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Analysis: Bulgaria’s Shale Gas and the Wider Geo-Economic Game

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In mid-2011, the Bulgarian government announced it would provide shale gas exploration licenses to Chevron for the Northern part of the country.  Under the terms of the agreement the company would pay around $30 Million USD in order to begin its project. Initial findings pegged assumed reserves anywhere from 300 BCM up to 1 TCM. These prospects presented for shale gas were quite significant, not just for Bulgaria but for the whole of Europe.  It should be noted that reserves likely extend to the neighboring state of Romania, which is just a few kilometers from the country’s Northern borders.

Nevertheless, soon NGO‘s and various environmental and citizen’s groups started campaigning against shale gas exploration, citing the dangers of hydraulic fracturing (hydrofracking). These campaigns took the form of street protests, Internet broadcasts and intense lobbying of local councilors and politicians, which eventually forced the government to retreat from its original plans that spoke of making Bulgaria the shale gas champion in Europe.

The Center Left party (Socialist) in Bulgaria that is often perceived by outsiders as pro-Russian took a leading role in opposing shale gas research. In the Bulgarian Parliament two judicial initiatives were submitted with regards to this.

The first was drafted by three members of parliament of the Socialist party that proposed a complete ban on research and exploitation of any shale gas reserves in the country. The second initiative was drafted by the incumbent government and called for a moratorium on the exploration of shale gas until a new environmental-friendly method is found.

Media reports from Bulgaria have often mentioned the initiatives both by the Socialists and the environmental NGO’s to be linked to the interests of Russian gas companies, namely Gazprom. In fact the Minister for Economy and Energy, Traicho Traikov, went as far as saying in public that behind all protests, powerful energy import interests are to be found, indirectly pointing the finger at the Russians.

It is important to note that Ivaylo Kalfin, a leading Socialist politician, organized the local movement against shale gas in Northern Bulgaria where Chevron was to explore. Moreover, two out of the three Socialist MP’s that drafted the judicial initiative against shale gas had signed in the past when they were in government important energy deals with Gazprom. The third MP has business collaborations with a consultancy that supports the construction of the Belene thermonuclear power station, which was awarded to the Russian company, but has been “frozen” as a project over the past two years.

Furthermore, it is widely known that the current Bulgarian government is seen as anti-Russian under Premier Boyko Borizov, who has effectively frozen many bilateral agreements with Moscow, ranging from Burgas-Alexandroupoli oil pipeline to the South Stream pipeline gas project to the Belene nuclear station. Thus, the question arises: why did the Bulgarian government decide to stop a project that may eventually lead to the diversification of its energy dependence from Russia?

The answer is that Bulgaria has already started a whole range of initiatives in order to decrease its dependence by interlinking its system with that of Greece and Turkey and by bidding for a pipeline route in the Southern Corridor through its territory. Also, Russia exerts considerable influence in Bulgaria and it is likely that Borisov’s government decided that it is the best not to oppose Russia any further, bearing in mind that the opposition against shale gas exploration in the country was not solemnly coordinated by Moscow and really had strong domestic social support against it.

A third answer is that strong domestic energy interests, that are anti-Russian but also pro-natural gas, have played their role in undermining shale gas explorations. These interests are in favor of importing natural gas from markets such as Azerbaijan, thus they viewed shale gas as their opponent as they have traditionally viewed Gazprom as well.

The story though does not end in Bulgaria alone. On the 26th of January, Borislav Sandov, one of the leaders of the opposition against shale gas, made statements in the Bulgarian media and supported protests against shale gas exploration in Romania as well. There was a protest at the Romanian Embassy in Sofia and it seems that Bulgarian and Romanian NGO’s are coordinating their activities. In parallel, the government in Romania is battered by an ongoing wave of protests by state unions and workers against its economic policies, and the ability of Bucharest to resist yet another campaign against its policies is decreasing. Lastly, the especially harsh winter period in both Bulgaria and Romania with temperatures in major cities reaching minus 32 degrees Celsius and with a considerable number of casualties, has increased significantly the natural gas imports from Gazprom, which seems in any case to be the only sure winner from all of these developments and the current failure of shale gas explorations in these particular countries.

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Bulgaria: Socialist Political Opponents Seek to Revoke Chevron Shale Deal

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Political opponents to the government of Prime Ministers Boyko Borisov’s Citizens for European Development of Bulgaria (GERB) party are seizing upon the issue of shale gas development.

Earlier this week, a proposal to implement a moratorium on shale gas development by the by the far-right nationalist Ataka party was voted down by the Bulgarian Parliament.

Ataka leader Volen Shopov derided Borisov in Parliament calling on him to: “Give Chevron back their bribe, if you took one.”

Chevron Corp. won a tender for a shale gas deposit in northeastern Bulgaria, offering the government 30-million-euros to explore a concession in a large section of Dobrudzha, in the north east of the country.

Now, the Bulgarian Socialist Party has tabled a draft bill envisaging a ban on shale gas exploration and production and revoking award to Chevron.

The left-wing party said that it is following the path of its French socialist brethren and their experience with successfully imposing a ban on hydraulic fracturing.

Under the draft bill, the government is required to table annual reports on the exploration and production of hydrocarbon liquids and gases, the methods used in the process and their impact on the environment by March 30.

Companies that have already conducted shale gas exploration and production activities with or without a permit must submit detailed reports with the Ministry of Economy, Energy and Tourism within one month of the law’s entry into force.

The Socialists had made reconsideration of shale gas activities a key party of their platform in the October 23rd presidential election, which saw their candidate, former Minister of Foreign Affairs and Deputy Prime Minister Ivaylo Kalfin go down to defeat.  Kalfin has pledged to initiate a national referendum on shale gas drilling and production in Bulgaria.

The small, conservative party Order, Law and Justice (RZS) has also proposed legislation banning shale gas drilling.

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