Bulgarian state-owned gas company makes big losses due to contract with Turkey

7 months ago 28

Bulgarian state-owned gas company Bulgargaz, a major player in the region’s gas market, is accumulating large losses due to an agreement with Turkish state-owned gas company BOTASH.

Turkey has shown no willingness to cancel the agreement between BOTASH and Bulgargaz, driving the Bulgarian state gas company into bankruptcy. This became clear on Saturday after a meeting between Bulgarian Energy Minister Vladimir Malinov and his Turkish counterpart Alparslan Bayraktar in Istanbul.

The Bulgarian authorities have been trying to renegotiate the agreement for over half a year, but to no avail.

The contract between Bulgargaz and BOTASH provides for the reservation of 1.85 billion cubic metres (bcm) per year of capacity from Turkish LNG terminals to the Bulgarian border through the Trans-Balkan gas pipeline. According to the contract, Bulgargas can unload tankers at certain LNG terminals in Turkey and receive the same amount of natural gas to the Bulgarian border until 2035.

The parliamentary committee investigating the Bulgargas-BOTASH agreement said it was completely unfavourable to Bulgaria and sent it to the European Public Prosecutor’s Office (EPPO) for investigation.

However, the parliamentary report concluded that the Bulgarian company pays almost half a million dollars daily to BOTASH but does not use the contracted capacity. As a result, the state gas company is losing hundreds of millions of dollars a year. Over two years, Bulgargas will spend nearly $300 million on the agreement, and the company will not earn any revenue from it.

The contract was signed in 2023 when the caretaker government appointed by President Rumen Radev was in power.

“Bulgargaz is bankrupt, saved only by the long-term contract for Azerbaijani gas. The contract with the Turkish company BOTASH is just an episode in the defeat of the Bulgarian energy sector,” Alexander Nikolov, a former energy minister, told Euractiv’s partner, Sega.

“Bulgaria and Turkey will continue their cooperation to ensure diversification and security of energy supplies,” the Energy Ministry said after the meeting between Malinov and Bayraktar.

“The Bulgarian side expressed willingness to review the agreement, while the Turkish side expressed its understanding and readiness to continue cooperation. The energy ministers instructed the management of the two companies to start active work on the agreement between Bulgargaz and BOTASH,” the statement said after Saturday’s meeting in Istanbul.

The contract was signed on 3 January 2023 in Sofia by Bulgargaz CEO Denitza Zlateva and BOTASH CEO Burhan Özdcan in the presence of the two countries’ energy ministers, Rosen Hristov and Fatih Dönmez.

In October, the European Commission’s Directorate General for Competition opened an investigation into the BOTASH gas supply contracts and capacity reservations at the Turkish-Bulgarian border.

The Commission has also requested information on contracts concluded or under negotiation under which Bulgargaz may act as an exclusive agent or distributor for gas supplies in Bulgaria or elsewhere in the EU.

The reason for the investigation is the suspicion that Bulgargaz may be the only company in the EU with access to natural gas through Turkish infrastructure and acting as an intermediary for Russian gas procured in Turkey and delivered to the region.

(Krassen Nikolov | Euractiv.bg)