PRESS RELEASE
For yet another month, Bulgargaz EAD will sell natural gas to the Bulgarian consumers at prices significantly lower than the European gas markets.
The price of natural gas for Bulgarian consumers in September 2021 is 69.40 BGN/MWh or 35.48 EUR/MWh;
In comparison, the average price on the European gas markets for September 2021 deliveries is higher and it exceeds 44.50 EUR/MWh, which means that Bulgarian natural gas consumers and Bulgarian industry will buy the natural gas from Bulgargaz EAD by 20 %, i.e. 9 EUR/MWh cheaper, compared to other markets.
It should be noted that prices on the European gas markets have been steadily rising in recent months and have reached historical record levels.
Despite the record high gas prices on the European markets in 2021, Bulgargaz EAD is able to offer more favourable prices, compared to other markets, with the price advantage for Bulgarian consumers and Bulgarian industry for 2021, calculated in terms of volumes supplied, being approximately BGN 100 million.
Bulgargaz EAD treats its customers with great care and passes on all the benefits of its long-term supply contracts. As a result, in 2021 the company's customers' consumption has increased by more than 30% compared to their preliminary orders. For the first 8 months of 2021, Bulgargaz EAD reported the highest sales in the last 5 years. The company's policy is strongly oriented to the needs of the customers. In confirmation of this, in 2020 Bulgargaz EAD passed on the benefits of the successful negotiations with the Russian supplier and the significant gas price reduction achieved by making compensation payments for past periods in the approximate amount of BGN 202 million.
It is important for Bulgaria to achieve a sustainable mix of supplies from different sources to ensure an optimal balance between price and security of supply. In different months, depending on market conditions, supplies under long-term contracts (Azeri gas, Russian gas), LNG or other gas offered on gas exchanges may be cheaper or more expensive relative to each other. Bulgargaz EAD has always strived to achieve solutions that are in the best interest of the company, the country's gas market and each individual customer, and to date the company has successfully achieved this goal.
In connection with the increased public interest in natural gas supplies from Azerbaijan, Bulgargaz EAD provides the following information:
The Agreement for the supply of natural gas from Azerbaijan provides for gas to be delivered to the IGB pipeline (Greece-Bulgaria interconnector) at Komotini, Greece. The Agreement does not allow Bulgargaz EAD to choose the delivery point, the time at which deliveries start or to make other amendments to the Agreement.
It is publicly known that for various reasons there have been significant delays in the construction of the IGB pipeline. The last announced date of commissioning for commercial operation is 01.07.2022. In the meantime, Azeri gas deliveries under the Agreement commenced on 31.12.2020.
Due to the lack of constructed the IGB pipeline, in 2020 Bulgargaz EAD held negotiations with the Azeri supplier and a compromise solution was reached to temporarily supply at IT Nea Mesemvria, which is the interconnection point between the TAP (the Trans Adriatic Pipeline) and the Greek Natural Gas Transmission Network. For this purpose, Bulgargaz EAD, under conditions of competition and bidding, purchased capacity on the Greek Natural Gas Transmission Network and the Azeri supplier secured capacity on the TAP.
It is important to underline that, apart from the infrastructure constraints, the supply at IT Nea Mesemvria is also subject to reaching an agreement with the Azeri company, which is neither obliged to supply to this point nor to redirect all gas volumes to it.
The interim arrangement for this Azeri gas route expires at the end of September 2021. Since the commissioning of IGB has been postponed again, currently until 01.07.2022, Bulgargaz EAD has started new negotiations with the Azeri company and is making every effort to negotiate the extension of the agreement to supply larger volumes via the alternative route until 01.07.2022, compared to the volumes under the current Agreement.
Negotiation of supplies via this temporary route is subject to the supplier's capabilities, and Bulgargaz EAD also takes into account the risks for the company and for consumers in Bulgaria of using the alternative route. The capacity of the Greek network, which Bulgargaz EAD purchased at auctions, is interruptible and under certain conditions the Greek operator may suspend the transmission to Bulgaria without being held liable. In this case, there is a danger that Bulgargaz EAD will find itself in a situation where it has paid for capacity that it cannot use and has paid for natural gas that it will not receive. In this situation, the only way for customers to receive the natural gas they have nominated is for Bulgargaz EAD to immediately provide substitute supplies. Such emergency supplies, if possible at all, are the most expensive. This entails serious financial losses in the supply chain and may even lead to the introduction of a restrictive regime by the Bulgarian Transmission Network Operator.
Moreover, the statistics from the beginning of the supply to date show that for various reasons beyond the control of Bulgargaz EAD, on 49 days out of 244 days the full contracted quantities of Azeri gas have not been delivered, which Bulgargaz is urgently compensating from other suppliers at higher prices.
As a public supplier, Bulgargaz EAD is obliged to ensure a reliable and uninterrupted supply of natural gas to heating and gas distribution companies that supply households and end users in the country. The necessary security of supply from Azerbaijan can only be ensured by the IGB pipeline, where Bulgargaz EAD will receive all the gas and where Bulgargaz EAD has already booked uninterrupted capacity that guarantees security of supply for the full volume. Once gas is received at the IGB pipeline at the Komotini point, gas from Azerbaijan will be delivered to Bulgaria in full volume and without interruptions.
Supplying Azeri gas to IP Nea Mesemvria and then transporting it through the Greek network to Bulgaria is the best temporary solution, but it does not provide the necessary security of supply for the Bulgarian market and risks financial losses for Bulgargaz EAD and its customers.
Bulgargaz EAD will continue to rely on the supplies from Azerbaijan as well as other supplies from alternative sources such as the LNG to diversify its gas portfolio and achieve optimal pricing conditions for the Bulgarian market.
01.09.2021 г.
BULGARGAZ EAD