Hungary – Bulgaria. Tax on Russian gas transport raises emotions – Hungary may veto Bulgaria’s entry into Schengen area

Hungary has made it clear to Bulgaria that it will ban entry into the Schengen area if the tax on Russian gas transit remains in place, the Hungarian Foreign Ministry said. “If the Bulgarians maintain this line, if they continue to threaten the security of Hungarian energy supplies, we will veto their entry into the Schengen area,” Szyjardo said.

On October 10 this year, the Bulgarian Parliament decided to introduce a transmission fee of EUR 10 per megawatt hour. The decision involved Serbia, North Macedonia, Hungary and Austria, which strongly opposed it.

Last Monday, the leaders of the two ruling parties – We continue the transition – Democratic Bulgaria and GERB, Kirill Petkov and Boyko Borissov, told the parliament that the fee will not be introduced for the time being, even though they have already approved the government’s decision. Parliament.

The tax was imposed to shut off gas from Russia that flows through the Black Sea and Turkey through the Turkish Stream gas pipeline. The capacity of Turkish Stream is 15.75 billion cubic meters per year.

The Hungarian diplomatic chief announced that Hungary would withdraw its veto once the tax was repealed.

Hungary receives 4.5 billion cubic meters of gas from Russia annually. The agreement on this issue was signed in 2021. The raw material reaches Hungary mainly through Bulgaria and Serbia via the Turecki Potok gas pipeline.

Peter Szijjardo said that Bulgaria’s action, contrary to European regulations, threatens the security of gas supplies not only to Hungary, but also to Serbia and North Macedonia.

“While the tax is intended to reduce Gazprom’s profits under gas supply contracts, this could result in transport disruptions and/or higher costs for countries receiving gas this way,” UniCredit economists wrote.

The Schengen Area is an area of ​​the European Union without internal border controls. It consists of 27 countries: 22 of the 27 EU member states and all members of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland).

The latest country to join the Schengen area is Croatia – it joined on January 1, 2023.