The Gas Crisis in the Balkans

Article excerpt

IN the night of January 6th--7th at precisely 3.35 a.m.. gas supplies in Bulgaria from Russia were suddenly stopped. In some cities, central heating had to be shut down unless it could use alternative fuel such as gasoil. Some schools were closed for a few days. Another economic sector that was affected was the one of the production of fertilizers. On the whole, the thirteen-day dispute is estimated to have cost the Bulgarian economy about BGN 456m ([pounds sterling]210m). According to the Bulgarian Minister of European Affairs, Mrs Gergana Passy, the country fell victim to 'energetic terrorism'.

This situation was a direct consequence of the gas dispute over the settlement of some outstanding payments by Ukraine to the Russian energy company Gazprom that led to the suspension of gas supplies from Russia. Although the crisis did not spare a number of countries in Central and Eastern Europe, countries such as Bulgaria and the former Yugoslavian Republic of Macedonia were particularly affected. Indeed, the gas dispute highlighted the specific energy situation of South Eastern Europe. Strategically located between the resource-rich region of Russia and the Caspian and key consumers in Western Europe, the region is still plagued by two main problems. The first one is the lack of an adequate infrastructure. The second one is the high dependence of the region on Russia for its gas supplies. If these two features are well-known, they are now taking on a whole new dimension as a result of this past winter's crisis.

The lack of an adequate energy infrastructure in South Eastern Europe stems from the fact that most of this infrastructure dates back to the 1970s and 1980s. From the grids to the nuclear plants, the wide use of standard Eastern block technology has raised concerns, not only in terms of security, but also with respect to the lack of capacity and poor environmental record. Ironically, though the gas dispute had caused some unpleasant disturbances in the region in the middle of winter, it has not led to large-scale drama. This was due to the still wide use of wood and the highly polluting lignite as combustibles. In the Balkans, coal amounts in some countries to 38 per cent of primary energy supplies. In other words, a number of provincial cities in Bulgaria are not yet fully connected to gas distribution systems. Other energy sources are not less problematic. Bulgaria, thanks to its Soviet-built nuclear plant in Kozlodui, became a net exporter of energy in the region. But because of the Chernobyl nuclear accident in 1986, the European Union demanded that the units built using the same technology be shut down. This demand came from the EU as a condition for EU membership negotiations for the country and was cast in stone in Article 30 of the Accession Treaty signed in 2005. By this Treaty. Bulgaria committed itself to close down the units 3 and 4 of the Kozlodui nuclear plant by the end of 2006 in exchange for EU financial support of up to [euro]210m ([pounds sterling]189m) for their decommissioning. (1)

As for the other sources of energy such as renewables, they still have largely remained an unexploited option for sustainable energy generation in the region. There is indeed an important potential for hydropower in some countries. Albania, for example, derives most of its electricity from hydro-power. There is no doubt that the poor state of energy infrastructure will require not only an urgent need for rehabilitation and replacement in the whole region but also the development of international cooperation between the different countries concerned. Indeed, the small size of the national markets does not generate the necessary economies of scale to make such investments profitable. International energy cooperation in the region has taken the form of a number of initiatives. The most important one is certainly the Energy Community Treaty concluded in 2002 between the European Community and all the Western Balkan countries. …