понеделник, 15 юни 2015 г.

The Manager: Behind the 'sudden' increase of the IGB capacity - rationale and risks

The news from Baku, that during his meeting with President Aliev Prime Minister Borisov confirmed the expansion of the capacity of the interconnector between Greece and Bulgaria to and possibly above 30 BCM came to many as surprise. It seems an ex prompt induced by latest developments, including other meetings Borisov held in Baku.

The Bulgarian leader was one of the very few if not the sole leader of an EU country present in Baku.

There are good reasons why EU leaders did not show up in the Azeri capital and even greater ones for the usually conservative and keeping the EU foreign policy mainstream Bulgarian PM to show up.

The important meeting however was the one held between President Putin and President Erdogan dedicated mostly to the Turkish Stream. Whatever has been discussed between the two leaders - the consequences will be felt shortly or not at all. The only invariable in the equation will remain the reluctance of the EU to play ball and accept the terms of play offered by Gazprom on the Turkish Stream.

Judged against this background the seemingly improvised move of the Bulgarian PM to upscale the transit capacity aims at enhancing his bargaining chips in anticipation of diverse and often competing gas flows potentially reaching the interconnector between Greece and Bulgaria. He could have either responded to concerns shared by the Azeri President (which given the volumes of Azeri gas seems unlikely) or trying to position Bulgaria as transit route for volumes of Russian gas via Turkish Stream. Meeting Russian gas in Turkey or in Greece has stirred politician and businessmen minds recently with OMV not wasting time to position themselves as the prime partner to Gazrpom in a revived Nabucco.

It sounds that the Austrians are playing solo and have not cleared their initiative neither with Brussels, nor with their co-shareholders in the Nabucco pipeline consortium or with Turkey. The pipeline epitomised efforts of the CEE and the EC to diversify away from Russian gas - hence the granted exemption. OMV are now playing the Third party exemption to attract Gazprrom and to present the pipeline as the best match to to Gazprom's demand for corresponding infrastructure as stated by President Putin and Alexei Miller.

With such dramatic increase in quantities the IGB should pre-qualify into a separate transit cross border pipeline.The same applies to the ITB should the Nabucco project is revived.

The Kremlin has decided to go all out and push in all directions in order to make the Turkish stream happen in one form or another - either through off shore segments to Bulgaria and Turkey (this has never ceased to be part of ongoing exchange) or to Turkey with an onshore segment.

President Putin is short on time and can hardly afford the standard time for all necessary permits and procedures in Turkey.

Bulgaria is now simply playing to preempt the option of Russian gas bypassing it.

Such moves come at a price and at a risk. The rationale is clear but the law of unintended consequences might bring unexpected results. Therefore it is still unclear whether the idea that emerged in Baku of a radical interconnector capacity increase should be treated as a second phase of the current project or as a parallel project.

It will be too obvious a move counter to diversification efforts if all the play around the Turkish stream and its follow on routes is allowed to negatively impact the schedule of the IGB and the signing of the final investment decision at the beginning of July.

The fact of the matter is that after six years of professed diversification not a single project has been implemented. Deeds are what matter at the end.

No doubt - Gazprom has a vested interest in blocking Bulgaria diversification projects and the use of its territory for alternative gas transit. The lobbying power at hand can hardly be underestimated - all the local intermediaries of Russian gas and their political off shoots.

The stakes are getting higher and the Bulgarian side might be risking too much if it bets too strongly on the alternative routes for Russian gas instead of alternative gas suppliers and seekers of transit services through Bulgaria.

One thing is certain as Capital Weekly article put it in its latest issue - if Bulgargas is unable or unwilling to buy gas from new suppliers and Bulgartransgaz is unable to transit new quantities from new suppliers the whole talk of Bulgaria as a transit hub will sound hollow.

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