Bulgartransgaz EAD held a Round table for the Balkan Gas Hub

On September 2, 2019 Bulgartransgaz EAD held a Round table on the Balkan Gas Hub. The aspects have been considered regarding project implementation in accordance with the adopted by the Council of Ministers and the National Assembly decision on amendment and supplement of the Energy Strategy of the Republic of Bulgaria until 2020.

The event was attended by representatives of the European Commission, the Ministry of Energy, MPs from the National Assembly, the Energy and Water Regulatory Commission, Bulgarian Energy Holding EAD, the Central European Gas Hub, gas associations, ENTSOG, BOTAS and other interested parties.

The key aspects of project implementation were discussed, such as the necessary new infrastructure, preparation of the existing infrastructure, also by concluding Interconnection agreements with the neighbouring transmission system operators, presenting the actions undertaken to create an organized exchange market with different trading segments and adopting the necessary legal amendments to ensure trade and regulatory environment.

The gas transmission infrastructure in Bulgaria, which will be implemented to connect the sources of gas supply and the target markets was introduced at the event. The Executive Director of Bulgartransgaz EAD Mr. Vladimir Malinov stated that the realization of additional infrastructure with implementation of the projects for modernization and expansion of the existing one is a prerequisite for establishment of the first liquid gas trading hub in the region of Southeast Europe. Mr. Klaus-Dieter Borchardt, Deputy Director of Directorate-General for Energy of the European Commission, confirmed the need of implementing the interconnections with Greece and Serbia and the storage capacity expansion of the underground gas storage Chiren. The support provided for these projects was pointed out, including the financial support by the European institutions under the Connecting Europe Facility Mechanism. Mr.   Borhardt emphasized on the necessity of maximum utilization of the existing connections with Romania from which not only Bulgaria but the entire region of Southeast Europe will benefit directly.

Regarding the construction of IGB and IBS projects, the Deputy Minister of Energy of the Republic of Bulgaria Mr. Zhecho Stankov expressed the support of the ME for the overall implementation of the Balkan gas hub concept and emphasized that the ME continues its consistent work on their realization, as well as on providing support in transferring IBS project to Bulgartransgaz EAD in its capacity of a project company and infrastructure operator in Bulgaria.

Regarding utilization of the existing capacities between Bulgaria, Romania, Turkey and Greece, Mr. Vladimir Malinov stated that as of April 1, 2019, as a result of the excellent cooperation between Bulgartransgaz EAD and DESFA, 4,1 mcm/d firm entry capacity was provided and additional 0.5 mcm/d interruptible capacity. In addition, Bulgartransgaz EAD is in the final stage of conclusion of the Supplement to the Interconnection Agreement with Transgaz Romania for IP Negru Voda 1/Kardam, envisaged to be finalized and signed by the end of October, 2019. That Agreement will ensure firm physical capacity in direction from Bulgaria to Romania amounting to 1.5 bcm/year. As far as this requires certain technical improvements at GMS Negru Voda 1 by Transgaz, in August 2019 after talks between the two operators, significant progress had been made as a result of the undertaken firm commitments and a roadmap with deadlines by Transgaz for performing these actions. The two operators held also a public consultation on the Business rules to the draft Interconnection Agreement for IP Negru Voda 2,3/Kardam which conclusion is forthcoming in the near future. Meanwhile, a public consultation on the draft Interconnection Agreement for the existing cross-border Interconnection Point between Bulgaria and Turkey (IP Strandzha/Malkoclar) is also expected to be launched by the end of this week. That was achieved by the excellent cooperation between the gas transmission operators of Bulgaria and Turkey - Bulgartransgaz EAD and BOTAS. After all, the conclusion of the Interconnection agreements for the interconnection points with the neighbouring operators will ensure full utilization of the capacity of the existing network and thus increase trade flows marketable at the gas hub.

Regarding the creation of regulatory and trade environment, Bulgartransgaz EAD supports the planned supplements and amendments to the Energy Act in order to ensure a liquid market for natural gas in Bulgaria. The process of thorough and constructive public discussion among all stakeholders organized by the Standing committee on Energy of the 44th National Assembly was also pointed out. In this regard, Mr. Malinov noted that the entry into force of the amendments would enable accelerated launch of the Balkan Gas Hub as of 1 January 2020.

Regarding the legal amendments, Mr. Klaus-Dieter Borchardt praised the public and open way of consulting and taking into account a substantial part of the proposals received from the interested parties, as well as of the European Commission itself. The Commission supports the amendments, adding that the role of the regulator needs to be strengthened. Mr. Klaus-Dieter Borchardt referred to the urgency of implementation of the gas release program, scheduled to start from January 1, 2020. He also indicated that, following auctions in the gas release program for customers in the country, it should be clearly stated in the Act that the remaining non-released quantities will then be traded completely free with the possibility of delivery outside the country. The program should also clearly state that companies that are affiliated with the public service provider should not benefit from the gas release program.

The Executive Director of Bulgartransgaz EAD pointed out the crucial importance of the gas release program, which will benefit the whole gas market in Bulgaria and the region, as early as next year, providing for the initial liquidity of the gas exchange.

In addition to the legal amendments aimed at ensuring liquidity and the regulatory environment, the Chairperson of the Energy Committee at the 44th National Assembly outlined the numerous working groups and public discussions attended by associations, stakeholders, private companies and state companies whose proposals have been adopted in the final draft for second reading of the Energy Act.

In his speech, the Deputy Director of Directorate-General for Energy of the European Commission, Mr. Klaus-Dieter Borchardt, stressed that the gas hub Trading platform is an essential element of the concept of establishing a liquid gas hub, but for its implementation the necessary prerequisite is existence of well-developed infrastructure in Bulgaria and the region. Mr. Klaus-Dieter Borchardt noted that the concept presented with regard to implementation of a trading platform is encouraging and in full compliance with the European framework in the field and the EC vision.

The Chairperson of the Energy and Water Regulatory Commission noted the role of the Regulator in the process of implementation of the Balkan Gas Hub concept, stating that the Commission supplemented and amended the Natural Gas Trading Rules, the Natural Gas Market Balancing Rules and the Methodology for setting imbalance charge and the amendments reflect the drop of the interim measures regime and regulate the creation of a trading platform under Regulation 312/2014. The EWRC undertakes to amend and supplement the regulatory framework also with a view to licensing of the gas exchange.