Azerbaijan's Beneficial Role In Bulgaria's Gas Supply And Global Market Dynamics

(MENAFN- AzerNews)
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Ulviyya Shahin Read more

In May, it is projected that Azerbaijani Natural gas suppliedthrough the Bulgaria-Greece Interconnector (IGB) will account for76.6% of Bulgaria's domestic demand.

According to the information provided by the energy and WaterRegulatory Commission (EWRC) of Bulgaria, the long-term gascontract with Azerbaijan, which is indexed to international oilprices rather than gas hub prices, plays a role in "achievingfavorable prices."

As stated by the regulator, the remaining portion of gas forhousehold consumption is provided by Bulgargaz, the state gascompany, through a contract for the supply of liquefied natural gas(LNG).

The Bulgarian regulatory authority for public services, EWRC,has approved a 7% reduction in the regulated gas price for May,setting it at 54.7 leva (equivalent to 30 US dollars) per MWh costs, excise taxes, and value-added tax areexcluded from this price.

Although the regulator did not specify the reason for the pricedecrease following a slight increase in April, it mentionedconsidering price trends in international gas markets.

It's worth noting that the Greece-Bulgaria gas pipeline was putinto commercial operation in October 2022. The IGB aims totransport "blue fuel" produced within the framework of the secondstage of exploitation of the "Shah Deniz" gas-condensate field inthe Azerbaijani sector of the Caspian Sea to Bulgaria. The statecompany "Bulgargaz EAD" has signed a contract with the "Shah Deniz"consortium for the supply of 1 billion cubic meters of gas from the"Shah Deniz-2" field.

The total length of the pipeline, which passes through 150kilometers of Bulgarian territory, is 182 kilometers. It isexpected to have an annual transportation capacity of 3-5 billioncubic meters.

Here poses questions:

Given that it is predicted to cover 76.6 percent of Bulgaria'sdomestic consumption in May, how important is Azerbaijan's role insupplying Bulgaria with gas?

The regulator noted the price trends in the international gasmarket to lower the gas price. However, knowing the sensitivity ofAzerbaijan's gas prices to global market dynamics, especiallyfluctuations in energy markets makes great sense.

Head of the Innovative Economic Research Center of AzerbaijanTechnical University, professor, economist Elshad Mammadov statedto Azernews that establishing cooperation in thedirection of gas supply with Azerbaijan is quite beneficial for theforeign trade partners.

"This is because of Azerbaijani gas is transported viapipelines, as is well known. The price of gas transported throughpipelines is traditionally more favorable compared to liquefiedgas, and this determines significant advantages for the foreigntrade partners in cooperation with Azerbaijan. At the same time,Azerbaijan has proven itself as a reliable, durable tradingpartner. All agreements related to Azerbaijani gas supply bear thesignature of the state, and I believe that the signature of theAzerbaijani state is widely accepted in the global arena,demonstrating its reliability and durability," Elshad Mamadovnoted.

According to him, furthermore, Azerbaijan prioritizes durable,long-term trade cooperation in its relevant agreements in theenergy sector, which undoubtedly promises great opportunities forthe foreign trade partners.

"Therefore, I consider that Azerbaijan's cooperation in theenergy sector, whether with Bulgaria or other countries in theforeign trade sector, is developing along a promising trajectory,contributing to the formation of economic processes in thosecountries."

Economist thinks that Bulgaria is not a major gas consumer tothat extent.

"There has been a significant decrease in the share ofindustrial enterprises in recent decades. Nevertheless, gaps inEuropean energy policy today encourage many European countries,including Bulgaria, to return to traditional energy carriers. AndBulgaria is undoubtedly among them. This is because of Bulgariafaces quite serious problems and challenges regarding its energysupply. Cooperation with Azerbaijan should be further emphasizedwith the exploitation of the interconnector, and I believe that notonly Bulgaria but also several other European countries willwitness the deepening of their cooperation with Azerbaijan in thenear future in terms of gas supply," Mammadov concluded.

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