3E News: South Stream and Nabucco – a pragmatic view

There is little doubt that by signing up to the South Stream project Bulgaria has given the outside world ample grounds to compare intent and action. Current policies are nominally based on traditional pragmatism – equal or shared interest in all competing project – with slight natural "preference" for the European Nabucco project since Bulgaria is a member of the EU. Such a middle ground approach implies as a prime prerequisite that the government avoids expressing overt preferences for either of the competing options and as a baseline script in public overtures key government officials refrain from voicing skepticism over the fate of the Nabucco pipeline as the preferred kid on the EU block. Without the EC’s support or ear, Sofia risks alienating key European partners and the European Commission, critically needed in securing alternative gas supplies for the interconnectors with Turkey, Greece and Romania.

The signing of the South Stream project and the new gas long term gas supply contract has changed little, though enough to moderate the perceptions of the outside world on our intent and objectives. On one hand, it is more than evident that Bulgaria chose not to play the game of the European Commission and joined an alternate project. Sofia went for the short-term benefit of lower price for gas in the wake of elections, regardless of many open-ended questions on the long term impact of the South Stream project. Better a sparrow in hand than an eagle in the sky. .

The rewards over the short term do not seem beyond reproach either. Even the "record" 21% price cut will rate poorly for year to come when compared to spot prices at key gas hubs in West Europe. A week ago Statoil and Wintershall signed a precedent setting spot price based long term gas supply for ten years for 45 BCM worth € 17.4 billion, i.e. 386 dollars per 1,000 cubic meters.  Bulgaria opted for the old school and the old Gazprom camp.  MORE