Bulgargaz launched short-term, medium-term and long-term LNG supply tenders

Tenders for the supply of pipeline gas are also to be announced

Energy / Bulgaria
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"Bulgargaz" has launched short-term and long-term tenders for the supply of liquefied natural gas (LNG). This was announced by the executive director of Bulgargaz Denitsa Zlateva at a joint press conference with the Minister of Energy Rosen Hristov. In the near future, in addition to the supply of LNG, tenders for the supply of pipeline gas will also be announced, as there is interest from Turkish companies.

The energy minister and the executive director of the gas company specified that taking these steps were in response to the caretaker government's decision from last week. The step taken ensures real diversification of gas supplies and their guarantee for a long-term period, Minister Hristov said. In addition, according to him, by securing long-term supplies, the goal is for Bulgargaz to become a strategically positioned, profitable commercial company that handles large amounts of blue fuel at competitive prices.

"Continuing the caretaker government's efforts to guarantee natural gas supplies, to diversify sources and routes, Bulgargaz will today announce tenders for the supply of liquefied natural gas (LNG).

The auctions will be held in an open and transparent procedure, and our goal is for the maximum number of companies to participate and offer their offers at a real competitive price to achieve the best price levels. These tenders are extremely important for guaranteeing the country's energy security and sustainability and security of supply," said Zlateva.

She reminded that as a result of the government's decision last week, "Bulgargaz" already has a capacity of 10 million and 600 thousand MWh at the terminal under construction in Alexandroupolis for liquefied natural gas for a period of 10 years. According to her, intensive negotiations are also underway to secure regasification slots for the period of November and December this year, and the company is also scheduled to participate in the 2023 annual tender for regasification slots at the Revitousa terminal in Greece, which will most likely take place in the month of October.

"At the same time, we are holding talks on securing additional slots for 2023 and at the liquefied natural gas terminals in Turkey," said Denitsa Zlateva and specified that short-term, medium-term and long-term LNG supply tenders are starting today.

"In this regard, today we will announce the following tenders:

We announce a tender for the supply of LNG for the month of November and for the month of December 2022.

We are announcing an annual LNG supply tender for the entire year 2023

We are launching a procedure with the announcement of a tender for long-term supplies for the period 2024-2034, with which we implement the decision of the Council of Ministers from last week".

The executive director of the gas company also gave details about the conditions and stages of the tender procedures that are about to take place.

"Unlike previous procedures, in which there were no clearly defined conditions and stages, there were no transparently defined evaluation criteria, the tenders that we are announcing today will go through several stages.

The first stage will be a preliminary selection of the candidates, where all interested parties, traders who wish to participate in the procedures must submit a letter of intent to Bulgargaz by fulfilling the requirements that we have specified in the tender documentation.

Zlateva emphasized the need for clear ownership of the company. In addition, the bidders must have no commercial restrictions, "have credibility with the servicing banks and a good reputation and have sufficient experience in LNG supplies. For each auction, it will be mentioned how many cargoes as a quantity of LNG for a previous period and what quantity must have been delivered".

The second stage concerns the submission of the offers, and the third - evaluation and ranking of the offers according to the accepted tender documentation, which will be uploaded to the company's website in the tenders section. "So that the participants and people who show interest and the media are aware of how the offers will be evaluated according to detailed criteria. The goal is to have traceability, publicity and transparency," she said.

Zlateva specified that the short-term tender covers the period for November and December, the medium-term - for the entire year 2023. The specific quantities for the month of November are 1 million 500 thousand MWh, and the expectation is that the auction will end in the first week of October and the supplier or suppliers will be selected.

The quantities for December - 2 million MWh.

The annual auction for 2023 is in the amount of 16 million MWh.

Quantities are distributed depending on from the monthly consumption and is adjusted to the summer and winter months.

Regarding the short-term and the annual auction, two separate positions will be made, one of which will be for the supply of LNG with secured slots from the company, and the other separate position will be for the supply of LNG with a secured slot.

The long-term tender coincides with the reserved annual capacity of the terminal in Alexandroupolis - 10 million 600 MWh each.

The long-term tender is for a period of 10 years - that is, for the period 2024. - 2034 and was defined by the executive director of the company as "strategic, for guaranteeing gas supplies for a period of 10 years and important for achieving the real diversification of sources and routes of supply".

"For this auction, there is 10 years of capacity reserved in advance at the terminal under construction in Alexandroupolis," she elaborated and explained why this auction was launched now. "Because this auction, unlike the short-term and medium-term, will go through several stages and will cover a period of 6 months. That is, the evaluation and selection of suppliers will take place in the month of March 2023. The responsible behavior of both us as the management of Bulgargaz and the management of the Ministry of Energy is to start the tender now, so that we have enough time to go through the following stages:

The release of initial information is scheduled to happen today.

The next moment will be accompanied by a road show, or an online presentation for all participants before the first stage even starts, that is, before the submission of a letter of intent. "This will happen in the months of October and November, when such an event will be organized at which the management of the company with all future suppliers and partners of the company will present the tender, conditions, quantities.

"Then we will go through the first stage of issuing a letter of intent, then admitting the candidates who meet the requirements, sending an initial binding offer, ranking the submitted offers according to very clearly described criteria with an ad hoc committee.

For the purpose of transparency, this time the tenders will be submitted as well as the public procurement system, that is, encrypted in a certain time range, the participants will send their passwords to a specially created email address, not the email of a commercial or legal director, so that only authorized people can access persons.

That is, we guarantee a really great transparency and openness and confidentiality of the submitted bids, and we will not allow bids released after the mentioned time to be considered, as was the case in the past," said the executive director of Bulgargaz.

"After the submitted bids are ranked, preparation of a framework agreement for the purchase and sale of natural gas, which is an important stage in the conclusion of such a long-term contract, will begin in parallel. The process is long, the final agreement is yet to be made by the Commission for Energy and Water Regulation (EWRC)," the executive director of Bulgargaz further specified. According to her, after the ranking of the 5 best offers, direct negotiations with the ranked participants will proceed to achieve better price levels, payment conditions, etc. After the ranking of the selected participants, which, as she specified, may be several, the framework agreement for the purchase and sale of LNG for a 10-year period (2024 - 2034) will be concluded, which fully implements the decision of the Council of Ministers from September 15. In the words of Zlateva, "this marks the beginning of the real diversification of sources and delivery routes, parallel to the delivery of Azeri gas."

The process has started now, and the management of the company is aware that it will take a period of 6 months, but hopes that during this time the new approach in contracting, the way of conducting public tenders and a good final result with price conditions for Bulgarian consumers, in particular and businesses, will be shown.

The Minister of Energy, Rosen Hristov, for his part, specified that the launch of tenders for the supply of pipeline gas is imminent, and Turkish companies are showing interest. Negotiations continue for an additional supply of Azeri gas of 200-300 million cubic meters, as well as with Gazprom.

Hristov specified that the caretaker government is focused on ensuring gas supplies at least for the heating season, and ideally until the end of 2023, and as a result, the short-term tenders. "The long-term tender, the results of which are likely to be accepted by the next regular government, we are launching to ensure a good start and is part of the long-term diversification strategy. What we are announcing today is exactly one big step towards diversification and these are the first competitive procedures for the supply of LNG as opposed to the direct month-to-month negotiations that were undertaken by the previous government,” he said.

The minister explained that the goal is for "Bulgargaz" to become an international supplier, a company that works for profit with larger volumes, better prices and accordingly be very well strategically positioned.

Meanwhile, a check on the website of the gas company indicates that the announcements for the two short-term tenders for the supply of LNG for the month of November and for the month of December this year have already been published.

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