Bulgaria has the right to impose a tax on the import and transit of Russian natural gas and the fuel shouldn’t receive “special treatment,” according to Prime Minister Nikolai Denkov.
(Bloomberg) — Bulgaria has the right to impose a tax on the import and transit of Russian natural gas and the fuel shouldn’t receive “special treatment,” according to Prime Minister Nikolai Denkov.
A tax on Russian gas, which is transited across its territory, was introduced by Bulgaria last week with immediate effect. The move sent shock-waves through Serbia and Hungary both of whom are heavily dependent on fuel that comes from Russia through Turkey via the TurkStream link.
“The tax we introduced creates an opportunity for real competition between liquefied natural gas from different sources and the gas that comes from Russia,” Denkov said in Tirana, Albania.
Bulgaria’s four-month-old government has attributed the tax to a need to keep the budget in line and to control inflation, while it also vowed to boost support for Ukraine and show commitment and willingness to cooperate with the European Union and the US. While not a major importer, Bulgaria is a significant route for the much-diminished pipeline flows that Russia sends to Europe after massive cuts in 2022.
The nation has introduced a charge of 20 Bulgarian lev ($10.76) per megawatt hour of Russian-origin gas. That is about 20% of the price of Europe’s benchmark gas traded in the regional hub of Amsterdam.
Serbia’s energy ministry said that the levy could cause a “dramatic” price increase by an estimated €100 per 1,000 cubic meters. The nation expects to replace about a third of its annual consumption with fuel from Azerbaijan or LNG via Greece once it opens a separate gas link later this year.
Serbian officials will discuss the matter with Bulgarian and Hungarian counterparts, according to a Monday statement by the country’s energy ministry.
Hungary’s foreign affairs minister Peter Szijjarto, the only high-ranking EU official to attend an energy conference in Moscow last week, said “for an EU member state to threaten another EU member’s gas supply is contrary to European solidarity, rules and is unacceptable.”
The country’s Premier Viktor Orban has been conducting a Kremlin-friendly policy and has never stopped doing business with Russia, even after its invasion of neighboring Ukraine. Orban has also been aggressively criticizing the EU and the US, while Hungary remains the most exposed European Union country to Russian energy imports.
Efforts to diversify away from Russia are in motion. Earlier this year Bulgaria began work on a pipeline to Serbia that will enable gas supplies from other countries like Greece and Macedonia. Last year Greece and Bulgaria completed a long-delayed link with Greece, now transporting Azeri gas and in the future – LNG from a terminal in Alexandroupolis, Greece. Hungary already buys buys LNG from Croatia’s terminal and is also seeking to purchase from Greece eventually.
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