Bulgaria signs gas deals with Azerbaijan

By bne IntelliNews September 22, 2014

bne -



Bulgaria and Azerbaijan have signed two agreements on joint gas projects, that could mean Bulgaria will receive gas from offshore Azerbaijani fields by 2017. The deals were signed at a groundbreaking ceremony for the Southern Corridor gas project near Baku, which will provide Bulgaria and other Eastern European countries with an alternative to Russian gas supplies. 

Bulgaria’s economy and energy ministry said on September 20 that a letter of intent had been signed with Azerbaijan   to explore the possibility of earlier gas deliveries to Bulgaria. Bulgargaz and the State Oil Company of the Azerbaijan Republic (SOCAR) will start negotiations on a feasibility study on the supply of natural gas to Bulgaria from 2017 via the Greece-Bulgaria (IGB) interconnector. The two state gas companies also signed a memorandum of understanding to look into the expansion of Bulgaria’s gas storage facility near Chiren.

The agreements were signed during Bulgarian President Rosen Plevneliev’s two-day visit to Baku for the groundbreaking ceremony for the Trans Anatolian Gas Pipeline (TANAP), which included bilateral talks with Azerbaijani President Ilham Aliyev. 

Bulgaria is already expecting to receive gas from Azerbaijan’s giant offshore Shah Deniz field via Turkey and Greece, thereby ending the Russian monopoly on gas supplies to the Bulgarian market. In addition to increasing Bulgaria’s energy security, the new competition is also expected to result in lower prices on the domestic market. 

Obtaining supplies from Shah Deniz is a key component of the European Commission’s Southern Gas Corridor project, launched to diversify gas supplies away from Russia by directly tapping new sources in the Caspian and Middle East. 

A final investment decision on the second phase development of Azerbaijan's Shah Deniz field was signed on December 17 2013. The agreement paved the way for investment of around $28bn to expand the field and build pipelines to carry its output to European markets, bringing total investment into the field and transport infrastructure to $45bn.

Shah Deniz II will add around 16bn cubic metres (bcm) of gas per year to the 9bcm  currently being produced by the first phase. Turkey will receive 6bcm, and European customers the remaining 10bcm, with the largest share going to Italy. The BP-led Shah Deniz consortium has already signed contracts with companies from Bulgaria, Greece and Italy. BP said in 2013 that it expects to export the first gas from the field to Georgia and Turkey in 2018, with the first shipments to arrive in Europe around a year later. Bulgaria is initially expected to receive 1bcm of gas from the field. 

To carry gas to Europe, the existing South Caucasus Pipeline (SCP) through Azerbaijan and Georgia is being expanded and two new pipelines - TANAP across Turkey and the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy - are being built. 

Gas interconnectors from Bulgaria to Greece and Turkey are also planned. Bulgaria and Turkey agreed in January to set up a joint company to build a pipeline linking their networks, while an investment decision on the Bulgaria-Greece interconnector is due to be made by the end of this year, which would allow construction to finish by 2016. 

Bulgaria has been exploring alternatives to Russian gas exports via Ukraine since January 2009, when supplies to eastern Europe were cut off. Plevneliev told the event in Baku that Bulgaria was the country worst affected by the 2009 crisis. 

“The Southern Gas Corridor will be end of the dependence of many years. This project will also be important from the standpoint of competitiveness and offer a fair price,” Plevneliev said, according to Azerbaijan’s APA news agency. 

“This pipeline will supply Bulgaria with gas. Romania, Serbia and other countries also will import gas. We’ll launch a connecting pipeline with Greece by 2016. We try to launch the pipeline merging Turkey and Greece in the short term.”

Top officials from other Caucasian and Southeast European countries including Georgian Prime Minister Irakli Garibasvili, Greek Prime Minister Antonis Samaras, Montenegrin Prime Minister Milo Dukanovic, and Turkish Minister of Energy and Natural Resources Taner Yildiz were present at the groundbreaking ceremony. 

Currently Bulgaria is almost entirely dependent on natural gas imports from Russia, and until EU sanctions were imposed earlier this years had been firmly behind the South Stream gas pipeline project. Sofia had hoped that South Stream, which will deliver gas from Russia, bypassing Ukraine, would end worries over supply disruptions. 

Sofia reluctantly complied with an EU decision to halt work on South Stream. However, under the former government of Prime Minister Plamen Oresharski, progress on the project quietly continued. Immediately before the government resigned in July, the Bulgarian press reported that state owned Bulgaria Energy Holding was preparing to make a decision on a €620m loan from Gazprom to finance the pipeline's construction. This was nipped in the bud by President Rosen Plevneliev, who said on July 22 that all activities related to South Stream should be suspended pending an agreement with the EU. 

Related Articles

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

EU, US partly suspend Belarus sanctions for four months

bne IntelliNews - The Council of the European Union (EU) has suspended for four months the asset ... more

bne:Chart - CEE/CIS countries perform particularly well in World Bank's "Doing Business 2016" survey

Henry Kirby in London - Central and Eastern Europe and the Commonwealth of Independent States’ (CEE/CIS) countries performed particularly well in the World ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.