BTA News

Finance Minister Vassilev Speaks to Financial Times about New Gas Transit Fee

The Finance Ministry in a press release on Tuesday quoted an article by the Financial Times about the new fee imposed by Bulgaria on the transit of Russian natural gas.

Here are some takeaways from the article.

Bulgaria has imposed punitive taxes on Russian-owned oil and gas operations, in an effort to make them less profitable and force them and their European buyers to look for other options, according to government officials. Sofia on Friday introduced a Lv20 (€10) excise tax per megawatt-hour of transiting Russian gas. The main goal of both measures was to squeeze the Russians out of the European market, officials said.

The Bulgarian finance minister, Asen Vassilev, said the goal was not to make gas more expensive for consumers in Hungary and Serbia but to make it less profitable for Gazprom to ship gas via Bulgaria.

“The new tax is . . . fully in line with EU goals of reducing EU reliance on Russian fossil fuels. Because most Gazprom contracts are priced at the point of delivery in a given country, the tax will most likely have no impact on gas prices downstream,” he said. “It will only reduce Gazprom profits.”

He said his government had notified Brussels of the changes. An EU official said the European Commission was “looking into” the issue.

Vassilev said that the government’s squeeze on Russian companies had also prompted Lukoil to start the process of selling its largest oil refinery in south-eastern Europe, which is located near Burgas, a Bulgarian city on the Black Sea coast.

“There probably is an economic benefit to switching the ownership of the refinery,” he told the Financial Times. “We have indications of interest.”

The government is not involved in the sale of the refinery, which supplies international clients with more than half of its output — including crucial shipments of diesel to Ukraine at the start of Russia’s invasion.

But the minister said Sofia would keep a string of punitive measures in place until new owners came on board.