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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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The Oil and the Glory: Year of the Pipeline

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Year of the pipeline: Time magazine’s Person of the Year is the protester, and that is probably valid, but we think that the editors missed an important also-ran — the pipeline. Few care to stop and notice the elegance in unsung lengths of steel cylinders stirring fierce passions such as nationalism, greed and tear-inducing anger. We are talking the 24- and 36-inch steel cylinders that carry oil and gas across continents, under bodies of water and over mountains to the 7 billion people of the Earth. Who for instance considered nominating the Keystone Pipeline as political instrument of the year for how it threatened to shut down the whole of the U.S. government, and may yet in the coming couple of months? Then there is Nabucco, a proposed natural gas line that has much of Europe, Russia along with the U.S. tied up in sanctimonious knots over who will exercise geopolitical and economic leverage in Europe. This week Russia notched up the temperature by securing crucial support from Turkey for its repost to Nabucco, a pipeline that it calls South Stream. That battle also will carry over into the new year. And who can forget the proposed trans-Afghanistan gas pipeline, known by the acronym TAPI? A powerful and high-kicking chorus is backing TAPI, led by Secretary of State Hillary Clinton and CIA director David Petraeus, who embraced the line when he was running the ground game as a general in Afghanistan. Observers, including this blog, have cast doubt on TAPI’s feasibility given Afghanistan’s chaos. Yet we celebrate it as a worthy addition to this improbable pantheon — inanimate objects that somehow transmogrify into organic, breathing beings capable of arousing high-stakes emotion in humans.

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