site.btaBulgaria Pays Turkiye’s Botas for Capacity Which It Cannot Use

Bulgaria pays Turkish company Botas for capacity which it cannot use, Energy Minister Zhecho Stankov said on Wednesday in Parliament during a hearing on agreements signed with the Turkish company, their impact on public supplier Bulgargaz, and the need to renegotiate their terms.

Stankov opened his speech by recalling that the process of signing the agreements had started with international meetings on December 9, 2022, which included President Rumen Radev and the caretaker government at the time. Subsequently, a draft sale and purchase agreement and a tripartite protocol for capacity reservation were prepared. On January 6, 2023, the Council of Ministers approved the agreement on a proposal of caretaker energy minister Rosen Hristov, but according to Stankov, the power capacity purchase and sale documents are missing from the file, because they were not attached. The Finance Ministry did not provide an opinion on the agreement due to the lack of necessary documentation. The Minister stressed that the long-term regasification and storage capacity on Turkish territory is actually up to 1.3 bcm, while the contract is for 1.8 bcm. According to him, a difference of 0,5 bcm has been “overlooked”.

He said the contract was signed under the leadership of caretaker minister Hristov. It has a term of 13 years and does not include a termination clause. If it is terminated, the full amount due is about USD 2.2 billion, not adjusting for inflation.

Stankov said that Bulgargaz had signalled that the Bulgarian side would pay a fee for the delivery of 53,200 MWh of gas per day. “Regardless of whether we fully use the capacity or not at all, the country is obliged to pay the value of this capacity,” Stankov stressed.

Stankov said that the contract does not provide Bulgaria with access to the Turkish gas transmission network, and according to it Bulgaria should receive 1.84 bcm of gas per year. In effect, however, it can transport no more than 1.3 bcm, which means that it will pay for 500,000 cu m of unused capacity, or about BGN 1.2 billion.

In addition, the agreement stipulates that Botas has the right to change the delivery point, something that already happened in 2023 and resulted in additional costs of USD 400,000 per cargo.

The analyses of an ad hoc parliamentary committee show that the signed agreement allows competitors access to the Bulgarian gas network, which could undermine Bulgargaz' position, Stankov said.