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The BEH building.
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Bulgargaz published the report from the inspection of the working group of its principal – the Bulgarian Energy Holding, on the company’s activities in the management of gas supplies for the period 2019-2021, together with its remarks to him. All specific data have been cleared, even the name of the Azerbaijani supplier. As it has already leaked in the media, this is Azerbaijan Gas Supply Company (AGSC).
A significant place in the inspection is given to the contract with the Azerbaijani consortium and the delivery point. Regarding the delivery point, it is written: the opinion of BEH’s legal advisers on English law is that only Komotini (this is the beginning of the Bulgarian-Greek gas connection – b.r.) is a delivery point under the contract and that any other point and gas volumes should be negotiated with the Azeri supplier additionally and are not its commitment under the original contract.
The report notes that Bulgartransgaz confirms the full possibility of transmission from both points on the Turkish-Bulgarian border. Bulgargaz clarified that the operators of the Bulgarian and Turkish networks do not offer such an opportunity and that to this day no capacity products are offered at the connection point of the gas pipelines between Bulgaria and Turkey. Despite the company’s inquiries to the two transmission operators – Bulgaria and Turkey, there was no answer from the Turkish.
The question is why in the additional agreement for the agreed temporary period until the commissioning of IGB (interconnector Greece-Bulgaria – b.r.) is not agreed supply of Azeri gas in the amount of …. m per year. It is clear that there are two agreements for the temporary delivery of the Nea Mesemvria point, agreed in case of risks that have been deleted. The first agreement was approved by the board of directors of BEH, the Ministry of Energy and the Council of Ministers. Bulgargaz clarifies that larger quantities have been agreed in the second agreement, but with interruptible capacity, which is a risk of uneven supplies. It has been approved by BEH and the Ministry of Energy.
Bulgargaz lists a number of letters until December 15, 2021, requesting full supplies of Azeri gas.
The Commission concludes that the correspondence presented shows that the description set out in the explanation does not fully correspond to the correspondence between the parties. The company objects.
BEH’s recommendation is to make efforts, regardless of the obligation of the supplier, to effectively and urgently negotiate … meters of gas per year before the commissioning of IGB, using all the possibilities for routes through Greece or Turkey .
The other recommendation is to examine whether additional volumes could be delivered at the price of the contract if the consent of the many shareholders in the Azerbaijani consortium is not obtained.
The other option is, if an increase in volumes is not achieved, then most of them should be withdrawn during the winter.
Regarding the way the price is formed, the inspectors note that it is formed by the declared deliveries from the customers, from the Azerbaijani gas plus the gas from the storage in Chiren and is supplemented by the quantities of Russian gas. They note that the quantities from the gas storage are not always at a price lower than that of Gazprom, and for January-March 2020 it is twice as high.
Bulgargaz notes that this is not correct, as during this period there was a renegotiation with the Russian company of the pricing formula, which led to a fall in prices. For gas in Chiren, the recalculation of the price was made entirely in March 2020, not on a monthly basis.
There are also conclusions about the storage and extraction of gas in Chiren and the question why Bulgargaz has decided to pump into the storage the quantities that are the responsibility of the capital’s district heating. The final recommendation is to develop a unified system for reporting on gas injection and production, average prices and to monitor their compliance with the regulated market. Bulgargaz reacted by keeping strict records and applying a turnover statement.
The group believes that it is necessary to monitor the sources of supply, which form the mix of quantities of natural gas for different markets – regulated, free with long-term contracts, gas release program for the stock market.
It is also proposed to develop a policy for the preparation of the trade calendar for auctions for unpurchased quantities of gas on the exchange and to determine the minimum and maximum quantities that can be purchased by one participant.
BEH insists on developing a pricing and free market policy. Bulgargaz objects that there are no arguments for the industry not to use the price referring to the regulated one and thus to benefit from Bulgargaz’s contracts with its suppliers.
Another recommendation is to develop a policy for the purchase of additional quantities of gas beyond that under long-term contracts, by writing down clear criteria under which conditions the transactions should take place.
Serious attention was also paid to the obligations of Toplofikacia – Sofia and their assignment to BEH, stating that it is a commitment of the Sofia Municipality. A gas cut-off option is also being played, which will, however, affect other consumers.
A comprehensive audit of the gas company is recommended.
The report is published on the website of Bulgargaz – https://www.bulgargaz.bg/upload/editorfiles/files/
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