Shale Gas in Bulgaria: An Interview with Tomasz Daborowski
Natural Gas Europe was pleased to have the opportunity to speak with Tomasz Daborowski of the OSW (Centre for Eastern Studies) on shale gas developments in Bulgaria. Mr. Daborowski is co-author of the recent work Shale gas in Bulgaria, the Czech Republic and Romania. Political context - legal status – outlook.
How did Bulgaria so suddenly reverse its stance towards shale gas? Please describe this rapid process.
As a matter of fact, there was a very heated debate on shale gas in Bulgaria and the position of the government towards the exploration and possible extraction changed sharply. Initially the centre-right government of the Prime Minister Boyko Borisov took a very favorable standpoint, just to make a U-turn and ban the hydraulic fracturing technology after half a year of broad protests.
The debate was ignited by the government’s decision to grant an exploration license for Chevron Corporation to explore for shale gas on one of the most promising areas in the North-Eastern part of Bulgaria. The approval for Chevron unleashed a full-blown war with environmental organizations and left-wing opposition one side and the government on the other. Tens of small but well-organized protest were staged across the country and opposition was constantly attacking the government in the parliament. Shale gas also emerged in a campaign of a leftist candidate for president in Autumn 2011. Although he lost the elections, a growing pressure forced the government to give up shale gas in January 2012.
Mere few months made politicians change their minds. Why, do you think, the reversal is not possible?
Reversal is not impossible – such development was observed for example in neighbouring Romania which in May last year imposed fracking moratorium and just recently made a u-turn in their shale gas policy. Nevertheless I’m skeptical about such positive developments in Bulgaria. The issue is simply too highly politicized right now. The shale gas was strongly put on the agenda of the leftist opposition, which is going to continue challenging the government, if it was to revive this matter. Bulgarian Socialist Party (BSP) will be probably be defeated one more time in the coming parliamentary elections in July 2013, but it will continue to give bad press to the potential return to shale gas. On the other hand, for the ruling Centre right GERB shale gas seems to be a game not worth a candle. Advantages of diversification via shale are uncertain and far off, while lifting shale gas ban would lead to negative social reactions.
Unlike Poland, Bulgaria has a strong nuclear lobby, the domestic gas company is not interested in shale gas and the country is historically, culturally, linguistically and religiously closer to Russia than Poland. To what extent can the Bulgarian reversal can be explained by these circumstances?
Indeed, there were a lot of reasons behind Bulgarian shale ban. First of all there was a little interest among Bulgarian business towards shale gas. Some of the representatives of the Bulgarian nuclear industry presented their negative vision of shale gas, while state-owned Bulgargaz does not have sufficient financial capacity and experience to start exploration for shale gas. Bulgarian-Russian friendship could also be the factor. For example, the Bulgarian Socialist Party, who were strongly opposing shale gas, are traditionally more inclined to have good relations with Moscow. Nevertheless, in my opinion roots of shale skepticism and Bulgarian shale ban lies elsewhere. It is a weakness of the state and lack of public trust. In Bulgaria any significant business undertakings raises suspicion of corruption. The culture of restrictive compliance with environmental procedures and matured environmental regulations are nonexistent. There were not high quality information about potential threats and benefits coming from shale gas – neither from governmental side nor from shale companies. In a such circumstances public doubts and strong protests were somehow pretty understandable phenomena.
In your report you quote another interpretation circulating in Bulgaria, according to which the anti-shale offensive, in the media, on the streets and in the cabinets, was inspired by a “foreign PR agency.” Who was a suggested contracting party and where was the alleged campaign prepared?
Yes, a lot of conspiracy theories emerged after Bulgaria had introduced fracking ban. Some right-wing politicians and political analysts were claiming that anti-shale movement in Bulgaria was simply too strong. And of course some allegations were made in the political debate, suggesting that blocking shale gas development in Bulgaria lies in interest of Russia, which needs to retain its dominant gas exporting position, in Bulgaria, as well as in Europe. However, these allegations about existence of PR–agency behind anti-shale movement are not based on any evidence, we rest on speculations and presumptions.
Things are getting complicated in Romania. In the recent report, you write that the untransparent way of granting licenses was the primary reason for the intensification of unfavorable attitudes toward shale gas in Romania.
Culture of classified or limited access to public information is still a serious problem in Romania. All exploration licenses as well as national deposits databases are classified by law. It raises constant doubts among Romanians, as well as NGOs and environmental groups, which are demanding more transparency. Another issue is the lack of mature mechanisms of dialogue between authorities and local communities. Channels to communicate priorities of energy policy and reliable information, concerning threats and opportunities created by shale gas production, are non-existent. In my opinion, the policy of keeping energy contracts shrouded in secrecy as well as general trust and information deficit were the main drivers behind public outcry against fracking at the beginning of 2012. Political reasons also played some role. The liberal – left opposition used mounting shale controversies to attack the center – right government. Therefore when the Social Liberal Union took power in May, it immediately announced the moratorium on fracking. Nevertheless it is important to stress that moratorium was rather an act of a new political opening than a carefully prepared and ideologically driven idea.
What has changed since the last elections? Does the declared plan of raising hydrocarbon taxes suggest, that the Romanian state is going to open the door for shale gas?
The leftist – liberal camp took power last April but their big victory came in last December when Social Liberal Union won elections and achieved the constitutional majority in the parliament. After the last elections, position of the Romanian government towards shale gas changed completely. Prime Minister Victor Ponta has changed his rhetoric and begun to talk in positive terms about shale gas exploration. The cabinet withdrew from initial plans of extending the shale gas moratorium, which expired in December. It seems, there is a possibility of a wider opening for the shale gas industry, as for example shale gas was put on the list of energy priorities in the programme of the government. Yet, there are not any special incentives for investors. Quite the opposite direction of the trend can be observed, as the cabinet of PM Victor Ponta introduced additional energy taxes, inter allia a high windfall tax on domestic hydrocarbon producers. This extraordinary taxes will remain in effect until the beginning of 2015 when a new royalty regime will be introduced. Therefore it seems to me, that a sudden opening for the shale gas industry, a kind of shale gas fever, is not probable in Romania. In my opinion regulatory risks for companies are currently too high.
Romania is a very close ally of the U.S. in Europe. Do you think, that this alliance can somehow support the shale gas development? Can Romania replace Poland as the leader, pioneer of this industry in Europe in a few years?
The political friendship between Bucharest and Washington can help the shale gas industry in Romania, but certainly will not replace the objective conditions for development: the creation of a transparent, positive and stable regulations for oil and gas companies and expanding and modernization of the gas infrastructure, which would allow production and subsequent gas trade of gas. Not to mention the fundamental condition; the very existence of shale gas deposits, whose volumes are still unknown. On the other hand among energy experts it is belived that Romania’s geology offers very favorable conditions for shale gas production, especially in Transylvania basin. Company Romgaz for example has accidentally produced shale gas in the middle of 90s, due to lack of funds and inexperience abandoned the project. Another plus is well developed Romania’s gas industry. It is worth to mention that Romania is a gas pioneer in Europe and started gas exploration and production already one century ago. Summing up: recent reverse course towards shale gas among policy makers in Bucharest is surely not enough. But it is still a good starting point for better understanding and exploring Romania’s shale opportunities.
Related Reading: Shale Gas in the Czech Republic: Interview with Jakub Groszkowski