BULGARIA: MINISTER OF ENERGY ON POST-GAS CRISIS

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000070

SIPDIS

E.O. 12958: DECL: 02/16/2019
TAGS: ENRG ECON PREL PGOV
SUBJECT: BULGARIA: MINISTER OF ENERGY ON POST-GAS CRISIS
STRATEGY

REF: SOFIA 0060

Classified By: Ambassador Nancy McEldowney for reasons 1.4 (b) and (d).


1. (C) Summary: Minister of Economy and Energy Petar
Dimitrov used a February 13 meeting with the Ambassador to
lay out Bulgaria's post-gas crisis energy strategy. Heavy on
diversification projects, the as-yet unwritten plan seeks to
distance Bulgaria from Russian energy sources. In the
two-hour meeting, Dimitrov did not once mention South Stream.
Instead, he accused Russia of blackmailing Bulgaria into
dropping compensation claims against Gazprom by threatening
retaliation for Bulgarian arms sales to Georgia. He
questioned the future of the Russian-led Belene nuclear power
plant project while stoking interest in a separate, proposed
Westinghouse-led project. He commited to support efforts to
improve transparency in Bulgaria's notoriously-opaque energy
sector and pled for Washington attendance at Bulgaria's April
24-25 Energy Security Summit, so that the event would not
become "a ball at which only Putin will dance." End Summary.


A DECIDEDLY ANTI-RUSSIAN MESSAGE
--------------


2. (C) Dimitrov's February 13 message had a decidedly
anti-Russian tone. He described Bulgarian preparations to
launch a legal claim against Gazprom for the losses Bulgaria
incurred as a result of January's two-week gas cut off. The
Russians continue to claim that Ukraine is the guilty party,
but, Dimitrov said, "we have no contracts with Ukraine." He
said it was clear that Gazprom did not supply Ukraine with
the volumes of gas needed for export, so Gazprom is clearly
"at fault." Dimitrov said Putin has acknowledged that the
Socialist-led Bulgarian government suffered clear political
losses during the crisis, and as a consequence the Russians
have hinted at some flexibility on the issue of abandoning
the shady Gazprom-owned intermediaries currently operating in
the Bulgarian gas market. But this hint of flexibility is a
ruse, indicated Dimitrov, as Russia is now threatening to
invoke sanctions against Bulgaria for providing arms to
Georgia, if Bulgaria proceeds with its Gazprom compensation
claim. Dependent on Russian maintenance and spare parts for
large swaths of its Soviet-era military hardware, such
sanctions would deal a severe blow to the Bulgarian military
and hurt its ability to meet its NATO commitments, said
Dimitrov.


LITANY OF DIVERSIFICATION PROJECTS, WITH AN EMPHASIS ON TURKEY
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3. (C) Dimitrov recounted a list of diversification
projects that the gas crisis placed on the front burner:
expansion of gas storage, gas interconnections and LNG
cooperation with Greece and Turkey, greater support for
on-going domestic gas exploration and extraction, especially
with the British company Melrose at Kaliakra and with the
Colorado-based Direct Petroleum at Deventsi. While it was
Greece that came through for Bulgaria during the gas crisis,
the Bulgarians are especially keen to pursue greater energy
cooperation with Turkey and they are seeking our help to
develop more of an appetite on Turkey's part for such
cooperation. Possibilities include making the gas pipelines
between Bulgarian and Turkey reversible, pursuing a
Turkey-Greece-Italy Interconnector hook-up in Turkey (if the
Greece TGI hook-up does not materialize),Bulgarian access to
Turkey's LNG facilities, and dusting off plans for joint
hydro projects.


4. (C) Dimitrov hinted at problems at the Belene Nuclear
Power Plant project (being built by Russia's AtomStroyExport)
and made a full court press to get Westinghouse interested in
a new nuclear project, Kozluduy 7 and 8. While the
government remains commited to Belene, Dimitrov said Bulgaria
would be interested in taking a minority stake of a future
Kozluduy 7 and 8 project, if Westinghouse would take the
lead. The Ambassador commited to sharing Bulgaria's interest
with Westinghouse. (Note: problems at the Belene NPP are
being reported septel.)

THE APRIL ENERGY SUMMIT
--------------


5. (C) In a now common-refrain, Dimitrov pled with the
Ambassador for high-level Washington representation at the
April 24-25 Energy Security Summit, which will likely be held
in Bulgaria's second city Plovdiv. Dimitrov worried that

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without high level USG representation, the summit would be
unbalanced - "a ball at which only Putin would dance." The
Ambassador indicated it was still too early to know who might
attend from Washington, but Bulgaria could improve the
profile of the summit by offering a clear vision of what
would be accomplished. An emphasis on achieving greater
energy security through diversification and increased
transparency would be a start.


6. (C) Comment: Normally soft-spoken, on-message and
hesitant to criticize Russia, Dimitrov has delivered an
increasingly anti-Russia message of late. This meeting with
the Ambassador (where South Stream was not mentioned once) is
another indication that change is afoot. The gas cut-off has
opened some eyes and changed the dynamic. The test will come
when it is time to turn this hard talk into concrete action.

McEldowney