At a round table discussion organized by Utilities Magazine, “Exchange trading with natural gas”, followed by an article in 3e-news, the chairman of the Bulgarian Association Natural Gas, Svetoslav Ivanov raised key issues related to the regulation of the gas price, the infrastructure and the gas release program.
For regulating gas prices and trading on the exchange
The chairman of the Bulgarian Association Natural Gas, suggested to the regulator that it is time to abolish the regulated prices:
“It is impossible to overlook the fact that the regulated (natural gas) price in Bulgaria is already a benchmark. I can support this statement with two specific facts. First, all (or at least everyone I`m familiar with) bilateral gas supply contracts are a function of the regulated price. Second, at the end of last year, the public provider (Bulgargaz) informed its customers with contracts on freely negotiated prices that the price under these contracts would be equal to the regulated price”, Ivanov said.
“These two facts give a very clear idea that the regulated price of natural gas in Bulgaria is 100% benchmark of the daily transactions,” he explained. Svetoslav Ivanov was clear that there were already enough factors for competition, which means that there are no circumstances for setting a regulated price for gas According to him in the Energy Act is stated that gas prices are subject to regulation until the regulator finds that there are sufficient factors for competition.
Under the Natural Gas Release Program
“I will not miss a few constructive criticisms of the (Gas) Release Program that is launching. It is, to me, a “kind of hybrid” between a regulated and an unregulated market. I will mention one specific argument, “he said, not omitting the benefits of the already registered 22 participants on the gas exchange and stressing that “the market is obviously developing “.
“There is an impression that there is only a side in the Agreement to participate in this program. There are no responsibilities from the other side. The price of the first auction, which was conducted under the Gas release program at the beginning of December, if you open the invoices of the suppliers, you will see that the achieved price is higher than the regulated one. For example, no one can answer the question why expenditures for the public interest should be included as an element of cost in the program. I do not see any motive for anyone to participate in this kind of trade, if he will simply record losses from this activity, “said Svetoslav Ivanov.
For gas as a resource, demand and infrastructure
“The demand for natural gas in Bulgaria to date is in about 3 billion and 200 million cubic meters, depending on the weather conditions it is plus/minus 10%. A modest enough number – the least demand among EU member states in the region both in absolute numbers and as a per capita indicator”, he said.
“The second thing to say is that nearly one quarter of the population or less than one quarter is insolvent. Third – this market has seasonal variations. Currently, the use of the instrument to regulate this seasonal irregularity is the underground gas storage (UGS Chiren). It is being used mainly by one dominant player on the market, “Svetoslav Ivanov outlined the situation.
“Last year, access to the LNG terminal in Greece, the only one existing so far in that country, was distributed among several Greek companies, given that the interest was extremely high, including from Bulgarian companies as well as from international ones. So this should give us absolutely no rest”, the expert said.
“I would like to remind you of an existing problem on the market, which we can also be associate with exchange trading, as it concerns a particular feature of the Bulgarian gas infrastructure. About one-third of the gas consumed in Bulgaria, which, respectively, is carried through the gas transmission infrastructure, after leaving the infrastructure points, enters into pipelines that are of unknown ownership – the so-called “grapes”. Why is this a problem related to exchange trading? Because, put yourself in the place of an end consumer who wants to buy (natural gas) directly or through a gas trader. You, I assure you, have a very serious problem in organizing the delivery at optimal costs without facing problems. This has to do with the peculiarities of Bulgarian reality that do not exist in Romania or Greece”, he said.
The question is not where we are on the gas map of Europe in terms of transit. The achievements there are obvious, but many years ago Bulgaria set criteria for increasing the domestic gas supply by 30%, and still there is no increase.
Source: 3e-news