Can Bulgaria build a reliable gas supply on the import of liquefied natural gas?

In terms of cost, liquefied natural gas (LNG) is significantly more expensive than pipeline gas, except when the gas is transported over the pipes over very long distances (over 5000 km). At these distances, pipeline gas sales become unprofitable.

Liquefied natural gas in Europe is imported from Qatar, Nigeria, Russia, USA, Tobago-Trinidad and others. Along with the pipeline gas, since 2018 Russia also exports liquefied gas to Europe from one of its large plants built on the Yamal Peninsula - Yamal LNG of the NOVATEK company with capital ownership: Russia (NOVATEK) - 50.1%; Total (France) - 20%; China - 29.9%.

From 2018 to the beginning of March this year (March 4, 2021), the liquefied natural gas plant "Yamal LNG" in Russia has exported to the countries of the European Union over 50 billion sm3 of natural gas, which is distributed by years is as follows:

for 2018 - 6.64 billion sm3

for 2019 - 21.07 billion sm3

for 2020 - 19.05 billion sm3

for 2021 - 3.45 billion sm3 (until 04.03.2021)

The main importers of liquefied natural gas from Russia are 6 European countries - Great Britain, France, the Netherlands, Belgium, Spain and Portugal.

As for the cost of liquefied natural gas from the Yamal LNG plant in Russia, it is cheaper than in the United States. However, we must not forget that the price of gas depends on the current market situation and the specific terms of the contracts. In this regard, liquefied natural gas from Russia may for a certain period of time be cheaper than gas from Qatar and / or more expensive than gas from the United States.

Here it is important to note that the price of this type of gas is highly dependent on the market situation in Asia. When the demand for liquefied natural gas in Asia begins to decline and thus fails to keep pace with supply, then other consumers have the opportunity to buy very cheap liquefied natural gas at spot prices. For clarification - buying at spot prices means short-term transactions for the supply of one batch of liquefied gas.

To advertise the active consumption of liquefied natural gas, Spain is often cited as an example, which has the largest network of re-gasification terminals for this type of gas in Europe - 6 units. But it should be noted here that the construction of these re-gasification terminals is related to the history of the gas industry in Spain, when the country did not have access to gas pipelines with satisfactory capacity, and at the same time the country's economy had need for natural gas. In addition, account must be taken of the specific geographical location of Spain, with its vast coastlines in the Mediterranean and the Atlantic Ocean. However, when a technical opportunity arose for the country 12 years ago, the Spaniards immediately expanded their gas pipeline infrastructure, building the MedGas gas pipeline (2009-2011), which currently carries pipeline gas from Algeria. Today, Spain supplies two natural gas pipelines - one from Algeria (MedGas), mentioned above, and one from France, through which natural gas can be imported from Norway, Russia and the Netherlands.

In conclusion

If natural gas consumers have access to pipelines, they would only buy liquefied natural gas (LNG) in the following cases:

- to supplement the necessary quantities, which for various reasons cannot be delivered on the constructed gas pipelines due to their insufficient capacity;

- in case of emergency situations, which led to stopping the gas supply on a given gas pipeline.

Bulgaria has a well-developed gas transmission infrastructure with well-trained staff and has a specific geographical location.

Given the above facts, the import of liquefied natural gas in Bulgaria from the gasification terminals in Greece and Turkey may be cheaper than the import of gas pipeline from Russia or Azerbaijan only in the following circumstances:

- in the case of large surpluses on the liquefied gas market;

- in cases of high gas prices under long-term contracts.

Building a safe and reliable gas supply on liquefied natural gas imports is impossible and risky. Why?

Because as demand for natural gas begins to increase on world markets (larger than supply), liquefied gas becomes either physically inaccessible or very expensive for consumers, even several times more expensive than pipeline gas under long-term contracts.

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* Eng. Dimitar Shterev holds a Master's degree from the Russian State Geological Research University (MGRI), Moscow, Russia, majoring in Hydrogeology and Engineering Geology. In the process of work he specialized in the field of "Simulation and evaluation of the operation of gas transmission systems and underground gas storage" in the offices of the International Oil and Gas Company Schlumberger, (Hlöngerger), Hanover, Germany; of Energy Investment Project Management in Dublin, Ireland; of Geothermal Reservoir Engineering at the UN University, Reykjavik, Iceland.

Since 1997 (for 24 years now) he has been working in Bulgartransgaz EAD in the field of “Natural Gas Storage and Transmission” and is engaged in optimizing the capacity of the Chiren Underground Gas Storage (Chiren UGS), with its current optimal operation, rehabilitation, maintenance and expansion, as well as the role of this site for optimal transmission of natural gas in the country and the region.

Since 2008, Dimitar Shterev is a member of the International Gas Union, Working Committee on "Underground Gas Storage", which has presented and defended a number of developments related to the transmission and storage of natural gas in Bulgaria and the Balkans. region, as well as with the development of the gas industry in the country.