Bulgarian regulator okays 34% cut in Oct gas price as link to Greece goes live

This is the first time that the entire volume of natural gas under Bulgaria's long-term contract with Azerbaijan has been taken into account as a price-forming component, resulting in the price per MWh falling by 120 levs per MWh, the Energy and Water Regulatory Commission (EWRC) said in a statement on Saturday.

Last month, the EWRC approved a monthly increase of 18.7% in the gas price valid for September, to 353.63 levs per MWh. The reduction in the October price is larger than the cut of 30% to 247.96 levs per MWh, which public supplier Bulgargaz initially proposed in early September.

The natural gas contracted with Azerbaijan comes at a significantly more competitive cost as it is not influenced by fluctuations in European gas futures exchanges. This is because its price is tied to petrol prices backdated by six months, the EWRC explained.

Bulgargaz has agreements with three different suppliers to secure the quantities of natural gas required for the rest of September, the energy regulator said.

With the Azeri gas now flowing through the interconnector meeting one-third of Bulgaria's needs, the Southeast European country will also rely on imports of liquefied natural gas (LNG) as well as pipeline-delivered natural gas purchased on the Balkan Gas Hub, according to EWRC.

Unused volumes of natural gas will go towards further replenishing stocks at Bulgaria's Chiren underground gas storage site, the regulator added.

Bulgargaz's final price proposal for October, also lodged on Saturday, was for 233.49 levs per MWh, compared to an October price of 202 euro ($197.96) per MWh on European spot gas markets, a separate statement showed.

At the official launch of the Greece-Bulgaria gas link on Saturday, Azerbaijan's president Ilham Aliyev pledged a 40% increase in gas supplies to Europe up to 11.5 billion cubic metres (bcm) in 2022, local media reported.

Historically reliant on Russian gas, Bulgaria sees the new gas link as an essential element of achieving diversification and security of energy deliveries as geopolitical tensions caused by the Ukraine war are escalating.

(1 euro = 1.95583 levs)

($ = 1.02039 euro)