The Bulgarian government has implemented a new tax on Russian pipeline gas being transported through its territory to the wider European Union (EU). The tax, amounting to 20 Bulgarian lev ($10.76) per megawatt-hour, or approximately 100 cubic meters of gas, was introduced through a law published on the official website of the Bulgarian parliament. The regulation took immediate effect.
This tax represents about 20% of the current cost of gas futures at the Title Transfer Facility (TTF) hub in the Netherlands, which serves as the benchmark for gas prices in Europe. On Friday, gas futures at the TTF hub closed at around €55.1 ($57.9) per megawatt-hour.
Until 2022, Gazprom, the Russian energy giant, was one of the main suppliers of pipeline gas to Bulgaria. However, due to the Bulgarian authorities’ refusal to pay for the fuel in rubles, direct exports to the Balkan country were halted.
Although Bulgaria no longer imports gas from Russia for domestic use, it remains a crucial transit route for delivering gas to the EU. This is particularly important as flows of gas through Ukraine have been significantly reduced due to sanctions against Russia and sabotage of the Nord Stream pipelines. Bloomberg estimates suggest that approximately half of the Russian pipeline gas destined for the EU currently passes through Bulgaria via the TurkStream pipeline.
Experts have expressed concern that the new tax imposed by Bulgaria could disrupt gas supplies to several Southern European countries, including Hungary and Serbia, which depend heavily on Russia for their gas needs. Hungarian Foreign Minister Peter Szijjarto described the tax as “unacceptable” and warned that it could jeopardize the security of energy supply for Hungary. He claimed that Hungary and Serbia are taking measures to ensure that Bulgaria cannot apply this legislation to their gas imports.
Gazprom has yet to comment on this development or respond to media inquiries regarding its reaction to the new tax.
It should be noted that while Bulgaria does not import Russian gas for its own use, it plays a crucial role as a transit hub for supplies entering the EU. The imposition of this tax is expected to have significant implications for the energy market in the region, including potential disruptions to gas supplies and the possibility of increased costs for consumers.
This story highlights the complex dynamics and challenges surrounding energy geopolitics in Europe, particularly with regards to the reliance on Russian gas and the transportation routes through which it is delivered. The actions of individual countries, such as Bulgaria, can have far-reaching consequences for the wider region and underscore the importance of cooperation and solidarity among EU member states.