Billionaire Paul Singer's American hedge fund Elliott Management wants to buy a stake in the Turkish Stream gas pipeline that runs through Bulgaria, the Wall Street Journal reported on May 9. Despite the importance of the topic and the unprecedented opportunity to sell gas infrastructure (since the time of Topenergy in the mid-1990s), it has remained out of the news, eclipsed by President Radev's demand for a referendum on the euro.
The Bulgarian section of TurkStream is Gazprom's only current access to the European market, and the US fund's interest is likely part of a larger plan. According to the Wall Street Journal, such a plan would also include acquiring infrastructure assets from state-owned gas operator Bulgartransgaz, including data centers and fiber-optic cables that run to each gas pipeline.
Also, according to the media, Paul Singer, who is a hedge fund magnate, major Republican donor and corporate lobbyist, and the Elliott Fund, are known for putting pressure on both governments and companies. For example, they are currently pressuring BP to abandon its energy transition plans and return to producing more crude oil.
As there is currently no official comment from the Bulgarian government or Bulgartransgaz, it is difficult to detail their plans and whether such a deal is actually on the table. But if we look at it formally, selling the gas pipeline would be difficult for various reasons.
Pipes or capacity
First of all, unlike the once-planned South Stream, the Turkish Stream through Bulgaria is not a standalone gas pipeline. It was disguised as an extension of the national gas transmission infrastructure to meet EU regulations and to avoid direct Russian ownership of the specific pipeline.
On his way back from the opening ceremony of TurkStream in Istanbul in early 2020, then-Prime Minister Boyko Borissov said: "There is no TurkStream on the territory of Bulgaria. This is our gas distribution network. We are building it so that anyone who wants to can pass gas through it."
"The Balkan Stream project is a completely Bulgarian project. The infrastructure is entirely Bulgarian property and will remain so forever," said the then Minister of Energy (now Finance) Temenuzhka Petkova in 2019.
The order for the construction of the gas infrastructure itself was designed so that it was not about an entire gas pipeline, but about an expansion of the existing network. In this sense, it would be interesting to see exactly what the Americans' proposal is for a possible deal - for specific pipes and compressors or just transmission capacity.
It is through the reserved transmission capacity that Russia's Gazprom now holds the transit options through Bulgaria (despite the pipes being owned by Bulgaria). In reality, the entry options from Turkey and the exit options to Serbia are almost completely blocked until 2038.
Against this background and given the still unpaid investments of nearly 3 billion leva in the gas infrastructure, it remains unclear what exactly the Americans would like to buy and how they would recoup their investment. Also, under EU rules, no company can own more than 50% of the transmission capacity of a certain gas pipeline, when it comes to a transit one. According to documents, Turkish Stream through Bulgaria is not a transit route and therefore either has to be separated as such, or part of the operator itself - Bulgartransgaz - has to be privatized.
Privatization on the horizon?
The partial privatization of Bulgartransgaz is not a new idea and is even a desirable step by the EU to ensure that there are no privileges for state-owned gas suppliers like Bulgargaz. However, so far, Bulgarian governments have always opposed such a move and for the time being do not even want to remove Bulgartransgaz from the structure of BEH. If talks are really underway with the Americans to acquire a stake in the gas operator, then this would also be a violation of the rules - an open privatization procedure should be launched and offers should be collected from which the best one should be selected.
Russian Foreign Minister Sergei Lavrov said earlier this year that Washington and Moscow were discussing the revival of Nord Stream. Reuters, citing its own sources, said that representatives of Washington and Moscow had already held talks to revive Russian gas sales to the continent, while the EC came up with a plan to completely abandon Russian energy dependence.
By acquiring a stake in Bulgartransgaz, the American fund could strengthen Russian influence in the region at the expense of other suppliers, but on the other hand, this is not in the interests of American gas companies, which will lose a potential market here.
Billionaire Paul Singer's American hedge fund Elliott Management wants to buy a stake in the Turkish Stream gas pipeline that runs through Bulgaria, the Wall Street Journal reported on May 9. Despite the importance of the topic and the unprecedented opportunity to sell gas infrastructure (since the time of Topenergy in the mid-1990s), it has remained out of the news, eclipsed by President Radev's demand for a referendum on the euro.
The Bulgarian section of TurkStream is Gazprom's only current access to the European market, and the US fund's interest is likely part of a larger plan. According to the Wall Street Journal, such a plan would also include acquiring infrastructure assets from state-owned gas operator Bulgartransgaz, including data centers and fiber-optic cables that run to each gas pipeline.
