site.btaUPDATED Outgoing PM Petkov: Energy Ministry to Propose Agreement on Seven Shiploads of LNG

Speaking to reporters after the end of the last weekly meeting of the outgoing government, Prime Minister Kiril Petkov and Energy Minister Alexander Nikolov said that with the help of the European Commission, Bulgaria has managed to agree with a US company the delivery of seven shiploads of LNG in the period from October 2022 to April 2023. 

In Petkov's words, the agreement will be signed shortly but will need to be confirmed by August 19. This means that if the caretaker government, whose appointment is pending, finds a better offer or if problems arise with the provision of infrastructure for re-gasification and transit of the gas, the offer can be declined. 

Nikolov said that the first delivery can arrive in October at the Greek Revithoussa LNG Terminal, in respect of which Bulgaria's Bulgagaz natural gas distributor has already reserved a slot. 

He said the offer is divided into two parts: three shiploads in 2022 and four shiploads in 2023, the latter of which will be under different terms and conditions which are yet to be agreed. 

Nikolov said that the price of the LNG in the offer is based on the gas prices at the US Henry Hub which he said are more stable than at the European TTF gas hub in the Netherlands. He said that at the time the offer was made, the price was approximately USD 30 below the European one. However, when the costs for re-gasification and transit are added, the price advantage is estimated to be at around USD 20. 

Nikolov declined to name the supplier citing trade secret but said it is from the United States.

The total quantity of gas in the seven shiploads is estimated at 995 million cu m. 

Nikolov said that the pending agreement is the result of receipt of other offers by Bulgargaz, which included proposals for higher quantities over longer periods that in turn require greater financial resources. Added to this is a risk that some of Bulgargaz's customers may not be able to effect the payments in due time which will jeopardize the entire supplies, the outgoing energy minister said, adding that Bulgargaz is not facing bankruptcy. 

"The attempts to spread fear and panic [regarding the gas supplies] are purely due to the pending elections. Globally, there is enough gas. Joint approach, routes and capacities are being sought with the European Commission," Nikolov said. 

Nikolov said that Bulgaria does not have direct access to a terminal, of which Bulgargaz or Bulgartransgaz is the owner or co-owner, adding that this will happen sometime at the end of 2023 or the beginning of 2024 at the Alexandroupolis terminal. The Energy Minister noted that it is natural for countries that own terminals to ensure an advantage for themselves. 

"The other thing is that many of the terminals in Europe are blocked speculatively. Someone buys capacity, despite that there's no ship expected to supply gas, but it's clear that it can be sold at much higher prices in the future. That is why the government has made an effort to ensure the necessary capacity for the possible first shipment in October," he said. 

Speaking before the government meeting, Petkov said that the Energy Ministry will propose signing an agreement on delivery of seven cargo ships with LNG.

Petkov said that the condition for receiving the seven shiploads of LNG is to ensure the necessary infrastructure from Greece and Turkey, which needs to be done next month by the caretaker government that will be appointed and the interim energy ministry. In Petkov's words, the agreement that will be proposed is an important step of the team, together with the European Commission, working to ensure natural gas for the winter months. 

He said that with this step the outgoing cabinet ensures continuity on the energy issue with the future caretaker government. 

Addressing his cabinet members, Petkov said that this could be the last weekly meeting of the government, which has several important items to resolve. Petkov thanked the ministers for their work.