EWRC does not expect a "shock" increase in gas prices at least until July

Plamen Mladenovski, Chairman of the Energy and Water Regulatory Commission (EWRC), does not expect a “shock” increase in natural gas prices in Bulgaria, “which is currently happening in European markets,” over the next three months. He commented on the energy crisis caused by the U.S. and Israel’s war against Iran and the disruption of 20 – 25% of global oil and gas production during an open meeting.

The meeting also discussed Bulgargaz’s proposal to raise natural gas prices by 5.12% in April, following an increase of nearly 1% in March. Bulgargaz is proposing a natural gas price of 34.27 euros per megawatt-hour (MWh) for April, excluding access, transmission, excise, and VAT costs, while the price for March was 32.60 euros/MWh.

The apparent calm regarding the coming months stems from the favorable contract with Azerbaijan, under which Bulgaria imports about 40% of its consumption. However, this contract expires in June and, according to acting Minister Traicho Traikov, will likely be revised, as it is partially linked to oil prices. Now Mladenovski has also confirmed that an indexation of this contract—which is effectively saving us at the moment – is likely forthcoming.

Bulgargaz CEO Veselin Sinabov noted during Tuesday’s meeting that the company enters into annual contracts with its customers and, based on them, secures the necessary quantities.

At present, we have secured the quantities for the concluded contracts. "Of course, we are prepared; for the moment, we do not yet see such significant interest in increased consumption, but in the event that we need to secure additional quantities beyond the contracts already concluded, we are ready to provide natural gas as quickly as possible to meet this increased demand," he said, as quoted by BTA.

Mladenovski, for his part, asked whether the quantities secured under the Azerbaijani contract and those from Turkey would be sufficient to cover May as well. Sinabov explained to him that everything would depend on consumption in April – if it is higher, this will affect the company’s reserves.

We do not expect any shocks; moreover, the contract with Azerbaijan guarantees that at these TTF natural gas price levels, we will be below them,” he said.

Mladenovski is concerned, however, about what will happen to heating and electricity prices in Sofia starting July 1.

As we can see, changes in oil prices are reflected immediately at the gas stations, while with gas, things happen with a time lag because the cargoes that have been purchased are at lower prices and are on their way to the respective countries. But once those supplies run out, the higher prices will take effect,” explained Mladenovski.

Translated with DeepL.