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Struggle of the Bulgarian gas industry after the Russian gas ban

The suspension of Russian gas supplies to Bulgaria last week has worried big and small companies; They fear supply disruptions and rising prices. According to one of the bakery owners, prices could continue to rise. The government insists Bulgaria has the “choice” of Russian gas and calls Moscow’s move to halt supplies “blackmail”.

Although natural gas supplies escaped punishment from European sanctions against Russia for its invasion of Ukraine; Moscow tried to sow discord among European countries by exploiting their dependence on gas. Russia required Gazprom’s customers to pay in rubles, not US dollars or euros; That would violate western sanctions. The Russian energy giant halted supplies to Bulgaria and Poland on April 27. Since then, Bulgaria’s neighbors have stepped in and increased supplies to the country, which for decades received more than 90 percent of its gas from Russia.

Bulgaria after the Russian ban

To meet the Balkan EU member’s annual needs of around 3.0 billion cubic meters of gas, the lack of a long-term solution is forcing large industrial consumers and small businesses. Many people in Sofia still remember the winter of 2009, when a Russian-Ukrainian gas leak cut off supplies to Europe for days. Because of this, houses remained without heating during the winter and industry was rationalized.

Bulgaria is already paying 10 percent more for its gas; The energy secretary confirmed this after securing May supply through an intermediary gas trading company. The government promised to diversify suppliers to ensure price restraint and energy supply. It plans to complete another major pipeline connecting its gas network with Greece by the end of June.

This will allow state gas operator Bulgargaz to negotiate with Azerbaijan; To increase the supply of the existing contract to 1.0 billion cubic meters per year. Get more gas from LNG terminals in Greece.

The prime minister also said the government is in talks to buy LNG from Egypt and the US. Analysts say prices could fall if the country is able to secure long-term contracts for LNG supply. According to experts, there is a great chance to achieve stable diversification of gas supply; However, this will not happen overnight.

Conclusion

It works normally at the Bulgartransgaz compressor station near Ihtiman, where Russian natural gas still flows through bright yellow pipes. However, Bulgargaz cannot use this gas. Most of it is for North Macedonia and Greece. For its supply, Bulgaria is currently relying on exchange deals with its neighbors, who supply it with Russian gas or LNG from Greece and reverse pipelines from Romania.

However, the expert warned about the dubious scheme of Russia to refuse a direct contract with Bulgargaz. In exchange, it is forcing the country to buy gas at higher prices through intermediaries such as Hungarian gas trader MET, which is known to be close to Gazprom, which has already helped provide certainty for May. Ultimately, this could lead to greater dependence on Russia for worse contract terms. Some players in the industry are taking a bold look as they have already started migrating their equipment to alternative fuel sources; For fear of a supply crisis. Increasing prices are expected, but it will not be impossible to work on.

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Callan Tansill

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