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Energy Diplomacy Republic of Bulgaria Ministry of Foreign Aairs N DOCENDO DIPLOMATIC DISCIMUS INSTITUTE Е Energy Diplomacy W S FOREIGN AFFAIRS RESEARCH PAPERS March 2019 11 REPUBLIC OF BULGARIA Ministry of Foreign Affairs Diplomatic Institute Energy Diplomacy FOREIGN AFFAIRS RESEARCH PAPERS 11 March, 2019 This Journal is issued with the support of: Consultant: Slavtcho Neykov Editor: Stela Stancheva Prepress and Print: Alliance Print Ltd., Graphic Design and Cover: Alliance Print Ltd. Sofia, 2019 Published by: © Bulgarian Diplomatic Institute, 2019 http://bdi.mfa.government.bg Facebook: Bulgarian Diplomatic Institute Sofia ISBN 978-619-7200-13-3 CONTENTS Energy Diplomacy journal – Introduction……………………………………….6 Foreword by Slavtcho Neykov Energy security as a global policy concern – Historical development and evolution of the concept………………………………………………………..12 Velislava Dineva The Black Sea region – Energy security and connectivity……………………..27 Hristo Mihaylov Political and policy aspects of preferential energy prices at EU and national levels and Bulgaria’s approach…………………………………………………41 Kaloyan Staykov The EU Presidency and the Process of shaping up the Fourth Energy Package…………………………………………………………………………56 Hristiyana Popova DG Competition – The new European energy regulator? ..................................67 Assoc. Prof. Atanas Georgiev, PhD Hydropower and energy diplomacy on the edge – The dispute between Ukraine and Moldova over the Dniester River.................................................................75 Ion Efros Caspian Aspects of the Bulgarian energy strategy – How Azerbaijani gas can contribute to the Balkan Gas Hub.......................................................................85 Gulmira Rzayeva, Plamen Dimitrov, PhD The energy component of modern-day conflicts in the Eastern Mediterranean…………………………………………………………………..92 Plamen Hristov, PhD Energy co-operation between the EU and Iran – Future challenges and the way forward………………………………………………………………………..106 Dimitar Ivanov More about the Bulgarian Diplomatic Institute……………………………….126 More about the Hanns Seidel Foundation………………………………….…129 Notes….…………………………………………………………………….…131 Аnnexes…………………………………………………………………….…133 The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Bulgarian Diplomatic Institute. ENERGY DIPLOMACY JOURNAL, 2019 Slavtcho Neykov1 INTRODUCTION By the end of 20182 the energy topic remains as turbulent as before – and the turbulence trends are upwards. The energy issue continues to provide substantial reasons both for serious considerations and political and policy concerns – regardless whether one refers to international, European or regional level while considering specific national developments. The papers included in the current issue of the Energy Diplomacy Journal, prepared as part of the activities of the Diplomatic Institute to the Bulgarian Minister of Foreign Affairs3, reflect the above-mentioned trends, even though they examine in earnest a small part of these. In this context, this latest issue provides the authors’ views on a wide variety of subjects of different nature: conceptual (e.g. energy security); global (e.g. the Iranian nuclear deal, the United States and the European Union); EU-related (e.g. the role of the Directorate-General for Competition in the energy field); regional (e.g. some specific energy aspects in the Eastern Mediterranean region); and some with distinctly national flavour (e.g. certain conflicts between Ukraine and Moldova). Thus, one shall have a chance to get concrete opinions on completely different aspects of the energy related trends and developments – even if the readers do not necessarily share the expressed personal positions, including mine in the current introductory notes. In fact, reasoned disagreement is always welcome in such cases. 1 Slavtcho Neykov has more than 26 years of uninterrupted experience in the energy sector, including as Secretary-General of the Bulgarian Ministry of Energy, Member of the State Energy Regulatory Commission, expert at the Energy Charter Secretariat in Brussels, and Director of the Energy Community Secretariat in Vienna. In addition to his experience as a state and international official, he has sat on the board of directors of several energy companies. Prior to his involvement in the energy sector, he has worked as a state prosecutor and legal advisor. In addition to holding a law degree from Sofia University ‘St Kliment Ohridski’, Mr Neykov has completed a two-year postgraduate programme on international economic relations and foreign economic activities. He also holds a Master of Arts in European Integration from the University of Limerick, Ireland. Since the end of 2014, he has been serving as Chairman of the Board of Directors of the Energy Management Institute in Sofia. Mr Neykov is also a member of the Board of Directors of the Union of the Electricity Industry – EURELECTRIC. 2 The current comments reflect facts as till 04.12.2018. 3 This issue of the Energy Diplomacy Journal has been made possible with the support of the Hanns Seidel Foundation [Hanns Seidel Stiftung] in Bulgaria. 6 The outlined frame and the presented content of the edition should be also looked at along some specific energy related aspects of more general nature, which in my view as a consultant to the journal, are worth recalling – particularly at European level. In parallel, however, there are some regional points, which need to be mentioned, from the perspective of South-East Europe. Further, the review would be certainly not complete without some references to the Bulgarian energy policy. Thus, once again one could trace the strong link between the national, regional and European energy trends, which – without any doubt – are also subject to influence by worldwide considerations. In the Bulgarian context, however, there was something else, which influenced very much the national scene and in parallel marked substantial steps at European level – this was the EU Presidency. ENERGY AND THE BULGARIAN EU PRESIDENCY 2018 was a specific year for Bulgaria in the overall EU context – it was the year of the Bulgarian Presidency of the Council of the EU, which took place for the first time. And here one should recall a rather common statement - there are no unsuccessful presidencies. And – as per outside evaluations - the Bulgarian one is no exception. Nonetheless, without any doubt, it could not be considered individually outside the overall EU developments – this provided the background for some analysts to state that the Bulgarian Presidency was successful, but EU crises are still not solved4. Certainly, such a view on the topic should not undermine what has been achieved within this six months’ period (January-June 2018). Further, it should be noted that Bulgaria is in a Presidential trio with Estonia and Austria – and one of the common priorities of this troika is also linked to energy, targeting the development of the Energy Union with a forward look at the climate policy. However, prior to focusing on energy, there is one specific point to be underlined in relation to the Bulgarian Presidency. This is its motto– “UNITED WE STAND STRONG” – and there is hardly better combination of words for the EU at the moment. In fact, in the energy field the Bulgarian Presidency proved that this motto refers not only to the EU member states. One of the Presidency priorities was linked to the Western Balkan countries and their European perspective. In fact, within the EU there was consensus agreement expressed on the necessity to invest particularly in connectivity, including in the energy field. Thus, concrete objectives, including in the field of energy, were identified, the achievements of which should benefit both EU and the Western Balkans – this was summarized in the Sofia Declaration dated 17.05.2018. There are several explicit references to energy in its text. Thus, “...The EU agrees to promote a market- and investment-friendly environment in the Western Balkans to move faster towards a digital economy and to sustainable and climate-friendly societies in line with the Paris agreement. Energy security will be prioritized, including through improved energy efficiency, better cross-border inter- connections, diversification of sources and routes, as well as a balanced energy mix better integrating renewable energy”. Further, it is stated that “… the EU welcomes the Western Balkans partners’ commitment, inter alia, to accelerate the implementation of the acquis under 4 See The Brussels Times, 24.06.2018, available at http://www.brusselstimes.com/eu-affairs/11720/successful- bulgarian-presidency-but-eu-crises-still-not-solved 7 the Energy Community and Transport Community Treaties, to remove all administrative barriers at borders, to complete the Regional Electricity Market...” 5 Substantial steps during the Bulgarian Presidency were also made when it comes to the development of the EU energy related acquis concerning energy efficiency, renewables, the Agency for Cooperation of the Energy Regulators and the Energy Union governance6. Thus, although the energy topic was only one among others within this EU Presidency period, the Bulgarian authorities certainly gave in this relation an important footprint in the overall process of EU integration. Let’s recall that energy has always been considered as a backbone of the cooperation between EU and non-EU states. This resulted in concrete in the successful Energy Community process7, via which the energy policy
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