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    Bulgaria straps in for near-20% tariff increase


Regulator says the tariff increase is less severe thanks to Azeri gas supplies, delivered through the newly-launched IGB interconnector.

by: Callum Cyrus

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Natural Gas & LNG News, Security of Supply, Balkans/SEE Focus, News By Country

Bulgaria straps in for near-20% tariff increase

Bulgarian regulator Energy and Water Regulatory Commission has sanctioned a 20% tariff increase for natural gas to 353.21 lev/MWh ($179.80/MWh), bringing the price to more than double the 133.41 lev tariff introduced in January, before Moscow's invasion of Ukraine the following month.

EWRC's announcement on September 1 said the market price was calculated based on a data analysis from national energy supplier Bulgargaz, which factored in piped gas from Azerbaijan via the Southern Gas Corridor as well as LNG cargoes from markets including the US.  In addition, the price reflects auctions on the Gas Hub Balkans regional trading hub.

EWRC said: "The leading reason for the high price growth for September is the continuing increase in international natural gas prices in August, as a result of Russia's aggression in Ukraine. The greatly reduced or suspended deliveries by Gazprom lead to increased uncertainty on the gas market in Europe and the formation of unrealistically high quotations."

The regulator insists the new regulated price is still better than European gas market rates for September shipments, pegged by EWRC at €232MWh (453 lev/MWh). Bulgarian consumers are now benefiting from Bulgargaz's long-term contract for Azeri gas volumes, Bulgargaz said, which in some cases reflect oil prices on a six-month time delay.

The Azerbaijan gas supply, from BP's Shah Deniz 2 project, arrived online in mid-August, with the launch of the Interconnector Greece Bulgaria route, which delivers gas volumes from SGC into the Bulgarian grid via Greece. EWRC also said Gas Hub Balkan-procured tenders had taken place at "very competitive prices."

Bulgaria had its Russian gas supply cut off at the end of April after Sofia refused to pay its bills in rubles. The IGB route is now Bulgargaz's primary piped gas route, initially carrying 1bn m3/yr from Azerbaijan, with capacity due to reach 3bn m3/yr subsequently.