Southeastern Europe has been gaining in importance in the current energy conditions and planned reforms of the European Union. The latest crisis in Ukraine showed that Europe has to find and secure alternative supply sources and routes of natural gas. Location of Romania, Serbia, and Bulgaria is crucial in terms of European energy security and diversification projects. Therefore, regional integration, the harmony of legislation and market liberalization in these countries are crucially important. In this context, the energy outlook of these countries should be analyzed, and this article will discuss the actual conditions, potentials, and challenges of Romania, Serbia, and Bulgaria in a comparative way.
Among these three countries, Bulgaria is the least developed country in terms of natural gas infrastructure and has the highest natural gas prices among all of the European countries. The number of households which are connected to the gas distribution system is less than 2%. Natural gas is the least used energy source and it meets 14% of the total energy consumption of Bulgaria. Total gas consumption of Bulgaria is around 2.54 billion m³ but total domestic production is only 410 million m³ per year which cover just 16% of consumption, with the remaining gas demand is covered by import from Russia. Bulgarian natural gas reserves are stored in Chiren underground storage facility owned by Bulgartransgaz with its 550 million m3 capacity.
On the other hand, Serbia consumes 2,827 billion m³ natural gas while producing only 484,7 million m³ per year. Natural gas constitutes the 12% of gross inland energy consumption. In Serbia, approximately 250,000 households use natural gas and the country has 450 million m3 storage capacity located in Banatski Dvor. Domestic production covers about 8% of total consumption and the remaining 92% of demand is also imported from Russia. According to the LNG terminal project in Omisalj-Croatia, there is to be another gas transportation opportunity to Serbia with other neighboring countries. Also, planned inter-connector between Bulgaria and Serbia will contribute to the integration of the region.
In comparison, Romania is luckier than the other two countries in terms of natural gas reserves. Romania is the fourth largest gas producer in EU after the United Kingdom, Netherlands, and Germany. Also, Romania is the third least energy dependent country in EU. There are 100 billion m³ proved reserves in the country. 75% of these sources are located in Transylvania, especially in Mures and Sibiu regions. Romania produces approximately 11 billion m3 natural gas while consuming 15 billion m3 per year. Which means 85% of demand is covered by domestic production and 15% is imported from Russia. According to Razvan Nicolescu, the Energy Minister of Romania, the country will have more gas than it consumes by 2020. Romania Energy Center’s statistical data shows that 30% of gross inland energy consumption is covered by natural gas. Romania has 3 billion m3 storage capacity by eight underground storage facilities. In the framework of New European Transmission System aiming to unite Central and South Eastern Europe natural gas networks, there are two pipelines going from Romania to Hungary (Arad-Szeged) and from Romania to Bulgaria (Giurgiu-Ruse). In addition to these, parties signed a memorandum on April 13, 2010, for the Azerbaijan-Georgia-Romania Inter-connector as one of the LNG projects. Moreover, Bulgaria, Greece, and Romania made an agreement to construct the Vertical Gas Corridor. This pipeline is intended to deliver 3-5 bcm natural gas per year to Romania from Greece Revithoussa LNG Terminal which will be linked to TAP.
For the future, cancellation of Nabucco and South Stream projects have disappointed all Central European and Eastern European countries, but on the other hand, Bulgaria will be an inter-connector country with Greece (IGB) and Turkey (ITB) in the Southern Gas Corridor. In Bulgaria, development of the country’s natural gas infrastructure is the top priority. On January 12, Bulgarian Prime Minister Bojko Borissov and the Vice-President for the Energy Union Maroš Šefčovič met in Brussels. They underlined the importance of infrastructure development in Bulgaria and discussed potential energy security policies. Also, mentioned parties agreed upon increasing regional integration and ensuring diversification of gas supplies. Šefčovič expressed their support for Borissov’s idea about turning Bulgaria into a common gas distribution center for European Union member states in the region. However, there are still several reforms which have to be realized for Bulgaria, such as, a proper infrastructure, transparency, liquidity and non-discriminatory access to suppliers and customers.
Contrary to other European Union member states, Bulgaria is not too much worried about Russian influence. Investments from Russia and employment opportunities are always welcomed. So, Putin’s unexpected and sudden move about the South Stream Project disappointed Bulgaria, but still, TAP will be a diversification opportunity for the gas supply sources of Bulgaria as one of the most affected countries during the gas crises which have occurred because of the conflict between Russia and Ukraine. Also, Bulgaria takes part in the Kavala LNG terminal project with the Greek state-owned gas company DEPA.
Serbia is another of the disappointed countries after the cancellation of the South Stream project but it is working on and should turn to other gas supply channels. In this context, Hungarian Prime Minister referred to the Turkish Stream project and suggested the possibility of bringing in the gas from Greece to Hungary through Macedonia and Serbia. Trans-Adriatic Pipeline project is also another opportunity for Serbia. With the Serbia-Bulgaria interconnection project which is agreed on March 10, 2010, Serbia can receive gas over from the Greek-Bulgarian border. Planned to be 180 km long, this inter-connector pipeline will tally a 120-million Euro investment cost. Such inter-connector projects are deemed vital for Serbia because of its landlocked location which makes LNG transportation next to impossible.
In the sense of economic prospects, all of those inter-connector projects will benefit from the financial support of the EU, and it is expected that those projects will contribute to the liberalization of regional energy markets and create competition between the gas suppliers. Without mention, these conditions will lead to lower gas prices. Economic growth and employment rates of these countries will increase with better economic integration and cooperation. Last but not least, those projects will provide an excellent opportunity for a transition from fossil fuels like coal and heavy fuel oil to the natural gas which is more environment-friendly and compliant to European Union greenhouse policies.
In conclusion, we can say that these countries have to make several reforms on their energy structures in order to be using their potential effects. Projects that are providing an integrated network between the countries in the region are prosperous, but at the same time, domestic infrastructures should be developed, regulations and mechanisms involved should be harmonized. On the other hand, in terms of the interests of the European Union, energy projects can contribute to the socio-economic stability and democratization of these countries and policymakers should attach reasonable importance to these processes in this regard.