Bulgaria Forms Natural Gas Supplies JV with Azerbaijan

Bulgaria’s state-owned gas operator Bulgartransgaz, a subsidiary of Bulgargaz, and the Azerbaijan state gas company GNKAR are going to set up a joint venture.

This has been announced by Bulgaria’s Minister of Economy, Energy, and Tourism, Traicho Traikov.

Traikov received authorization by the Council of Ministers Wednesday to sign a cooperation memorandum for the setting up of the joint venture with the Energy Minister of Azerbaijan, who is going to be part of the delegation led by the Azerbaijan President visiting Sofia later this week.

The Bulgaria-Azerbaijan joint company is going to explore the possibilities for the delivery of natural gas from Azerbaijan to Bulgaria, including as both finding supplies for the quota of natural gas that Bulgaria will be entitled to receive through the Nabucco gas transit pipeline, and for the transit of compressed natural gas with tankers through the Black Sea.

If the project is realized, Bulgaria will not have to participate in the construction of a liquefied natural gas terminal. As a result of the January 2009 Russia-Ukraine gas crisis, the Bulgarian authorities considered pushing for the setting up of such a terminal in Greece or Turkey in order to diversify the country’s gas supplies.

“Tankers for the transport of compressed gas cost more money but use cheaper infrastructure because they do not require the construction of a special terminal for the unloading of the fuel, which can be directly delivered to the country’s gas network or to be stored in a storage facility,” Minister Traikov said Wednesday.

In his words, the Galata gas deposit which is under the concession of the UK company Melrose Resources, could be used as a storage facility. The government has initiated talks on that matter with the concessionaire.

The new Bulgarian-Azerbaijan memorandum is going to build upon the one signed in June 2008 in Baku for starting talks between Bulgargaz and GNKAR for the supply to Bulgaria of 1 billion cubic meters of Azerbaijan natural gas.

The 2008 document says that Bulgaria will be receiving the above-mentioned quantity of natural gas through the existing pipes, the future pipeline Nabucco, or other infrastructure and mechanisms.

According to Traikov, if the joint venture for transporting compressed natural gas from Azerbaijan to Bulgaria with tankers is successful, the quantity could be increased up to 7-8 billion cubic meters including supplies to be transited through Bulgaria for third parties.

This idea corresponds with the plan put forth by Bulgarian President Georgi Parvanov during his recent visit to South Korea where he suggested that Hyundai should cooperate with Bulgarian shipbuilders in the construction of tankers for transporting natural gas across the Black Sea.