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Global Energy Advisory – 10th October 2014

Geopolitics & Domestic Politics

Bulgaria

On the election front, Bulgaria’s center-right Citizens for European Development (GERB) won snap elections last week, and will likely receive around 90 seats in the 240-seat parliament, followed closely by the Socialists and ethnic Turkish Movement for Rights and Freedoms, which will each gain around 70-80 seats. It will be very challenging to form a stable coalition under these circumstances. From the oil and gas perspective, what’s at stake here immediately is a Russian gas pipeline that would give Moscow more leverage over Europe’s energy.

Earlier this year, the Bulgarian government announced it would suspend work on Russian Gazprom’s South Stream pipeline amid strong opposition from the EU and the US, as well as because of the looming threat of sanctions against Russian firms working on the project—a threat that has since become a reality. Bulgaria will be very hard hit in the event that Russian gas supplies are cut off, and beyond Ukraine, Bulgaria is the most vulnerable to Russia’s brand of geoeconomic warfare. Over 85% of Bulgaria’s gas needs are met through Gazprom—and that goes through a single route passing through Ukraine. Bulgaria has a single oil refinery run by Russian Lukoil, which supplies over 60% of its refined fuel, with the crude coming through a Ukrainian Black Sea port. Even Bulgaria’s nuclear fuel is shipped through Ukraine. The country…

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