The Bulgarian decision to impose taxes on the transit of Russian gas is a hostile move towards Hungary and Serbia
– this was the title of the joint communication issued by the foreign ministers of Hungary and Serbia on Tuesday. „This new Bulgarian measure jeopardizes the energy security of Hungary and Serbia. The European Union does not impose sanctions on gas shipments originating from Russia, so the Bulgarian Prime Minister’s argumentation in this regard is entirely incorrect. This decision is also contrary to European solidarity, as it endangers the energy security of an EU member state as well as of a candidate country. Hungary and Serbia are coordinating their response and will not leave this hostile Bulgarian decision unanswered,” emphasized the joint statement by Serbian Deputy Prime Minister Sinisa Mali and Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó.
According to Bulgarian portal Dnes.bg, Bulgaria introduced a special tax on Russian gas transmitted and delivered through its territory on October 13. The newspaper quoted Bulgarian Minister of Finance Asen Vassilev’s response to the Hungarian-Serbian statement. Vassilev emphasized:
„The new tax is in full accordance with the EU’s objectives of reducing dependency on Russian fossil fuels,” Vassilev stated, adding that the price of gas for a given country is applied – and determined in the supply contract – at the designated location of delivery. In the case of Hungary, this is the town of Kiskundorozsma. In other words, the Bulgarian Minister of Finance was referring to the fact that Sofia’s new tax is to be paid by Gazprom, as opposed to the receiving state, up to the point where Russian gas reaches its destination country. Therefore, he argued, this Bulgarian measure does not affect the price levels in recipient countries. „It only reduces Gazprom’s profit,” he noted. The minister also mentioned that the Bulgarian government had informed Brussels about the changes.
Vassilev also pointed out that Gazprom had suspended gas deliveries to Bulgaria last spring following the start of the conflict in Ukraine. Russia had also previously shut off gas supplies during the winter of 2008-2009, due to a dispute with Ukraine in that case, too. The Bulgarian Minister of Finance emphasized that when Gazprom halted deliveries last year, Sofia had a plan in place already within 24 hours, and since then, Bulgaria has opened up towards Turkey and Greece, established new gas connections towards the latter, and increased delivery capacities towards Serbia and Romania.
The backdrop to the joint Hungarian-Serbian statement, condemning Bulgaria in an unprecedentedly harsh manner, is that the leaders of both countries, Hungarian Prime Minister Viktor Orbán and Serbian President Aleksandar Vučić, were both negotiating in China when the statement was issued. However, much more, and much more negative international backlash surrounded the fact that the Hungarian Prime Minister also met with Russian President Vladimir Putin in Beijing.
in Beijing, Xi Jinping referred to Viktor Orbán as his „old friend,” while Vladimir Putin praised Hungary during his stay in the Chinese capital. It is of symbolical significance that Hungary’s Minister of Foreign Affairs and Trade, Péter Szijjártó, discussed the text of the statement condemning Bulgaria with Serbia’s representative Sinisa Mali – the country is an outsider to NATO and only a candidate for the EU – also in Beijing. Regarding this, we must be clear:
Meanwhile, the Serbian opposition-aligned newspaper Danas emphasizes that China and Russia are among Serbia’s most important arms suppliers – to boot, in a time when tensions are escalating in the Southeast European region regarding Kosovo. All of this poses significant security challenges for both the West and the region. According to the article, Belgrade is increasingly drifting away from the European Union, and the freshly signed free trade agreement between Serbia and China in Beijing would likely become invalid if our southern neighbour was to join the EU – as this new agreement contradicts EU economic policies.
The Serbian President has also raised his voice regarding Bulgaria’s taxation of Russian gas transit. Vučić stated that he would turn to Rumen Radev, Bulgaria’s head of state, to negotiate the issue. „This is a huge problem for us” – he explained, adding that the decision would result in gas prices rising drastically in Serbia.
From a geopolitical perspective, it’s even more interesting that according to government-aligned Magyar Nemzet, the United States could be behind Bulgaria’s decision to tax the transit of Russian gas. Jordán Tütünkov, author of the article titled „Bulgaria to punish Hungary due to American pressure”, argues that Péter Szijjártó had already sharply criticized Bulgaria during his Moscow visit from a few days earlier, for „there is a law to be announced that would significantly increase the cost of gas shipments to Hungary – according to our Minister of Foreign Affairs, it is not ruled out that gas transit could even be suspended altogether.” The newspaper concludes: „It is obvious that the proposal was made under American pressure. The proposal indicates that in case the increased Russian transit fee would not be paid, the gas tap would potentially get shut off.” To support this claim, the article quotes Georgi Markov, a former constitutional judge and former Member of Parliament, who stated in an interview, „It is obvious that we are aiming to punish Aleksandar Vučić and Viktor Orbán following American dictate, not to mention that Prime Minister Denkov has not informed them about being sanctioned.” Markov’s name is known in Hungary as well, as he is the author of „The Orbán Phenomenon”, a book praising Fidesz’s leading politician.
Magyar Nemzet recalls that in the days leading up to his Beijing visit, Szijjártó stated upon arriving to Moscow:
This is obviously unacceptable. For an EU member state to endanger the gas supply of another EU member state is simply contrary to European solidarity and European rules.
Tütünkov warns Bulgaria to exercise caution, stating that the Bulgarian draft legislation „has not been officially announced yet”, but its adoption „would be very risky for Bulgaria, as Hungary could thwart the Balkan country’s ultimate desire to join the Schengen Zone.”
In response to criticism on part of Serbia and Hungary, Venko Sabrutev, a parliamentary representative of PP-DB, the West-aligned political alliance supporting the coalition government, says, „Bulgaria determines the scale of the tax (transit fee) on the gas passing through its territory. The pipeline is Bulgarian, and we determine the transit fees. Hungary and Serbia can seek alternatives. This is the right of the state that owns the pipeline.”
Szabrutev points out that it is part of a pan-European policy anyway to reduce revenues from the sale of natural gas and oil products, stating, „We are members of the great European family, which does not want war in Ukraine.” He also added that the transit fees paid by Russia to Bulgaria are „horribly low.” The legislation has already been accepted by the Bulgarian parliament, and the new, increased transit fees have been in effect since October 13, as published in the Bulgarian Official Gazette.
But what could be in the background of this move by Bulgaria, anyway? At 24.hu we had already reported briefly on the matter based on a summary from economic news portal G7. According to this source, „Péter Szijjártó protected Gazprom’s profits” when he spoke out against the Bulgarian tax increase in Moscow.
According to the law debated in several rounds by the Bulgarian parliament, an extra transit fee of 20 Bulgarian leva per megawatt-hour (approximately 4,000 Hungarian forints, or 10.5 euros) must be paid for Russian gas transported through the country. G7 points out that while the law does not seem to be EU-compliant (it visibly aims to target one specific market player, which is problematic), it does not jeopardize Hungarian gas security, as suggested by Péter Szijjártó in Moscow, but rather seeks to toll the Russians. In other words, if the Minister of Foreign Affairs and Trade criticized the Bulgarian move, he was indeed protecting the profits of Gazprom.
Based on the current volume of Russian gas imported from Russia to Hungary, online economic newspaper Portfolio estimates that the new Bulgarian tax would amount up to 148 billion forints annually.
However, the measure doesn’t actually jeopardize Hungarian energy supply; rather, it incurs significant additional costs for the Russians. According to G7’s sources, as per the contract between MVM (Hungary’s state electricity supplier) and Russian state-owned Gazprom, the transfer point is at the Serbian-Hungarian border, meaning that according to industry practice, all costs up to that point are borne by the seller. This was confirmed to 24.hu by an industry expert who asked to remain anonymous. In theory, the cost of Bulgarian transit is irrelevant for Hungary, as paying for that is Gazprom’s responsibility.
Nevertheless, Hungary’s dispute would then be with Gazprom, not Sofia, as it is the Russian company that would not fulfil its contractual obligations.
Portfolio interprets the situation in a slightly different light. According to the economic news portal’s analysis, the subject of the new Bulgarian tax would be the Bulgarian gas transit company, Bulgartransgaz. The additional expenses could then be passed on by the network operator to either Gazprom or the buyer, which in Hungary’s case is MVM CEEnergy. Legally speaking, it is Hungary’s state-owned MVM CEEnergy and Russia’s Gazprom that are in contract with each other, so the new tax imposed on Bulgartransgaz does not, in appearance, affect the contract. However, Portfolio suggests that
An expert who requested our paper to maintain his anonymity suggests that if it was indeed the American influence suggested by Magyar Nemzet that was in the background of the Bulgarian decisions – and not, for example, the gaping holes in the Bulgarian budget, i.e., the high budget deficit – then the potential role of Ukraine is also to be considered. If Russian gas does not reach Hungary through Turkey and Bulgaria, the remaining route would lead through Ukraine. In this context, the possible American interest could be to increase transit fee revenues in Ukraine – not to mention that Europe is a target market for American gas exports as well.
In light of this, it’s interesting to note an August news report stating that Péter Szijjártó had consultations with the Bulgarian president, Rumen Radev, following which the Hungarian Minister of Foreign Affairs stated
We also agreed that the expectable interruption of gas transit through Ukraine significantly increases the importance of the Bulgarian-Serbian-Hungarian transportation route.
It’s important to mention, however, that in reality it’s not Radev who governs Bulgaria, but a coalition opposed to the president, comprised of the parties of the West-aligned, and Bojko Borisov, nicknamed the „Bulgarian Orbán”. The coalition’s primary goal is the earliest possible introduction of the Euro as well as to accelerate Bulgaria’s accession to the Schengen Area. Therefore, the direction of the otherwise rather populist-leaning Borisov and his party is also currently characterised by Western aspirations, while President Radev, who is more sympathetic to Russia, has been pushed to the sideline of mainstream Bulgarian politics. So Péter Szijjártó’s consultations with Radev may not have had much impact.
Currently, Hungary indeed receives a significant portion of its gas through Bulgarian pipelines serving as the continuation of the Turkish Stream pipeline, running under the Black Sea. The construction and operation of the Turkish Stream previously involved substantial American and Dutch technology and know-how, but now – primarily due to American and not EU sanctions – the Russians are required to operate this pipeline. The Kremlin’s experts are most likely hard pressed to keep this Western technology up and running.
It’s also important to remember that
The EU had already accused Russia of blackmail in 2022 when Gazprom started reducing the amount of gas supplied to Poland and Bulgaria. Then, Gazprom announced in April last year that it would halt gas supplies to the Balkan country altogether.
Interestingly, just back in this year’s January, Szijjártó still referred to Bulgaria as a reliable partner in the transit of Russian gas. Furthermore, during his visit to Sofia, it was also revealed that Bulgaria plays a key role in the delivery of fuel rods for the Paks nuclear power plant. The Radioactive energy sources are transported from the port of Varna to Romania and then to Hungary. This is necessary because EU sanctions have made it impossible to transport fuel rods from Russia to Paks by air.
All of this shows that despite the Hungarian government – especially Szijjártó – strongly emphasising how Russian energy resources help reduce Hungary’s energy dependence, obtaining gas from sanction-struck Russia is only possible through several other countries, as long as Hungary doesn’t want to import through Ukraine. Moreover, Hungary is dependent on a number of countries even in supplying the Paks nuclear plants with fuel. That’s why it’s rather peculiar that Szijjártó has again reiterated his case in Beijing, saying:
Like it or not, without the Hungarian-Russian cooperation, the security of our country’s energy supply cannot be guaranteed.
