Bulgargaz CEO: Talks for Shah Deniz 2 Gas Supplies Are 99% Complete

Bulgargaz is in talks for gas supplies from the Shah-Deniz 2 field in Azerbaijan, according to Dimitar Gogov, CEO of the state-owned company.

In an interview published by Monitor daily on Monday, Gogov specifies that Bulgargaz and the consortium developing Azerbaijan's Shah Deniz 2 field (SOCAR, British Petroleum, Statoil, and Total), have already reached agreement on 99% of the terms of the future supply contract, following talks of over two years and a half.

In Gogov's words, the gas supply contract with the Shah Deniz 2 consortium is to be signed by end-2013.

The CEO of the state-owned gas supplier explains that Bulgaria will seek all of the 10 billion cubic meters expected to remain available after the quantities earmarked for Azerbaijan and Turkey have been taken out.

"Naturally, it is unrealistic to believe that we shall manage to get all of the 10 billlion cubic meters of gas, which is why we are talking about volumes which will allow us to guarantee Bulgaria's consumption by 2020" he says.

Shah Deniz, Azerbaijan's biggest gas field, is estimated to contain 1.2 trillion cubic meters of gas.

Turkey is to receive 6 billion cubic meters of gas a year, while a total of 10 billion cubic meters have been earmarked for Europe.

According to forecasts cited by econ.bg, Bulgaria's consumption of natural gas will grow to 4.4 – 6 billion cubic meters in 2020.

Meanwhile, the Shah Deniz consortium is to make a final decision on the funding of the project by the end of 2013, which is why it must be aware where it will sell the gas and at what prices.

The Shah Deniz consortium is to select a gas export route option to Europe by end-June 2013, the rival projects being Nabucco West, in which Bulgaria takes part, and the Trans-Adriatic Pipeline (TAP).

An agreement for the acquisition of 50% of the consortium developing the Nabucco project by the Shah Deniz consortium was reached at a meeting in Sofia on January 10.

The official agreement for the acquisition was signed on January 18 in Vienna.

On January 22, three the partners of the Shah Deniz Consortium, BP, Total and SOCAR, entered into a Shareholder Agreement with the TAP shareholders (Statoil, Axpo and EON), allowing Shah Deniz actors the option of taking a combined 50% stake of TAP, should they decide to choose TAP as the preferred export route in the Southern Gas Corridor.

Asked whether a potential selection of TAP as the preferred export route for Shah Deniz 2 gas, Gogov says that Bulgaria has agreed with the Shah Deniz consortium to have the natural gas delivered to the Bulgarian-Turkish border or the Greek-Turkish border, from where it could be transported to Bulgaria via the gas grid interconnections.

The CEO of Bulgariaz reminds that this makes the construction of the Bulgaria-Turkey gas grid interconnection all the more necessary.

He highlights that the Bulgaria-Turkey gas link must be completed by the beginning of 2018, when Shah Deniz 2 is to start sending gas supplies.

Gogov also notes that the Nabucco West gas pipeline is preferable to TANAP for Bulgaria because it is shorter.

He adds, however, that Bulgaria will not reject the option of receiving gas supplies via TAP to the Greek border, as long as the Stara Zagira – Komotini gas grid interconnection has been completed by that time.