural gas (LNG) terminal to receive gas from Qatar and Algeria.

Critics argue that Traikov's opposition to Belene is the real reason for his sacking, while Borisov also pointed to delays to Bulgaria's participation in the South Stream gas pipeline - which plans to carry Russian gas to southern and central Europe, one of the few Russian projects that Sofia still apparently supports.

Ankara has also had its differences with Moscow over gas recently, and in October refused to extend its 25-year-old contract for imports unless Gazprom drops its prices. On the other hand, Turkey has also signed up for a major role in South Stream.

However, Erdogan pointed to good-neighbourliness as the main reason behind Turkey's agreement, with Bulgaria having been hit hard during February's cold snap by reduced gas supplies. "As a neighbouring country, we want to rush to the rescue," the Turkish PM stated. "We agreed today to do what is necessary in infrastructure for this purpose, so that Bulgaria would no longer experience difficulties in connection with natural gas supplies."

Turkey is also planning a Trans-Anatolian Pipeline (Tanap) project with Azerbaijan. The pipeline would run from the eastern border of Turkey to the country's western border. The initial capacity of Tanap will be 16bn cubic metres per year. The two countries have already signed a memorandum of understanding to establish the consortium that will build the pipeline, with construction slated to start this year and completion set for late 2017.

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