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    Bulgaria wants to swap power for Azeri gas


Proposal comes as Bulgaria prepares to launch Greek interconnector to receive up to 2bn m3/yr of Azeri gas supply.

by: Callum Cyrus

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Natural Gas & LNG News, Europe, News By Country, Azerbaijan, Bulgaria

Bulgaria wants to swap power for Azeri gas

Bulgaria wants to trade electricity for gas supplies from Azerbaijan to help alleviate gas shortfalls caused by Gazprom shutting off Russian exports this summer, Euractiv reported September 11.

The idea was floated by Bulgaria's acting economy minister Nikola Stoyanov, who suggested Bulgaria could receive gas quantities over the winter season by "bartering gas for electricity." Stoyanov suggested Gazprom's curtailments meant several governments were seeking Azeri gas, putting significant pressure on its export capacity.

Trading electricity could allow Bulgaria to clinch a deal over its competitors.  The Bulgarian power grid possesses an interconnector into neighbouring Turkey, which borders Azerbaijan to the east, though electricity would need to cross the breadth of Turkish territory to reach Azerbaijan's grid.

Euractiv claimed Bulgaria is among Europe's leading electricity exporters, drawing on its significant nuclear, hydroelectric and coal-fired generation capacities.

Stoyanov explained: "They produce electricity only from gas, and we are a large producer of electricity; we export and have overproduction. This possibility exists; it has been confirmed in principle. If Bulgaria can alternately supply electricity, and Azerbaijan can send the gas, they save."

Bulgaria is set to receive gas from the BP-operated Shah Deniz 1 gas project in Azerbaijan thanks to a new interconnector with Greece that ties into the Azerbaijan-driven Southern Gas Corridor project. Shah Deniz 1 currently produces around 16bn m3/yr for export into Turkey, Greece and Italy, as well as significant volumes into Georgia.

The interconnector is expected to launch later this month with an initial capacity of 3bn m3/yr, rising to 5bn m3/yr upon the installation of more advanced compressors. The pipeline is bi-directional meaning Bulgaria can also transport excess gas volumes to Greece when needed. Under its present arrangement with Azerbaijan, Stoyanov expects to receive around 1bn m3/yr, almost one third of Bulgaria's estimated 3.5bn m3/yr gas demand. This could rise to 2bn m3/yr if current negotiations are successful, Stoyanov suggested.

Using its spare electricity capacity as a bargaining chip could buy Bulgaria access to increased Azeri gas volumes, especially if an Azeri-EU scheme to build out the SGC's export capacity to European markets receives a positive sanction, following early negotiations between the two sides.

The European Commission agreed a preliminary memorandum with Azerbaijan to double European gas imports through the SGC in July, potentially allowing for volumes to reach 20bn m3/yr by 2027. Euractiv suggested Caspian Sea gas exports to Europe would reach 12bn m3/yr next year.

Stoyanov also confirmed talks with Gazprom to potentially resume Russian gas supply. Bulgaria's contract with Gazprom runs until the end of this year, but the national importer Bulgargaz refused to comply with Gazprom's ruble-only payment demand, which led to the contract being suspended in late April.

Bulgaria's prime minister Kiril Petkov has come under significant criticism from opposition parties for not accepting the ruble-payments rule, with the country lacking alternative gas import channels aside from new infrastructure projects due to launch in coming months.