Bulgargaz gives Gazprom Export 1 month to pay EUR 400 million for suspended gas supplies

The new management of Bulgargaz has decided to make claims to Gazprom Export for the suspended gas supplies in 2022 in the amount of 400 million euros. This was announced at a press conference by the Minister of Energy Vladimir Malinov. The Russian gas company will be given 1 month to voluntarily settle the claims. In the event that the obligations are not settled, Bulgargaz will initiate arbitration at the International Court of Arbitration in Paris. The claim is based on a serious analysis carried out by the management of the Bulgarian gas company.

"The deadline will be extremely short, as a delay of more than two years is, to put it mildly, unacceptable for me," said Minister Vladimir Malinov.

The minister also explained that 13 companies have applied for the announced tender for the LNG terminal in Turkey. Based on the methodology, which is based on a complex assessment of prices and payment method, the winning company is the Turkish Botash, explained the executive director of the company, Veselin Sinabov. As it became clear from his words, Botash won not only because of the price, but also because Bulgargaz will not pay in advance for the delivered gas, but will have a term of 20 days after the ship's delivery. In addition, according to the agreement between the two companies, the Turkish Botash will make a discount worth BGN 11 million.

"This will lead to a reduction in the price of gas for the regulated market by 3%," explained Sinabov. In particular, this means that the company, which was preparing to ask for an 11% increase in the price of blue fuel for the regulated market, will now submit a proposal for an increase of 8%. "Beyond this impact on the discounted price, Bulgargaz will gain significantly from costs outside the EWRC application, as of these quantities of 1 million MWh purchased by Botash, only 200 thousand MWh will come in for a regulated price," said the executive director of the gas company.

Meanwhile, today Bulgargaz is expected to submit its application for the price of gas for the month of June for the regulated market.

Minister Vladimir Malinov also explained that the management of Bulgargaz will announce two types of tender procedures - for capacity and for services. "In order to implement capacity, since it cannot be used in relation to our portfolio and separately the reduced consumption in the last two years, in order to quickly implement this capacity and reduce the financial costs of Bulgargaz for this, we are announcing two tenders, which are for the provision of a service for regasification, storage and transfer of LNG from a Turkish terminal to a virtual point in Bulgaria. For this service, the customer who won the tender will owe a fee to Bulgargaz, from which we, the company, respectively, will compensate the costs to Botash. The other auction is for the partial transfer of rights and obligations, that is, whoever is willing can take part of the rights for regasification, transmission and storage under our agreement with Botash. The products are for providing a service - a 6-month product from July to the end of the year. We then offer a five-year product for the service. As for the transfer of rights, there are three products - a five-year and two ten-year products," Sinabov specified.

The Minister of Energy also gave details regarding the proposal submitted by Kozloduy NPP for the price of electric energy in EWRC. After discussions with the management and with BEH and the plant, based on an analysis, the management of the Kozloduy NPP will withdraw the current application submitted to EWRC and will submit a new application with optimized parameters for the electricity produced by the nuclear plant, which will lead to a corresponding decrease in price. I want to draw attention to the fact that these optimized costs will in no way endanger the safe and trouble-free operation of units 5 and 6 of our nuclear power plant," said Malinov. As he later clarified, the management has decided that it can optimize its costs. Further analysis by the NPP is also pending, but "there will not be a 30% increase compared to the previous regulatory period," he said.

Vladimir Malinov also informed that he held a meeting with Prime Minister Glavchev and the Deputy Prime Minister and Minister of Finance, at which the possibility of compensating the accumulated deficit in the Electricity System Security Fund (FSES) was discussed. The meeting was initiated on the occasion of a letter from the chairman of the board of FSES sent to him and the chairman of EWRC about the accumulated deficit in the fund since the beginning of the regulatory period on July 1, 2023 in the amount of more than BGN 435 million and expected to reach over 530 million BGN until the end of the regulatory period. "What we've focused on is seeing the current regulatory period - what the actual accumulated shortfall is going to be so we can make up." With regard to the new regulatory period, it is the function of the Energy and Water Regulatory Commission to assess whether there will be a discrepancy between the expected costs and the needs of the Fund from July 1, 2024," he specified.

"Expect before the EWRC pronouncement on the price of electricity (for households) that the government makes a decision and that this deficit does not affect the price," Minister Malinov said.