Much has been said and written about Russia’s proverbial “gas weapon.” The argument is that Russia’s high reliance on natural gas makes Eastern and Southeastern European nations think twice before considering making any move against Moscow. The Kremlin is in a position to punish those who dare to oppose it by inserting harsh clauses into gas deals or, worse, by cutting off deliveries. Friends, on the other hand, are rewarded. Case in point: the “incredible” deal Russian President Vladimir Putin gave Serbia, which many believe secured the re-election of Serbian President Aleksandar Vucic.
However, we have recently seen that this so-called “gas gun” does not actually exist. On April 26, Gazprom turned off the tap on Bulgaria and Poland after they refused to comply with a unilateral change in their supply contract dictated by Putin and to pay their monthly consumption in rubles. Several weeks later, both countries are doing well. The Russian decision has not unleashed chaos in either economy. It has not triggered an internal political crisis, much less caused a major change in Polish or Bulgarian foreign policy. In any case, the court has strengthened the determination of those countries.
Even Bulgaria, the most docile of pigeons when it comes to Russia, has shown some courage. On April 28, hours after the gas stopped flowing, Prime Minister Kiril Petkov traveled to kyiv to discuss with Ukrainian President Volodymyr Zelenskyy what Sofia can do to help. Although Bulgaria does not formally send military assistance to Ukraine, it is a public secret that ammunition and weapons from its defense manufacturers are transferred through third parties, notably Poland.
Bulgaria’s response to the interruption of gas flows from Russia deserves special attention. Unlike Poland, which currently gets less than half of its gas from the Russian Federation, the Balkan country relies on Russia’s Gazprom for more than 90 percent of its supplies. But unlike previous cuts in 2006 and 2009, this time the government in Sofia clearly had a plan. For example, the state-owned trader Bulgargaz has contracted shipments of liquefied natural gas (LNG) which now enter Bulgaria through the Revithoussa terminal in Greece. Additional volumes are also arriving from Romania, via the Trans-Balkan Pipeline which, until TurkStream became operational in 2020-21, served Gazprom. The fact that the interruption occurred in the summer, after the end of the heating season, also makes life easier for the Bulgarian authorities.
The bottom line, however, is that Bulgaria’s long-overdue interconnection gas pipeline with Greece (ICGB) is due to come online on or shortly after June 30. Once up and running, Bulgaria will import 1 billion cubic meters (bcm), corresponding to about a third of its annual demand, from Azerbaijan, as ICGB connects to the so-called Trans Adriatic Pipeline.
The LNG will come from terminals in Turkey and, after the end of 2023, from a floating storage and regasification unit (FSRU) next to the port city of Alexandroupolis in northeastern Greece. On May 3, Prime Minister Petkov witnessed the launch of the FSRU works in the company of Greek Prime Minister Kyriakos Mitsotakis and EU Council President Charles Michel. Also present were Aleksandar Vucic and Dimitar Kovacevski, Prime Minister of North Macedonia. The war in Ukraine has given impetus to new infrastructure projects that will diversify gas deliveries to the Balkans and redesign supply routes.
However, in the short term, everything remains the same. Despite being rejected by Gazprom, Bulgaria does not stop the streams from Russia to Serbia and Hungary via TurkStream. Sofia generates income from the Russian shipments that pass through, she does not want to spoil relations with Budapest and Belgrade, and she also wants to appear that she is acting in good faith in her contractual obligations to Moscow in light of the case of upcoming arbitration. .
Contrary to popular belief, southeastern Europe is not dependent on Russian gas. The main reason is that local countries consume limited volumes: three bcm per year for Bulgaria and Serbia each and six bcm for Greece. Meanwhile, Romania, a large market where annual demand is 12 bcm, barely accepts Russian gas. With the right infrastructure links, Gazprom can be replaced by alternative providers.
That is why Greece and North Macedonia are considering an interconnecting pipeline that could also extend to Kosovo. The same for Bulgaria and Serbia. There are long-standing plans for a branch of TAP in the Western Balkans: the Ionian-Adriatic Pipeline that could serve Albania, Montenegro and Bosnia. More immediately, gas itself can be replaced by electricity, particularly if prices change in favor of the latter. Thanks to the large capacity available, Bulgaria and Romania export electricity to countries such as Greece and Turkey, where demand often exceeds supply. Last but not least is the green transition. Investment in renewable energy and energy efficiency, a priority in which the European Union is more interested than ever, will shape the future of South East Europe.
The question, really, is about the price. These days, Russian pipeline gas based on long-term contracts and indexed to oil is cheaper than what spot markets charge, which reflect supply and demand. Diversification outside of Russia comes at a price. However, tomorrow the balance may change. A slowdown in global economic growth and depressed demand for energy will also make gas cheaper. The Balkan countries will then be in a much better position to negotiate with Gazprom, should the Russians want to strengthen their market share.
The main crisis has to do with politics. As long as there are politicians and businesses in South East Europe who benefit from the current setup and are happy to put supply diversification and energy sector modernization on the back burner, Russia will have a card to play. You can buy all the support you need and build gigantic projects like TurkStream with ease. That is why the current crisis is also an opportunity to shake things up. What happens in Bulgaria can serve as an example for others in the region.
The views expressed in this article are those of the author and do not necessarily reflect the editorial position of Al Jazeera.