site.btaBulgargaz Makes Official Proposal to Turkiye's BOTAS to Re-negotiate LNG Terminal Access Deal

On July 4, Bulgarian state-owned natural gas supplier Bulgargaz sent an official proposal to Turkish energy company BOTAS to re-negotiate the two companies' agreement which gives Bulgargaz access to liquefied natural gas terminals and the gas transmission network of BOTAS. The draft of a supplementary agreement was attached to the letter, Bulgaria's caretaker Minister of Energy Vladimir Malinov said during a parliamentary hearing on Thursday.

In its proposal, Bulgargaz says that its agreement with BOTAS, signed on January 3, 2023, should be updated to reflect the current market price levels for the services provided by BOTAS in the region while at the same time keeping some of the advantages of the agreement such as ensuring the security and diversification of gas supplies.

On April 19, the Bulgarian National Assembly assigned the Minister of Energy to take action for re-negotiating the agreement between Bulgargaz and BOTAS. Critics of the deal argue that, under the take-or-pay agreement, the Bulgarian company undertook to pay nearly USD 500,000 daily to the Turkish supplier for reserving 1.850 billion cu m capacity on regasification terminals in Turkiye for natural gas provided by Bulgargaz and its delivery to the Bulgarian border. For the 15-plus months during which the agreement had been in effect, Bulgargaz had delivered less than 250 million cu m of gas under it but was obliged to pay some USD 250 million for the booked capacity despite using a tiny fraction of it, the critics claim.

During Thursday's hearing, Energy Minister Malinov also said that the official proposal to BOTAS stipulates streamlining the gas capacity booked by Bulgargaz, cutting the prices for the services provided, defining permanent and variable price components, providing for the possibility of Bulgargaz terminating the agreement unilaterally, and envisaging an option for a full transfer of the rights to third parties. Malinov expects that the re-negotiation process will be completed by the end of July.

In the letter, Bulgargaz says it cannot continue to fulfill its financial obligations under the present financial conditions and cannot utilize the capacity it has booked. Therefore, the payments due from Bulgargaz for July have not been made, Malinov noted. According to him, over 2 million MWh of natural gas owned by Bulgargaz is stored in Turkiye at present. Before July, the Bulgarian company paid for the capacity as agreed. The June payment was smaller by BGN 12 million because of a discount provided by BOTAS. Nothing has been paid for July.

The Energy Minister said he will submit all parameters of Bulgargaz' proposal to BOTAS to the classified information registry of the National Assembly, so that the MPs can obtain information about the tentative financial and economic conditions. He expressed a willingness to discuss the proposal with the MPs.

Malinov has written to his Turkish counterpart to express his hope that the re-negotiation process can be stepped up and completed by the end of July.