Baku Energy Forum - Bulgargaz former management to be charged over failure to import cheap gas from Azerbaijan

Bulgargaz former management to be charged over failure to import cheap gas from Azerbaijan



The former management of state-owned gas supplier Bulgargaz is expected to be indicted in the coming days over its failure to import cheap natural gas from Azerbaijan, Bulgaria's Prime Minister Kiril Petkov said at a press conference on January 31, Report informs, citing foreign media.

On January 28, the whole management of Bulgargaz was fired by Bulgarian Energy Holding (BEH), which manages the state-owned energy companies, over its decisions related to the purchase of additional amounts of cheaper natural gas from Azerbaijan.

Petkov said on January 31 that the management was dismissed after the authorities found out 1bn cubic metres of gas could have been imported from Azerbaijan even though Bulgaria's gas link with Greece has not been completed yet.

The difference between prices of the natural gas sold by Azerbaijan and Bulgaria's main supplier Gazprom is "so huge that giving up [any] amounts with any excuse, which then turns out to be invalid, damages Bulgargaz and consumers", Petkov also said.

He added that the hike of the natural gas price in Bulgaria since the beginning of the year was to a large extent due to the decisions of Bulgargaz's former management.

Bulgaria's Energy Minister Aleksandar Nikolov accused Bulgargaz earlier in January of failing to import 1bn cubic metres of natural gas from Azerbaijan at a lower price than the gas it buys from Russia's Gazprom. Nikolov even suggested that, by amending contracts with Azerbaijan Gas Supply Company (AGSC), Bulgargaz made imports from Azerbaijan impossible. Instead, Bulgargaz was importing more expensive natural gas from Gazprom.

According to the contract between Bulgargaz and AGSC, the Greece-Bulgaria gas link is one of the ways to deliver gas from Azerbaijan. The completion of the gas link has been delayed, but Nikolov claims that Bulgargaz still was able to import the full amount agreed with AGSC.

"When we have given up with a contract and annexes cheap amounts [of natural gas, the] reasoning [for this being] the lack of a Greek connection, and at the same time we are receiving from our suppliers' notification that the gas can enter through Nea Mesembria, just 200 kilometres away from the other access point, this for me is an obvious mistake or intentional wrong selection of a supplier," Petkov told the press conference live broadcasted on January 31 by Dnevnik news outlet.

He added that the interior ministry is working to establish the facts and that he was expecting an indictment in the next few days.

Bulgargaz's former management has denied that the annexes to the contract are blocking the supply of the full agreed quantities. The company claimed that it created the annexes in order to be able to receive at least some of the agreed quantities until the Greece-Bulgaria gas link is completed.

The IGB is designed to transport blue fuel from Shah Deniz 2 to Bulgaria. Through this pipeline, which will join TAP, Bulgaria will import 1 billion cubic meters of natural gas a year from Azerbaijan. Thus, the state company Bulgargaz EAD has signed a contract with the Shah Deniz consortium to purchase this amount of gas from the Shah Deniz-2 field. Azerbaijan will be able to meet 25-30% of Bulgaria's gas needs. Construction work on the IGB is expected to be completed in the second half of next year.