The price of natural gas is expected to fall to around BGN 109 / mWh at the beginning of next month

Natural gas is projected to fall by between 14 per cent and 18 per cent in February. This was explained by the chairman of the energy regulator Ivan Ivanov during the public discussion of the prices of blue fuel. No surprises are expected from the gas supplier Bulgargaz and their proposal will probably be to reduce prices to levels of about BGN 109 / mWh, explained director Nikolay Pavlov during an open meeting of the Energy and Water Regulatory Commission (EWRC).

"If today Bulgargaz had to submit an application for approval of the price of natural gas, it means that the proposal would contain a price that is lower by 18 percent compared to the current month of January or nearly 109 leva," said the executive director of Bulgargaz. From there, they closely monitor the movement of prices on the gas markets and the final proposal on exactly how much natural gas will become cheaper will be submitted to the EWRC on the morning of February 1.

"There is significant dynamics in the natural gas market in Europe. At first there were declines. In the last two days we see an increase, but in any case we do not expect surprises and there will be a decrease in natural gas prices," Pavlov told BNR. Bulgargaz is still expected to receive the methodology used by the energy ministry to calculate natural gas prices for the current month.

The analysis, prepared by Bulgargaz and after calculations according to the price model, in the EWRC report shows that the price of natural gas from February 1, 2022 to be BGN 114.31 per megawatt-hour (excluding prices for access, transmission, excise and VAT). For January, the price is BGN 133.41 per megawatt-hour. For the previous month - December, the price approved by the regulator was BGN 102.33 per megawatt-hour.

At the open meeting, the executive director of Bulgargaz Nikolay Pavlov, who joined online, commented that after the date of the application there is a significant dynamics in the natural gas market in Europe. Initially, there were declines in values, while in the last two days there has been an increase, but in any case in the remaining days until February 1, no surprises are expected and there will be a decrease in the price of natural gas. Pavlov assured that the final proposal, which the public supplier will submit on the morning of February 1 and will reflect the reporting data of the pricing components as of January 31. It will lead to lower prices for natural gas.

In response to a question from Ivan Ivanov regarding tensions between Russia and Ukraine, Nikolai Pavlov said that no interruption of Russian gas supplies to our country is expected: "Recently, the board of directors had a conversation with colleagues from Gazprom. We have no worries and no sign that there will be a supply disruption, on the contrary. They confirmed that they will be delivered not only in Bulgaria, but also in the region and in Europe. They will strictly comply with their agreements and will supply the quantities of natural gas. "

Bulgargaz has provided the necessary quantities of gas for its customers, Nikolay Pavlov added. He reminded that our country also buys natural gas from Azerbaijan. We remind you that the supplies of natural gas to our country are made through Turkey and the Ukrainian gas transmission network is not used.

Pavlov also explained that the company complies with all regulatory requirements for pricing, and the company operates at a minimum markup of 1.37% in 2021. This is BGN 0.75 per megawatt-hour, Pavlov explained. The director again dismissed allegations that the gas trader was selling cheap natural gas in Romania.

Azerbaijani gas

At the moment, Bulgaria receives the maximum possible quantities of natural gas, which the Azerbaijani supplier agrees to deliver, Nikolay Pavlov was quoted as saying by BTA. He clarified that the Azerbaijani side has an obligation to supply natural gas to the Greek connection, and since it has not been built, Bulgargaz has been forced to try to persuade through negotiations to find the best solution for the supply of Azeri gas. on an alternative gas pipeline, after obtaining the explicit consent of the supplier.

"That's what Bulgargaz did," Pavlov said. According to him, Bulgargaz has managed to negotiate with the Azerbaijani supplier to receive natural gas on another alternative gas pipeline, which is located nearly 300 km away from the contract. To this end, two interim agreements have been signed. One came into force after receiving approval from the Board of Directors of the Bulgarian Energy Holding, the Ministry of Energy and the Council of Ministers, Pavlov added. He added that the second supplementary agreement had entered into force in an identical manner, including the reservation of the specific level of the capacity in Greece, corresponding to the amount of the agreed deliveries with the express consent of the Azerbaijani side.

The Executive Director of Bulgargaz pointed out that the concluded agreements are entirely in the interest of the Bulgarian side. They exclude the possibility for the Azerbaijani side to activate a penal clause under the treaty, given the lack of this treaty route. In the absence of such contractual agreements, Bulgargaz would not only be unable to receive Azeri natural gas, but would also pay a penalty for quantities it cannot receive, Pavlov said. He pointed out that these interim agreements allow the Bulgarian market to reach quantities of natural gas, which are at the contract price from the first day of delivery.

Pavlov noted that the second interim agreement expires on June 30th. "After June 30, if there is no IGB pipeline, we will return to the starting position and will be subject to criminal sanctions - ie payment of penalties," he said.

At the moment, Bulgargaz has not been informed by the project company that the gas pipeline will not be built on time. Otherwise, a new temporary supply period for Azeri natural gas must be sought again.