Caspian Energy (CE): Mr. Nikolov, Bulgaria has a central geostrategic position in the Balkans, how does it help in solving energy security issues?

Alexander Nikolov, Minister of Energy of the Republic of Bulgaria: Indeed, Bulgaria’s geostrategic position plays an important role in improving not only the country’s national energy security, but also that of the region of Southeast Europe. A key national priority in the field of energy security is the implementation of a prospective strategy for diversification of natural gas supply sources and routes. Our country is actively working on the implementation of major energy projects: the gas interconnector Greece - Bulgaria (IGB), the gas interconnector Bulgaria-Serbia (IBS), the construction of the LNG terminal near Alexandroupolis, in which Bulgaria is a shareholder, and the development of the country’s gas infrastructure. The targeted efforts of our government to complete these projects are essential for strengthening the country’s role in improving energy security throughout the entire region of Southeast Europe. The interconnector Bulgaria-Romania, operational for several years now, contributes to that too.

The interconnectivity development was one of the topics discussed during the recent visit of Bulgarian Prime Minister Kiril Petkov in North Macedonia, where the construction of a second interconnector between the two countries was considered. It is obvious that the implementation of such projects is a major factor in deepening energy security of the region.

Bulgaria is working consistently to enhance energy security also by optimizing the use of local energy resources, moder­nization of energy infrastructure and increase of energy efficiency.

With regard to nuclear energy and in line with the requirements of the European Commission (EC) and the guidelines of the Euratom Supply Agency (ESA), our country fulfils its commitments to diversify the supply of fresh nuclear fuel for Unit 5 and 6 of Kozloduy Nuclear Power Plant.

CE: What gas sources does Bulgaria use as a transit country? Are you satisfied with the level of diversification?

Alexander Nikolov: Bulgaria is currently heavily dependent on one single natural gas source. More than 70% of the gas used in the country is supplied by Russia. This is why diversification efforts are a key priority in the field of energy.

Bulgaria has concluded a contract with Azerbaijan for delivery of 1 billion cubic meters of natural gas, which represents about a third of the consumption in the country.

The implementation of this contract, which has an accumulated delay, will provide a higher connectivity level between Greece and Bulgaria. The Bulgarian Gover­nment makes great effort to minimize the damage caused by the accumulated delay and start the commercial operation of the interconnector Greece-Bulgaria by the beginning of July 2022, according to the last agreed delay with the EPC contractor.

At the same time, our shareholder participation in the LNG terminal near Alexandroupolis will provide favourable conditions in the future for receiving alternative supplies from farther regions and thus ensure competitive prices for Bulgarian consumers.

First deliveries to Bulgaria of liquefied natural gas from the USA have started since 2019. Despite being modest in terms of quantity, they are an important step in the process of market liberalization.

CE: Do you think that an increase of excise duties on the use of fossil fuels in transport and a 50% increase in fuel prices by 2023 will solve the task of emissions reduction?

Alexander Nikolov: Greenhouse emissions and climate change issues are undoubtedly a global task in which Europe plays a leading role. The reduction of CO2 emissions in line with the objectives of the European continent for climate neutrality can be achieved by the implementation of a set of measures and with the active involvement of each individual country, in compliance with the specificities of its economy. The increase in excise duties is one of the possible measures, and such are also the implementation of new, modern technologies, energy efficiency and others. Each of the measures implemented must be well considered and their introduction should be accompanied by a serious analysis of the potential benefits and risks of the respective step. Bulgaria fully supports addressing the challenges set out by the European Green Deal, while taking into account the specificities of each country and the potential risk of loss of competitiveness.

CE: How has the coronavirus affected Bulgaria’s energy security?

Alexander Nikolov: The world Co­vid-19 pandemic has impacted the life of everyone for the last two years. In particular, in terms of energy, we must note the serious negative effect from the increase of energy prices on the economies and household customers of the old continent, including Bulgaria. This peak in recent months has largely been due to increased demand for energy and energy resources due to the economic recovery after the restrictions imposed by the COVID-19 pandemic. The current crisis in energy prices poses a significant challenge, which has an increasingly visible negative social and economic impact on businesses and households in the EU.

We believe that in order to deal with the current situation we need both, measures at national level and coordinated action at EU level. We are convinced that an EU’s coordinated approach for addressing high energy prices and all challenges relating to climate neutrality will help Member States to carry out the transformation in an efficient and cost-effective way.

CE:  Do you plan to increase supplies of Caspian gas?

Alexander Nikolov: I have already mentioned that the public supplier Bulgargaz EAD has a contract with the Azerbaijani AGSC for the purchase of 1 billion cubic metres of natural gas per year, which is one third of the country’s annual consumption. The potential benefits of the existing partner relations with AGSC are not fully realized. In the context of our efforts to diversify gas supplies and achieve better conditions for consumers, Caspian gas is one of the absolute alternatives. In the Energy and Climate Action Plan of the Republic of Bulgaria 2021-2030, we have clearly stated that for the diversification of natural gas supply sources we also count on the Caspian region through the Southern Gas Corridor. Bulgaria is interested in increasing the volume of Caspian gas supplies. In this regard, I believe I have met great partners in the face of Azerbaijani Energy Minister, Mr. Shahbazov, the Minister of Economy Mikayil Jabbarov, as well as the management of AGSC.

CE: Do you plan to abandon nuclear energy as other EU countries did it?

Alexander Nikolov: For Bulgaria, nuc­lear energy is an important part of the country’s energy mix, which guarantees the basic production of electricity at predictable and competitive prices. Kozloduy Nuclear Power Plant EAD provides over one third of the national annual electricity production and is an important factor for Bulgaria’s energy security. We support the view that nuclear energy is a key element in the transition to a low carbon economy and the achievement of the increased climate ambitions of the EU.

In the national framework positions on legislative proposals from the European Commission in the field of energy, Bulgaria has repeatedly stated that the country relies and will continue to actively rely on the production of nuclear power. This sector provides energy at affordable and competitive prices for businesses and households by stimulating economic growth, including through the creation of highly skilled jobs with high added va­lue. All these advantages, combined with the national potential of energy resour­ces and its specifics, make nuclear energy an essential element of moving towards a carbon neutral economy.

CE: At the expense of which sources will the so-called free energy transition be carried out in Bulgaria and the Balkans in general?

Alexander Nikolov: In the transition to the 2050 targets set out in the Paris Agreement and the European Green Deal, EU adopted stricter standards and targets to reduce emissions and decommission polluting power plants. This is the path followed by Bulgaria as well.

According to expert assessments over 27 per cent of final energy consumption by 2030 will come from renewable sources. We will also continue to rely on nuclear energy as a zero-emission source and natural gas as a greener fuel in the transition to climate neutrality.

At the same time, the energy transition in our view should be smooth and just. It should take into account the different starting point and geographical position of Member States so as to meet the objectives and the principle of technological neutrality, and the right to choose their own energy mix.

We believe that Bulgaria can be a positive example to the countries of the region on their way towards solid climate neutrality.

CE:  Bulgaria has recently become a member of the World Bank Group’s Development Association, how will this help with free transition investments?

Alexander Nikolov: Bulgaria signed a membership agreement with the International Development Association, which make the country a full member of all World Bank Group organizations. We are extremely pleased with our joint cooperation in the energy sector. The International Bank for Reconstruction and Development has already provided advisory services to Bulgaria in the preparation of territorial plans for the Just Transition Fund in eight carbon intensive regions in connection with the European Green Deal.

The World Bank has granted significant funds in the form of green investments, for example in infrastructure, finan­cing in development policies and other programs. Given the importance of the international financial institution and its role in defining the global agenda, our energy relations have acquired great significance.

Bulgaria stands ready to benefit from the various mechanisms and opportunities for financing the green transition provided by international financial institutions and the EU funds.

Thank you for the interview.