Bulgaria received an unusual price discount from Gazprom in November. Instead of rising by 32%, as the Bulgarian state gas company Bulgargaz predicted, the price of gas was reduced. In November, the Bulgarian gas price is €46.5/MWh, which is almost two times less than the tariffs of European gas hubs. This happened thanks to additional quantities of natural gas provided by Gazprom Export at a significantly lower price, explained the chairman of the Bulgarian energy regulator Ivan Ivanov.
Euractiv reports that additional quantities have been agreed from Gazprom at a significantly lower price, so the real reduction is 33% compared to the price previously requested by Bulgargaz. The director of Bulgargaz, Nikolay Pavlov, did not want to say how much additional gas was provided and at what price because it was a trade secret. He said the quantities were delivered after resolving disputes with the Russians. Pavlov explained that these are one-off purchases, for which the regulator has decided to reflect on prices in November.
The discount from Gazprom comes at a very auspicious time for the caretaker government and President Rumen Radev, who has been constantly criticised by former Prime Minister Boyko Borissov and his GERB party including on the energy crisis. On 14 November, Bulgarians will vote for both president and parliament, and Radev is the favourite for a second term. Russia hopes the next Bulgarian government will sign a new long-term agreement with Gazprom, following the example of Hungary. Gazprom supplies about 70% of the gas in Bulgaria.
The energy regulator says the reduction in gas prices will save consumers $40 million. In December, it is expected that there will also be a drop in the price of natural gas in Bulgaria to below €46. “The government has done everything possible to reverse the trend in gas prices and prevent unaffordable prices for consumers,” commented Social Affairs Minister Galab Donev. “I would not say that Gazprom gave us a discount in prices last week. This is not a discount unless it is a secret agreement “, commented Bulgarian energy expert Hristo Kazandjiev to EURACTIV. According to him, the reduction is related to the upcoming elections. “The long-term strategy is to sign a new contract with Gazprom next year when negotiations will begin. Gazprom is fully aware that Bulgaria does not have many options for new suppliers. It relies mainly on Russia and Azerbaijan. So Gazprom has done a good job. This price reduction is PR because of the elections,” Kazandjiev said.
Meanwhile, the Bulgarian authorities have launched an investigation into the Russian oil company Lukoil Bulgaria for abusing its dominant position in the country’s fuel market. The inspection is on a signal from another leading European company – OMV Bulgaria. OMV commented to BNR that it “supports compliance with competition law, which is essential for a fair business environment.” Lukoil Bulgaria will not comment on the inspection at this stage.
The two companies are members of the Bulgarian Oil and Gas Association. Two years ago, Boyko Borissov’s government launched an initiative to set up a state oil company to intervene in the fuel sector and sell gas stations through its own chain. The idea was never realised, despite the tens of millions spent and the changes made in the law. The main problem, however, remains.
Lukoil owns most liquid fuel storage facilities in the country. This allows the Russian company to limit the activities of alternative suppliers, which may be left without the possibility of storing imported fuels in the country. Lukoil Bulgaria operates the largest refinery in the Balkans, near the Bulgarian city of Bourgas on the Black Sea coast. The Commission for Protection of Competition has conducted numerous inspections for distortions in the fuel market, but they have never reported a problem.
