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Nikolay Pavlov: The supply of natural gas from Shah Deniz 2 is of priority importance for Bulgaria

How do you assess the significance of the Southern Gas Corridor project for Bulgaria and for Europe’s energy security in general? What are your expectations from the meeting of the Southern Gas Corridor Advisory Council to be held in Baku on February 23?

Minister Pavlov: Ensuring security of gas supply is one of the key priorities of the European Energy Union. Bulgaria and the EU are actively working on the diversification of sources and routes of gas supplies, which will ensure the implementation of this priority.  In this regard, the Southern Gas Corridor is a project of strategic importance for both Bulgaria and the entire region of South-East Europe that will provide energy security for the EU. Our country has supported this project since its initiation. Azerbaijan is not only a major gas source, but also a key factor enabling the realization of the Southern Gas Corridor.

I must underline that Bulgaria and Azerbaijan enjoy excellent partnership, especially in the energy field. An expression of this partnership is the contract concluded between Bulgargaz and SOCAR for supply of 1 bcm of natural gas per year from Shah Deniz 2. This gas will be delivered through the Southern Gas Corridor, namely: the South-Caucasus Pipeline, TANAP, TAP and the Interconnector-Greece-Bulgaria (IGB) to our country.

At the forthcoming meeting of the Southern Gas Corridor Advisory Council we expect the countries involved in the project to inform about their progress regarding the above-mentioned projects, i.e. the development of the second phase of Shah Deniz, the expansion of the SCP (SCPx), the construction of TANAP and the ongoing activities related to TAP. On the Bulgarian side, we are going to present the significant progress in the IGB and the development of other Bulgarian interconnectors: the commissioning of the interconnector Bulgaria-Rmania (IBR) at the end of 2016, the interconnector Turkey-Bulgaria (ITB) and the interconnector Bulgaria- Serbia (IBS).

Azerbaijan’s State Oil Company (SOCAR) has sent a request to pump its gas through Interconnector Greece-Bulgaria and participated in the market test. How do you assess the results of this market test and SOCAR’s participation in this project in general?

Minister Pavlov: On 30 November 2016 the second binding phase of the market test for capacity allocation of the interconnector Greece - Bulgaria was completed.

We are satisfied with the outcome of the market test showing increased engagement and growing market interest in the project, and this in turn is a factor for its successful implementation.  The company responsible for the implementation of the project “ICGB” will continue to provide shippers with conditions for access to the pipeline capacity and an equal and non-discriminatory treatment of all existing and future partners. The participation of SOCAR in the capacity allocation market test for IGB is an expression of the strong confidence in the development of the project and its key role in the realization of the Southern Gas Corridor. In addition, I would say that this is an expression of the expected development of the gas markets in Bulgaria, South East and Central Europe, i.e. through the diversification of sources and routes of gas supplies. We highly appreciate the participation of SOCAR in the market test as a further proof of the long-term strategic energy partnership between Bulgaria and Azerbaijan.

What are the prospects for SOCAR’s participation in the project for expansion of the underground gas storage Chiren in Bulgaria?

Minister Pavlov: Currently Bulgartransgaz performs activities relating to two different projects, which will render Chiren underground gas storage (UGS) modern and meeting the standards and requirements of the European Union. The first project concerns the modernization of the storage, which will improve the daily flows of natural gas to levels of 5 mln. m3. The expansion of UGS Chiren is the second ongoing project of Bulgartransgaz EAD. The expansion consists of a phased increase in the storage volume — larger volumes of stored gas, increased gas pressure in the tank, greater flow rate of daily injection and withdrawal. The project plans an increase of working gas volume of up to 1 bcm and increase in the flow rate of daily injection and withdrawal up to 8 -10 bcm per day.

In the framework of the first campaign for receiving project proposals under the Connecting Europe Facility, Bulgartransgaz EAD has applied and obtained co-financing to carry out 3D filed seismic surveys in the area of Chiren structure. We expect to hold the tenders for supply of the equipment in 2019 and construction works to start after 2020.

Public procurement procedures under the Bulgarian law will be launched for the implementation of these activities. We welcome the participation of as many companies as possible in these procedures. The participation of SOCAR there would be an expression of evaluation by our partners from Azerbaijan to the feasibility of this project, as well as a real area for enhancing cooperation between our countries in the field of energy.

SOCAR has expressed intention to enter Bulgaria’s oil products market. Are there any negotiations on this? If yes, then at which stage are these talks? If not, then how do you assess this initiative?

Minister Pavlov: A few years ago, SOCAR examined and discussed with the Bulgarian party the opportunities to enter the market of petroleum products in Bulgaria. We support the entry of new players in the petroleum product market, because this will increase competition and will have a beneficial impact on fuel prices and services provided.

What are the ways of further developing the energy cooperation between Azerbaijan and Bulgaria?

Minister Pavlov: Bulgaria greatly values the partnership with Azerbaijan in the area of energy.  As I have already had occasion to mention, a concrete expression of this partnership is the contract between Bulgargaz and SOCAR for the supply of 1 bcm natural gas per year as of 2020 from Shah Deniz 2. For us, this supply is of priority importance since it will cover around one quarter of Bulgarian gas consumption to 2020.

National gas companies on both sides will also work to carry out joint gas supplies to potential users in other countries of the Southeast European region through the Bulgarian gas transmission network and the currently built interconnectors. Another area of our energy cooperation could be SOCAR to enter in the gas distribution in the country and in the market for petroleum products too.