Back to Sofia Energy Roundtable Page
Speakers:
- H.E. Boyko Borisov, Prime Minister of the Republic of Bulgaria
- H.E. Gunther Oettinger, European Commissioner for Energy
- Ambassador James Warlick, U.S. Ambassador to the Republic of Bulgaria
- Ambassador Richard Burt, Atlantic Council Board Director and Managing Director, McLarty Associates
March 2, 2010
AMBASSADOR RICHARD BURT: I want to thank the prime minister for being with us this morning, and it’s my special privilege to introduce the relatively new European Union Commissioner for Energy Gunther Oettinger.
This is a happy opportunity for me because I have some experience in my own diplomatic background of having served in Germany and having a very special warm spot in my heart in particular for the area or state in Southwestern Germany, Baden-Württemberg. I spent many days in that lovely area of Germany with Stuttgart as its capital. It’s a part of Germany that combines, I would argue, the industriousness – the famous industriousness of Germany but also the very special regard for the environment. It is a scenic and beautiful part of Europe.
The EU commissioner comes from Baden-Württemberg, where he served as the ministry president. He now has taken over a very important portfolio at a critical time, not only for energy policy in Europe and the region as a whole but also at a critical time for the development of the European Union itself. He serves on a new commission in the post-Lisbon Treaty era when people’s expectations, I think both in Europe and abroad, are for a European Union that is more dynamic, more focused, and more strategic in its approach.
We’re lucky this morning to have the commissioner with us. He not only represents a new dynamic face of the European Union; he represents also a very important part of Europe, a part that’s going to be called on to play a larger role. And I can say, as an American, he represents a European Union that will become an ever more important partner in this Euro-Atlantic community.
So without further ado, I give you Gunther Oettinger, the commissioner for the European Union for energy. Thank you. (Applause.)
GUNTHER OETTINGER: Prime Minister, the Ambassador Rick Burt, Excellencies, ladies and gentlemen, it’s a great pleasure to be here in Sofia today. I congratulate the Atlantic Council for the organization of this conference. I am grateful for the opportunity to address you about Europe’s energy security priorities.
Ladies and gentlemen, energy security is one of the great challenges facing the world today. It is not only a European challenge; it’s a global challenge. Energy cooperation was one of the first priorities of European integration. It was seen as crucial to securing peace in Western Europe.
In recent years the link between energy security and broader economic security has come to the fore. Today, the global energy market is a prospect of growing imbalances between supply and demand. The task for assuring energy security is unlikely to become easier.
In the European Union, the mainstay of energy security is the internal energy market. For more than 10 years the EU has developed a unique set of rules and regulations which created the largest regional market focus and electricity all over the world.
It brings together more than half a billion consumers and will in time link up energy supply networks from Eurasia in the east, the Arctic in the north, the Sahara in the south, and the Atlantic in the West. The international market ensures that markets can work as efficiently as possible to ensure that energy reaches the consumers, wherever they are, at an affordable price.
To achieve this, the EU has opened up its energy markets by, for example, allowing third-party access obligations to the infrastructure. We have increased transparency to ensure a level playing field. The situation of new infrastructure companies that will own transmission assets independent of supplier and consumption is important. This will ensure the investments in new cross-border infrastructure take place.
Adequate investments are needed both upstream and downstream. EU electricity and gas networks will need some 300 billion of investments over the next 20 years to maintain or increase capacity, integrate new technologies and fuels, and facilitate imports.
To ease this task, the European Network of Transmission System Operators has been created and a European agency for cooperation of energy regulatory authorities is being stabilized in – (unintelligible).
These will develop medium-term investment strategies and deal with the problems that arise because networks are bigger than member states. Networks are also bigger than the European Union, so we will have to bring in our neighbors too in a spirit of cooperation. North Stream is an example of an extension of a network where we will cooperate with Russia.
Bulgaria, Mr. Prime Minister, has many important decisions to make during the course of this year. I am happy to say that your government’s decisions are taken in synchronization with the European Union. I am making every effort so that each decision taken by your government and by the parliament of your country will be in keeping with European policy.
We should consider today’s event as the first step in a coordinated and trustworthy dialogue. We are dealing, on the one side, with the gas infrastructure. In the European Union we are highly dependent upon “Gasimprov” and we have a gas line infrastructure that is not adequate for the long term.
The critical issues are capacity and quality. The technical quality of existing gas lines is not stable long term, and this alone represents a high degree of insecurity. The demands for capacity by the European membership states are not adequately covered over the long term. The European Union therefore supports a new North Stream line, which means more capacity and cutting-edge technology. And for that reason, should South Stream become reality, we feel that it is proper for the volume, the requirements, the capacities.
We thereby reduce our dependency insofar as technical quality is concerned and Nabucco is a project that could not only offer capacity, it could offer not only new technology and quality, but also offer a new region, the Caspian Sea region, the Middle East, i.e., other gas fields which could be developed for the European Union.
Nabucco is primarily a European project. It is for said new infrastructure that the decisions are pending this year. All involved parties: the investors, the energy companies, the participating countries expect that a decision is taken this year. Such decision is being thoroughly prepared by us during the next few weeks.
The objective of the European Union in this case is first and foremost moderation.
We want to ensure that a win-win situation can be created for all participants. For the countries in which the gas resources are located – Azerbaijan, Turkmenistan and others for Nabucco; the Russian Federation for South Stream – the involved countries through which the line network is to be installed, the involved countries that want to accept these gas volumes and integrate them into their national gas network and the participating energy companies, which are located in the European Union and which are primarily responsible for the investment, I am convinced that it is possible to coordinate and synchronize the interests of Bulgaria and the interests of the European Union in all questions of gas infrastructure.
Even more sensitive and just as current is the issue of nuclear power, the issue of the lanes (?) and how the issue of Bulgaria’s politics and that of the European Union can be coordinated and synchronized during the next few weeks. Insofar as the issue of lanes (?) is concerned, neither you nor we are at the point of day one in making plans.
Plans are in existence, contracts exist, there are pre-investments, there are contractual obligations. And in democracy, the operating principle is continuity. Trust is built by means of continuity in the actions of a government. Therefore, I believe that the opportunity must be utilized to develop an analysis and a business plan for the Bulgarian market and for the neighboring markets in matters of electricity, on the basis of which – and on that basis alone – a new impulse for participation can be provided for the private energy industry.
The Russian Federation is a partner for the European Union. Such partnership stands for peace; it also stands for worldwide commerce; it stands for energy as well, and it stands for gas and can also stand for electricity.
For that reason, Mr. Prime Minister, we will be glad to coordinate and synchronize your steps and our steps, particularly also insofar as nuclear energy is concerned, with the objective that the decisions will be taken this year. This is true with respect to gas and it is true with respect to electricity. I wish you much success for your meeting. Thank you very much for your invitation. I shall be happy to once again return to Sofia during the course of the year because the energy policy and the foreign policy of your country are of central significance for Bulgaria as well as for the European Union. (Applause.)
AMB. BURT: It is now my privilege to introduce the U.S. ambassador here in Sofia, Mr. James Warlick. He comes to this post with a wealth of experience, having had an important policy job in the U.S. State Department, overseeing America’s participation in the United Nations and other international organizations, and having served in a senior capacity in the State Department’s Bureau of European Affairs, and prior to that he had a very important assignment during a very difficult period in Iraq.
He has, in a short period of time, developed, I think, a very close relationship with the Bulgarian government and has reached out with the rest of his colleagues at the U.S. Embassy to all parts of Bulgaria.
With that, Mr. Ambassador, we welcome you here this morning. (Applause.)
AMBASSADOR JAMES WARLICK:
Good morning! I am very glad to be here. I think there are important topics for Bulgaria for today and for the future. I hope we can discuss these topics today. I am interested about these subjects and about the solutions for Bulgaria. I have to speak in English. (Laughter, applause.) Thank you very much for the invitation today and it’s a special pleasure to be here with the EU commissioner and with the prime minister.
I would just like to mention that one week ago, the Atlantic Council hosted a conference on NATO. And you might ask, why am I mentioning NATO in the context of a conference on Black Sea Energy? Well, let me refer you to our secretary of State, Hillary Clinton, who said, at the Atlantic Council conference, one, energy security is a particularly pressing priority; two, countries vulnerable to energy cut-offs face not only economic consequences but strategic risks as well; three, the United States is determined to support Europe in its efforts to diversify its energy supplies.
That’s a very important message. The decisions that are being taken in Bulgaria and in Brussels today will have an impact not only on Bulgaria but on the region for decades to come. These decisions need to be taken with great care, great thought, and also important discussion. And I appreciate that the Atlantic Council has come to Bulgaria to be a part of that discussion.
First of all, I would like to congratulate the prime minister for his participation in a meeting last week of Visegrad Four countries. It’s a clear indication of the emerging unified position in this region that energy security and diversification are important priorities.
And I commend the prime minister for his recent proposal that the time has come for a centralized agreement for purchase of energy supplies. I would invite the EU commissioner to also be a part of that discussion. It’s important that that discussion not just take place among the Visegrad Four but also include other European countries.
I would also hope that the European Commissioner will continue to make Southern Corridor a priority. That means of course the Nabucco project, which we hope will come to fruition in the very near future, but also the conclusion of a Turkey, Greece, Italy interconnector for natural gas.
There are also other EU initiatives that are important, and let me just tick off a few that I know are being considered in Brussels and deserve support throughout the region: the focus on building a single market for energy, unbundling the distribution and supply functions of energy firms, building interconnectivity of European gas and electricity networks, enhancing LNG import capabilities and increasing gas storage. Each of these issues is important for Bulgaria and the region. We need leadership in Brussels as well as in capitals throughout the European Union.
Let me mention to you five goalposts, if you will, or five critical issues as Bulgaria and the European Union consider energy security. For those of you who have heard me speak before, this should come as nothing new. And in fact, I hear a discussion around these five themes on a regular basis in Bulgaria.
The first and perhaps most important is diversification. As all of you know, this is an issue not only for Europe but for the United States. We too need to diversify our energy sources from Middle East oil, so too Bulgaria and the countries of Central and Eastern Europe need to diversify it sources of energy. This is not about any one country. This is about energy security for the future.
Second priority. Decisions on energy need to be based on economics and energy security, not on political pressure and vested interest. That only seems obvious, but the decisions that are taken now will have a profound impact on the future. And we’re not only talking about energy but we’re talking about the economy region-wide.
Third, transparency. The Gas Transit Transparency Initiative, in partnership with the Extractive Industry Transparency Initiative, a sister organization of Transparency International is extremely important so that we don’t find decisions are made on political pressure and backroom deals.
I’d like to congratulate Minister Traykov for his participation with Transparency International and EITI. That’s a good sign. In this regard, Bulgaria can play a role as a leader in the region for transparency for transit countries, and we all welcome the steps towards that goal.
I would mention just two other particularly important areas for the future, for Bulgaria and for the region. First is renewable energy. And here again, Bulgaria is one of the leaders. The American company, AES, has established a wind farm in the country and is looking at a substantial investment in solar energy in the country. This would make Bulgaria one of the leaders, if not the leader, in Europe in renewable energy.
And, finally – and this is a challenge during hard economic times – it’s important that Bulgaria and the region invest in technology. The key to coming out of a difficult economic period is budget discipline, but also growth. And that comes about in Bulgaria and in other countries by attracting foreign direct investment.
Investing in technology, investing in training and education will in fact attract investors to Bulgaria, and I look forward to a discussion today and talking with many of you about the future of energy in Bulgaria and in the region, and please be assured that you have the support and full confidence of the United States. (Applause.)
AMB. BURT: Thank you.
I wonder now, Mr. Prime Minister, if we could invite you to the podium to make a few brief remarks.
PRIME MINISTER BOYKO BORISOV: I am taking this opportunity to express my opinion on these important issues, for everybody present in this room must realize that there happen to exist decisions, which when taken, are not concerning only Bulgaria.
I would like to point out very clearly and with extreme precision that Bulgaria is already a member of the European Union, and a member of NATO – and an extremely predictable, loyal and punctual partner at that. Our participation in Budapest, in the meeting, as well as of the ministerial meeting of the Visegrad Four, and then – in wider format, of eight premiers from Southeast Europe, was clearly and precisely identified; there was signed a very open, very clear declaration upon finalizing the meeting.
From what we have heard from the Euro commissioner, Günther Oettinger, and from the American ambassador, I can summarize and simultaneously respond to expectations and questions, which may have arisen:
Nabucco, the pipeline, on the meeting in Budapest, as well as now I will continue to maintain that all the West European countries, the United States of America, including of course Bulgaria, have prioritized the importance of this pipeline. However, what I am positively establishing as of today is that this is a priority of words.
Bulgaria may be among the few, if not the only country, which besides having signed – pardon me? Are there any other countries? – the Bulgarian parliament has also ratified the Nabucco agreement some 10 days ago. We have ready financing for this project; we can start building it tomorrow. Therefore the United States of America, as well as the European Commission and the other countries should clarify for themselves the issue why this project is still below ground level at the moment. In Bulgaria, we have not only pronounced it as priority, but we have also completed all the necessary steps for this project.
As concerns the South Stream, on the meeting in Budapest, there was raised the question, particularly by the prime minister of Serbia, that it should be included in the declaration, and it was included, and on the territory of Bulgaria the South Stream is not “fighting” with Nabucco. We are quite capable of completing both projects without difficulty.
On the issue of the Bourgas-Alexandroupolis, South Stream, we have clearly and precisely said it before, and now moreover in the times of financial and economic depression. I could not know what the readiness of the other states would be, yet we have given this the first place in priority, which is in fact the general principle of the European Commission today. This is the preservation of the environment; this is the priority for all countries in the European Union. Therefore it was not by accident at the meeting in Copenhagen, that the European union was the engine, the leader in the struggle to fight the climatic changes.
Regretfully, our partners from China, India, Brazil, the United States of America, including.Russia, did not come to participate so actively in the fight with climatic changes The European Union, the European Commission has put 7 billion euros on the table as a first step. Yet, to our greatest regret, if we should be frankly speaking, Copenhagen was a disaster for me.
I do hope, however as a first step, that all the other countries would make their own conclusions, and when they are watching Haiti, and when they are watching Chile, and when are observing those, saying that in the sphere of activity of the Euro Commissioner, dealing with natural disasters is a weak sphere of activity, an unimportant one. I believe that at this moment Ms. Georgieva, as well as this Euro commissioner, will be the busiest in the European Commission in this respect.
That is why on the issue of the Bourgas-Alexandropoulos, the South Stream, we have stipulated very precisely, very clearly – an international environmental evaluation. The most important concern for Bulgaria is the ecology, and we are observing it. With regard to the five reference points that the American ambassador has given us:
We are namely the ones, actively engaged and participating in the diversification with regards to the gas deliveries. Therefore we have taken out Nabucco as priority. We are actively pursuing it, we have signed an agreement with others.
Ms. Galja Tosheva may explain in detail afterwards: Of the inter-collector networks with the neighbouring countries – with Turkey, Greece, Serbia and we are intensively working on it. For the Bulgaria-Greece network I believe there have already been granted 40 million euros by the European Commission, so – this issue is actively operated upon. What is the stage exactly of the developments – maybe later she will say, or Minister Traykov, if he shall express an opinion.
Our government is a government which is sincere and open and which puts the problems on the table, as they are. And when his Excellency Ambassador James Warwick is speaking of openness, for transparency, to our regret, these exactly principles were not observed when the tender procedures were carried out under most of the energy projects.
And now we are facing a situation, I am already speaking on the subject of the atomic power station Belene, where only the fifth and sixth reactor of the Kozloduj Atomic Power Station are operating. And I repeat again, I am positive that the third and fourth reactor would not be shut down if I had been in the prime minister’s seat at that time.
However they are already gone – the first, second, third, fourth. The fifth and sixth will be shut down in 2020. In other words, only after 10 years Bulgaria will not have a nuclear power station.
We have now prepared of course, and we are adopting it on the next council of ministers meeting as a decision: A procedure for prolonging the service life of the fifth and sixth reactor. Yet – this will be in the future, if they let us do it! I would like to formulate it very clearly – if they let us – then their service life will be extended with 10 years.
We shall be asking for 20 years. Yet, in the best possible case scenario, in 2030, if they let us, it will be over with the Kozloduj Atomic Power Station. Therefore it will be very important, besides the procedures for prolonging the life of the fifth and six reactors, there also to commence the procedures for the seventh and eighth reactor. This is on the Kozloduj Atomic Power station.
What do we have in Belene? In Belene we have performed tender procedures. In Belene we have officially signed agreements on the part of the Bulgarian government for the construction of this power station. Last night we spoke with the European commissioner for about an hour-and-a-half, and his words were literally that Germany, as well as Europe, will not tolerate a government that revises, or gives up (cancels) the agreements of the previous government. Good or bad the principle is that what the people have chosen to do and signed below, this shall be supported.
In other words, whoever is saying, shut down the Belene project, should know that this would be our first negative input and liability. To make a long story short – Bulgaria becomes a country, where nobody knows whether an agreement shall be kept and executed, if signed.
In other words, the political continuity in this case is important so as to guarantee that when an investor comes to Bulgaria or there is signed an agreement of the Bulgarian government, the next government will honour it.
Otherwise, we shall be giving out a very bad signal to everybody, wanting to come to Bulgaria or wishing to invest a lot of money in Bulgaria, for you have heard that there are a lot of investments, we are leaders in the business of renewable energy.
We had a forum yesterday, with reference to the innovations at the moment, very large companies all over the world are inquiring and soon enough they will be investing in Bulgaria in this branch of industry. What do we have in Belene?
We have signed agreements, we have over a billion and 200 of invested money, we have penalties pending on these agreements, that we shall have to pay, we do not have a single leva set aside in the budget by the previous government for the Belene project. On the contrary, we have credits of hundreds of millions of euros that, in the event that the Belene project would be closed today, will continue to be payable in interest of 25 million euros, plus the principal, from the internal budget!
Of which the International Monetary (bank) Fund, the World Bank and the European Commission have said yesterday: “So far you are doing well, yet do not touch over 1.8, if you intend to have this stability of development, and to be Europe’s high achievers,” as we already are!
In a few words – anyone who would dip into the next year’s budget and stake around a billion and more at credit, including euros, will put the state in the deficit zone. So far as our partners in Parliament are trying to attack us in this direction, I would like to make all of this clear – because it is one thing to chatter, another matter to blabber, and a third and fourth issue would be to have a billion euros of state debt on your conscience.
I will repeat myself – if the tender procedure was today – it would not be carried out in such a manner, such an absurd manner, as it was performed under. However, it was carried out there and then, and also present was the European administration and the American administration, yet they did not react and this tender, this agreement is now a fact.
What we agreed upon with the European commissioner yesterday: All of our steps, connected with gas, electricity, energy will be coordinated precisely and clearly, and shall be taken only upon the European commission sanction.
And of course, all the facts, I am throwing here, should be considered by the European Commission because, ladies and gentlemen, for 300 million euros, promised by Mr. Barroso, adopted by the European Commission and now at the European parliament. For some 300 million euros, for already an year now there have been going procedures so as not to be granted.
Whereupon, even the European deputies have raised the issue – to grant them the money, if only they would also build a nuclear waste-depot. For 300 million euros! While I would have to subject to bondage billions of euros, if I would stop the project.
So I will repeat – if granted by the European Commission, 300 million euros would be such a superb amount of money, but when taken from our budget – it just doesn’t matter! Therefore, when speaking about transparency, openness, fairness, all of these facts should be taken into consideration, for our decisions are such that they also affect other countries.
We have clearly indicated that our internal budget does not allow for, and in the coming years will not provide for an atomic power station in the budget. Therefore we had a clear and straightforward agreement with the European commissioner – we are looking for European money, we are looking for European investors, so as to continue the project.
And until we find the money, we will not have financing of our own. This is on the Belene project. Anything else would be populism, and small talk. These are the ruthless realities. At one moment – I will describe it in images – you would have to scratch out and bury in the ground, where they are, 2 billion euros, and the next moment you would have to find another two or three, hopefully Minister Traykov knows exactly how many, in order to have a nuclear power station.
Whether or not to add more money? – yet, this is another traditional Bulgarian proverb, you know, where the man is supposed to first get a hundred sticks on his back, then to eat a bag full of salt, and always in the end – he slightly gave up. Yet finally in the end he got all of it – the salt, the whipping, and whatever else there was.
We would not like to appear in such a condition – what we have guaranteed, what we are saying in full transparency, and only with the sanctions of the European Commission because, as the American ambassador said, “Energy is the first item in the national security, as well as in the overall Euro-Atlantic security.”
And when there is to be made such a step, it should be supported by the Euro-Atlantic community, and respectively the colleagues of the Russian Federation should also be familiar with the fact that this is a project, tolerated or supported by the very European Commission. These are the realities.
If there are any other questions, I believe – these are the most important issues, around which the day revolves. Thank you for your attention. (Applause.)
AMB. BURT: Thank you, Mr. Prime Minister, for those compelling and candid remarks.
We’re going to depart from the schedule that you have because we need to rearrange the furniture to some extent for Minister Traykov’s speech and our panel discussion. So we’re going to call for a 15-minute intermission, or break, at this point, and I’m going to ask the conference organizers to rearrange the podium for Minister Traykov’s speech and the ensuing panel discussion. So we’ll try to keep to 15 minutes. Many thanks.
Transcript by Federal News Service, Washington, DC