Bulgaria: Increase in Price of Gas for January, a Jump of 22.7% compared to December

The Commission for Energy and Water Regulation (EWRC) approved the price of natural gas for the month of January in the amount of BGN 179.33 per megawatt hour (MWh), which is 22.75% more than the price of the blue fuel for December. It is free of charge without fees (for access, transfer) and levies (excise duty and VAT).

At this price, Bulgargaz EAD will sell natural gas to final suppliers and to persons who have been issued a license for the production and transmission of thermal energy.

EWRC confirmed the price after an analysis of the current data and documents submitted yesterday by "Bulgargaz" EAD, in which the prices of the individual suppliers and the size of their quantities in the total mix are indicated. The regulator found that the total estimated quantity for the domestic market was provided by several different supply sources.

The price mix includes the entire agreed amount of Azeri natural gas delivered via the "Bulgaria-Greece" (IGB) interconnector at prices according to the current long-term contract with Azerbaijan. These quantities cover about 27% of the country's consumption and are of key importance in achieving favorable prices for the blue fuel.

After organizing a tender procedure for the whole of 2023, "Bulgargaz" concluded three contracts for the supply of liquefied natural gas (LNG) with traders from the region for the month of January, the Commission also states.

The company has also concluded a contract for the supply of natural gas at the entrance of the Bulgarian gas transmission network. In the price mix for the month, the public supplier has also included quantities of natural gas from the Chiren Gas Plant.

The confirmed price of BGN 179.33/MWh is significantly lower than the estimated price proposed in Bulgargaz's initial application in the amount of BGN 204.14/MWh and slightly below the company's proposed lower price of BGN 179.72 BGN per megawatt.

The main reasons are the decrease in the stock indices of the international markets at the end of December, as well as the significantly lower than planned output from the gas storage in Chiren due to the mild weather. The public supplier has virtually injected additional quantities of natural gas into the storage. As a result, the average price of the stored quantities has been lowered, mainly pushed up during the summer months, when gas reached extremely high price levels on the international exchanges. With the reduction in the price of blue fuel from Chiren, which is a pricing element in the overall mix, it contributes to a lower final gas price for January.

The price for January is significantly more favorable compared to the indices of the European gas markets for deliveries in the month of January, which are at the level of 118 euros per MWh, EWRC states.

Gas TTF futures chart (in EUR per MWh)

"There will be no change in the prices of heat and electricity from January 1, 2023, which is of key importance for consumers in a regulated market. In this way, the energy regulator helps to maintain prices in our country, as a major factor in inflationary processes throughout Europe are the prices of energy carriers", said the chairman of the Commission, Ivan Ivanov, at the open meeting held on December 30, 2022.

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