Bulgaria has warned that it may halt the transport of Russian gas through its territory starting January 1 due to a dispute over payments routed through Gazprombank. Such a move would have severe consequences for Serbia, which is highly dependent on Russian gas. Serbia relies almost entirely on the import of Russian gas via the Turkish Stream pipeline, which crosses through Bulgaria. If Bulgaria proceeds with this decision, Serbia would lose its primary source of Russian gas.
In addition to this pipeline, Serbia could theoretically access gas through the pipeline from Russia via Ukraine to Europe, but Ukraine has announced it will not extend its gas transit contract with Russia, which expires on December 31. As a result, Serbia would face significant energy challenges, given that 94% of the country’s gas imports come from Russia.
According to Dušan Bajatović, the General Director of Srbijagas, Serbia consumes approximately 14 million cubic meters of gas daily, with consumption peaking at 17 or 18 million cubic meters during the winter. Households account for about 15% of this consumption. Despite the looming threat, Bajatović assured that Serbia would have enough gas to last through the winter and is exploring alternatives with other countries. He also suggested that the European Union is pressuring for a reduction in Russian gas imports, aligning with U.S. efforts to reduce Europe’s dependence on Russian energy amid the ongoing war in Ukraine.
Aside from the Balkan Stream pipeline, Serbia also imports gas from domestic storage facilities in Banatski Dvor (750 million cubic meters capacity), Hungary (163 million cubic meters) and Azerbaijan. The latter is expected to provide up to 1 million cubic meters of gas per day, amounting to roughly 400 million cubic meters annually. This is only about 13% of Serbia’s total annual consumption of 3 billion cubic meters.
Although gas could be sourced from Western Europe, it would come with much higher transport fees, making it a less feasible option. Another potential source is Liquefied Natural Gas (LNG) from the Alexandroupoli terminal in Greece, but again, its cost is significantly higher than Russian gas.
Should Bulgaria halt Russian gas shipments, both households and industries in Serbia would be severely affected. The importance of gas can be seen in the country’s heating systems—over 80% of Serbia’s heating plants run on gas, providing heat to more than 660,000 households. A substantial portion of imported gas, roughly a third, is also used for electricity generation and heating.
The dispute between Russia and Bulgaria began after the U.S. imposed sanctions on Gazprombank in November, which had been facilitating transactions for Russian gas sales. These sanctions not only prevent American companies from engaging with Gazprombank but also threaten third-party companies that continue doing business with the sanctioned institution. Bulgaria’s Energy Minister, Vladimir Malinov, has stated that if the issue isn’t resolved by December 20, Bulgaria may suspend gas transit through its territory. Gazprom must find a way to pay Bulgaria without using Gazprombank, which could involve third-party banks or other payment methods.
Despite this looming crisis, sources within Bulgaria’s energy sector suggest that halting gas transit would be an extreme measure, and time remains to find a resolution. Potential solutions could involve Russia paying penalties or transit fees being directly handled by the countries receiving the gas.
This situation echoes a previous standoff in 2022 when Bulgaria briefly stopped importing Russian gas following Moscow’s demand for payments in rubles and through Gazprombank. However, the suspension of imports did not last long, and Russia eventually lifted the conditions.
The U.S. sanctions against Gazprombank are not only a concern for Serbia but also for countries like Hungary and Slovakia, which rely on Russian gas transported through Serbia. While there is concern about a potential complete gas supply cutoff, experts believe Russia will find ways to circumvent U.S. sanctions, possibly using banks in countries such as China or India. Moreover, alternative payment systems like the BRICS payment system could allow the continuation of gas transactions without utilizing Western-controlled networks such as SWIFT.
Energy expert Velimir Gavrilović suggests that these alternative channels could allow gas to continue flowing despite the U.S. sanctions. However, secondary sanctions against businesses that work with Gazprombank remain a critical issue.
In summary, while Bulgaria’s threat to cut off Russian gas transit remains uncertain, Serbia is preparing for all possible outcomes. However, if Bulgaria moves forward with its decision, Serbia will face a significant energy crisis, impacting both households and industry.
