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| Energy Security: Diversification and Source Dependence
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On 7 December 2007, in the Central Military Club in Sofia the Center for the Study of Democracy, in cooperation with the Southeast European Development Initiative Foundation organized a round table on Energy Security: Diversification and Source Dependence. The discussion was attended by high-ranking representatives of Bulgarian institutions, foreign ambassadors and embassy officials, business leaders, energy sector experts and the media.
In his keynote speech, Mr. Matthew Bryza, Deputy Assistant Secretary of State for European and Eurasian Affairs, defined energy security through several different perspectives: of consumers, of energy producers, and as it relates to environmental issues. He stated that US energy policy takes into account the interests of both energy producers and energy consumers. He focused on the particular care with which priorities for large-scale energy projects should be selected, as oil and gas pipelines take eight to ten years to construct and are very expensive. Failure in picking the really important and sustainable projects could lead to serious financial losses.
Mr. Bryza also talked at length about the activities of Gazprom, underlining that the company’s policy was not fully compliant with standards of transparency and fair competition. He noted that currently Gazprom supplies 25% of all gas consumed in Europe and although supplies have been stable, there are certain causes for concern. The chief among them is that Gazprom makes only scarce investments in the extraction sector. The natural gas resources in Southwest Siberia are rapidly being depleted, and the company does little to develop new gas reservoirs. According to expert estimates the Barents Sea Shtokman field will be fit for exploitation no earlier than 2020, creating a gap of insecurity in the period between 2011 and 2020. At present Gazprom compensates for supply shortages through natural gas purchases from Turkmenistan at around 100–150$ per 1,000 m3. These quantities are later sold in Europe at 250–280$, allowing Gazprom to make huge profits, whose distribution remains totally opaque, except for the self-evident fact that they are not invested in gas extraction and transfer facilities.
The South Stream project is a case in point. Despite the US wish to be optimistic about it, Mr. Bryza commented, the construction will be extremely high-priced, and gas carried along the new pipeline will therefore be costly. Even the Russian partners do not currently have clarity about costs. Moreover, with the forecast shortages in the period 2011–2020, it is also not clear what source will be filling the new pipes.
The US think that the planned Nabucco natural gas pipeline together with the pipeline that will transport gas from Turkey via Greece to Italy are a good opportunity for Southeast and Central Europe to diversify their energy sources. Estimates show that these pipes could carry gas from deposits in Azerbaijan, and later on—from Turkmenistan. Iran also offers a vast set of possibilities. These developments will place market countries in a better position, benefiting Gazprom as well by placing the company in a healthy competitive environment.
Edward Chow, Senior Fellow at Center for Strategic and International Studies, underlined the need for cooperation between governments and the industry to create enough competition and prevent the monopolization of the energy sector. The government should regulate the market in favor of competition and achieve a level of transparency that will attract investments.
Overgas Executive Director Sasho Donchev argued that source diversification could indeed help lower gas prices, but that the major problem in Bulgaria remains the poor efficiency of energy consumption.
MP Ivan Ivanov from the parliamentary Energy Committee outlined several major goals that Bulgaria needs to attain—increasing energy efficiency, developing renewable energy sources and local brown coal deposits, as well as diversification of imported energy resources.
Tasko Ermenkov, Executive Director of the Energy Efficiency Agency, that diversification should be viewed on at leas two planes—new routes and new sources. He defined energy security as the correlation between supply and consumption. He said that Bulgaria has three main energy sources—coal, gas and oil—and that the consumption aspect in terms of energy efficiency and a complex approach to renewable sources was of equal importance to their supply.
The US Ambassador to Bulgaria John Beyerle thanked the Center for the Study of Democracy and Ambassador Boyko Noev in particular for their efforts in organizsing the round table and underscored that energy security is a vital contemporary issue which must be discussed more often and more openly.
Media Coverage (in Bulgarian)
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