Bulgartransgaz's revenues are improving, but profits are declining

The interruption of the transmission of natural gas to Turkey as a result of the commissioning of Turkish Stream in early 2020 is the most significant event that has affected Bulgartransgaz. At the same time, with the launch of Balkan Stream, gas flows to Greece and northern Macedonia have increased. This is clear from the financial statement of the transmission operator for 2020. As the gas pipeline is only in its first year of operation, it is too early to make predictions about its profitability. Moreover, the development of the gas market in Bulgaria will depend on the general picture of the economy in the coming years.

The natural gas transferred through the National Gas Transmission Network to starting points on the territory of Bulgaria for 2020 decreases by 12.90% (4,641,512 MWh) compared to the transferred MWh in 2019. This is stated in the annual report of Bulgartransgaz for 2020 d. A decrease in the transferred MWh of natural gas is observed in eight of the months of the reporting period. According to the data, the decline varies from 3.52% in February to 39.31% in September. In the months of March, October, November and December there is a transfer of larger quantities - for example by 3.02% in March to 32.30% in October.

Transmission of natural gas to third countries

The quantities of natural gas transferred to interconnection points with operators of neighboring countries in 2020 are a total of 74,492,395 MWh, including under a long-term cross-border transmission contract - 33,382,212 MWh.

The quantities of natural gas that have been transferred to neighboring countries under a long-term cross-border transmission contract, expressed in cubic meters for the past 2020, are also halved, the report shows.

There is a decrease in the total transferred quantities in 2020 (3 162.108 million cubic meters) compared to the transferred in 2019 (6 893.431 million cubic meters) by 3 731.323 million cubic meters, or by 54.13%. For example, the quantities of natural gas transported to Turkey are lower, but the transmission of blue fuel to the border with Greece and Northern Macedonia is increasing.

The most significant is the decline in natural gas to Turkey. In percentage terms, this is "a decrease of 97.92%, and in quantitative terms - 4, 258.110 million cubic meters compared to those reported in 2019. The reason is the start in early January 2020 of the offshore part of the pipeline." Turkish Stream”, through which Russian gas now reaches directly to Turkey. As it is known before, the transmission of gas to the Turkish side took place along the route of the Trans-Balkan gas pipeline.

At the same time, the transmission operator reports for 2020 compared to the previous 2019 an increase of 21.60% or 485.422 million cubic meters of flow to Greece. Gas transmission to northern Macedonia also increased by 42.365m cubic meters, or 14.29%.

"In the distribution of the transferred natural gas by destinations there is a decrease of 60.24% of the share in the direction of Turkey, compared to the share in 2019. Its share in the period January-December 2019 is 63.10%, and in 2020 decreases to 2.86%.

An increase of 53.82% is observed in the share of the transferred quantities to Greece, which represent 86.43% of the total transferred to the borders with Greece, Turkey and Northern Macedonia in 2020 compared to 32.61% in 2019.

The share of transferred natural gas in the direction of Northern Macedonia for 2020 increases by 6.41% compared to 2019 and amounts to 10.7% (for 2020) compared to 4.30% (for 2019) of the total quantities of natural gas transported through the gas transmission network ”to the borders of the countries, the report says.

Natural gas storage

Regarding the storage of natural gas in the underground gas storage in Chiren, the report of Bulgartransgaz states that for the period January-December 2020, the extracted quantities are 5 405 747 MWh, and the pumped - 4 858 703 MWh.

The natural gas owned by customers as of January 1, 2020 amounted to 2,847,255 MWh and includes virtually extracted and pumped quantities.

As of December 31, 2020, the available natural gas to customers in the underground gas storage in Chiren is 3,040,361 MWh, reported by the company and marked an increase of 2,522,820 MWh compared to available at the end of the same period in 2019 - 517,541 MWh.

Revenues, expenses, profit

Bulgartransgaz's main revenues for the reporting period last year are from licensing activities, access and transmission, transmission to third countries, balancing and storage of natural gas.

The company reported an increase in total revenues last year. According to the report, the realized total revenues amount to BGN 434 million 526 thousand (BGN 434 526 thousand), and the net sales revenues are BGN 393 million 644 thousand (BGN 393 644 thousand). Compared to 2019, the total amount of revenues generated by the company increased by BGN 30 million 877 thousand or 7.65% and net sales revenues increased by 9.97% or 35 million 688 thousand. BGN

In the total structure of revenues realized in 2020, the largest share is occupied by those from natural gas transmission to third countries - BGN 272 million 299 thousand with a relative share in net sales revenues of 69.17%. The reported revenues from transmission to third countries in 2020, compared to those in 2019 to be higher by BGN 47 million 617 thousand or 21.19%, the report says.

At the same time, the report shows what the damage is to the company from the direct diversion of Russian gas to the Turkish side through the Turkish Stream.

In 2020, the realized revenues from natural gas transmission in the amount of BGN 73 million 351 thousand (BGN 73 351 thousand), which represent 18.63% of the net sales revenues of the company are lower by 12 million 573 thousand BGN (14.63%) compared to the realized in 2019 as the transferred quantities of natural gas in 2020 are less by 4 641 512 MWh or 12.90% compared to those in 2019. , when they are 35 978 593 MWh, shall be stated in the report.

Better revenues are reported from the storage of natural gas - amounting to BGN 6 million 491 thousand (1.65% of net sales revenues) as in the previous year they were BGN 6 million 195 thousand.

Revenues from balancing also increased - by 41.28% or by BGN 5 million 236 thousand to BGN 17 million 918 thousand (4.55% of net sales revenues). However, a decrease of BGN 4 million 888 thousand is reported in the part “other revenues” compared to 2019 - a decrease to BGN 23 million 585 thousand from BGN 28 million 473 thousand.

In the part for expenses, however, there is also an increase in them.

Comparing the total expenses of the company reported in the period January-December with those for the previous 2019, an increase of BGN 66 million 613 thousand or 23.19% is reported, namely of BGN 287 million 293 thousand in 2019 of 353 million 906 thousand BGN in 2020, the authors of the report write. In this regard, an increase in operating costs by 9.50% (BGN 22 million 978 thousand), the cost of natural gas for balancing and goods sold - by 10.60%, and a slight decrease in technological costs - by 3.23%. According to a number of other indicators, Bulgartransgaz reports higher costs.

According to the company's data, the company's EBITDA or profit before taxes, interest and depreciation in 2020 is BGN 223 million 774 thousand, which is 7.17% more than in 2019.

The equity of the company at the end of 2020 amounted to 2 billion 508 million 593 thousand BGN and decreased by 25 million 565 thousand BGN or 1.01% compared to the same period in 2019. The accumulated retained earnings amount to BGN 286 million 615 thousand, including profit for the period amounting to BGN 72 million 478 thousand (for 2019 this profit was BGN 104 million 654 thousand). The company has no unpaid dividend to the sole owner of the capital - BEH.

The report also indicates the main projects on which Bulgartransgaz continues to work - the development of the gas transmission infrastructure of Balkan Gas Hub, modernization of compressor stations. Also the construction of the two new compressor stations under the project for expansion of the gas transmission network, construction of the gas-Bulgaria interconnection (IBS), increase of the capacity of the gas storage in Chiren, expansion of the gas transmission infrastructure on Bulgarian-Turkish and Bulgarian-Serbian border.

Under the projects co-financed by the EBRD, at the end of 2021 the transmission gas pipelines to Panagyurishte and Pirdop, as well as to Svishtov must be completed. The transmission gas pipeline to Razlog and Bansko will be built by the end of 2023.

The report also draws attention to the events that occurred after the date of the financial statements, among which the most significant are the acquisition of a shareholding of 20% in "Gastrade" SA for the liquefied natural gas terminal in Alexandroupolis. As well as the final decision on the gas connection with Serbia.