Bulgarian energy ministry stops expansion of Chiren gas storage due to a European Prosecutor's Office investigation

The Bulgarian Acting Energy Minister Vladimir Malinov suspects that “external interests” want to delay the expansion of the Chiren underground gas storage facility. But instead of protecting this key energy project, which began under his leadership of Bulgartransgaz, now, in the (possibly) last days of his ministerial tenure, he decided to stop it.

This decision, announced at a special briefing on Wednesday, comes only a day after it became clear that the European Public Prosecutor's Office (EPPO) is searching the Bulgartransgaz offices due to suspicions of misuse of European funds specifically along the lines of the Chiren expansion. For the implementation of this important project, which now stands to be delayed for an unknown period of time, the European Commission has granted funding in the amount of 78 million euros. 

In the end, it became clear that the object of the inspection was one of the public contracts under the project - more specifically, the creation of the underground storage, which includes drilling operations. The project executor is the UGS Drilling Chiren consortium, headed by Glavbolgarstroy. The other participants in the venture are Kazakhstan's PM Lucas LLP, Turkey's Botas Pipeline Services and the Sofia University of Mining and Geology through the company Mingeouniverse Engineering-NIS-MGU. The contract has a price tag of 110 million euros and concerns the design, supply of the necessary materials and the drilling of boreholes for the expansion of Chiren. The contract was signed in the spring of 2023 by Vladimir Malinov, who was then the executive director of Bulgartransgaz, the company managing the project. 

The basis for the inspection is a report by the Bulgarian Energy and Mining Forum (BEMF), filed at the beginning of 2024. However, Malinov is adamant that, bearing in mind the importance of the project for the region, one must look at "the entire geopolitical framework in which this project is taking place as well as the time when the BEMF signal was given'.

Given the general geopolitical framework, I hope during this audit the possibility of potential external interests in delaying this project will be considered. And this whole process will allow Bulgaria to move forward," he said.

When asked who would be interested in stopping the project, Malinov answered that there was a logical and easy answer.  

I believe that you yourself could answer who has an interest in Bulgaria not diversifying and not having the security of its supplies, given its dependence in previous periods on specific sources and supplies of natural gas".

The minister’s words probably refer to Russia, as Bulgaria was 97% dependent on Russian gas supplies until a few years ago.

According to the approved contract, no construction activities have yet been carried out, no requests for payments have been made, no payments have been made and there is no possibility of financial damage to the company, he further explained. However, an advance payment has been made and it is 100% guaranteed, he added.

The same contract was subject to a 2024 audit by the Bulgarian Public Financial Inspection Agency (PFIA), which did not find any violations.

Malinov added that he "admired the investigation" and that the European Public Prosecutor's Office was being given full cooperation.

I am calm and confident that after a thorough analysis, the results will prove that the technical decision taken for the realization of the project was the right one", stated Malinov.

The energy minister hopes that the investigation will be completed as soon as possible so that there will be no delay in the project.

Vladimir Malinov also commented on his eventual participation in the upcoming interim government headed by Goritsa Grancharova-Kozhareva. Later this week, he will meet with the designated prime minister and, in his words, if he receives an offer to stay, he will accept it.

Translated by Tzvetozar Vincent Iolov