Russia Cuts Price of Natgas Supplied to Bulgaria by 40.3 Per Cent, Effective August 5, 2019

Bulgargaz and Gazprom Export have finalized their agreement on a 40.3 per cent reduction of the price at which Russia supplies natural gas to Bulgaria, backdated to August 5, 2019, the Bulgarian company's CEO Nikolai Pavlov told a news briefing at the Council of Ministers on Tuesday.

Bulgaria was the last of eight EU Member States of Eastern Europe to strike a deal on a price cut with Gazprom, in the wake of a settlement reached between the European Commission and the Russian monopolist on an anti-trust investigation.

As a result of the change, Bulgargaz will propose to the Energy and Water Regulatory Commission to endorse in April a price of 26.29 leva/MWh, down from the present level of 44.04 leva/MWh.

Bulgargaz will restore to its clients an estimated 150 million leva inclusive of VAT for the period between August 5, 2019 and February 29, 2020, Pavlov said. The new pricing takes effect on March 1, 2020 and will be set on a monthly basis. A new hybrid formula will now be used, in which the European gas hubs will heavily outweigh oil market fluctuations. The price cut takes into account prices on the European gas markets and the dollar rate by March 2, 2020. So far, the price of the Russian natural gas for Bulgaria was calculated on the basis of the oil prices for the last six months.

The CEO described the seven-month negotiations with Russia as "hard and long-drawn," adding that his company has acted consistently throughout the process.

For his part, Prime Minister Boyko Borissov said that Bulgaria conducted the negotiations professionally with the help of the European Commission. He thanked his Russian colleagues for giving Bulgaria the largest reduction of all countries that renegotiated the price terms.

Borissov noted the symbolic significance of the fact that the signed agreement was delivered by Russia on the morning of March 3, the last day of the 1877-1878 Russo-Turkish War that resulted in Bulgaria's liberation from Ottoman rule.

The PM credited diversification and competition for pressing down the natural gas prices, describing as a "job well done" the 500 million cu m of liquefied natural gas that Bulgargaz imported in 2019 and the two interconnectors (with Romania and Greece).

Energy Minister Temenouzhka Petkova pointed out that the unprecedented reduction of the price of natural gas will enable the Bulgarian economy to become ever more competitive and Bulgarian users to benefit from market pricing of this energy resource. She acknowledged the role of the European Commission, since the settlement reached in the anti-trust case between the Commission and Gazprom made it possible to sign binding supplementary agreements establishing the price-setting negotiating procedure.

Source: BTA