THE BALKAN GAS HUB - A
REALITY CHECK
Ilian Vassilev, August 24th, 2017 BulgariaAnalityca
Quod
licet Jovi, non licet bovi
The Balkan Gas Hub – the Russian paradigm
The Balkan gas hub has become synonymous and in many ways
a substitute for Bulgaria’s energy policy in the field of natural gas. In order
to avoid speculating about the concept’s different variations, hereinafter is
the official project draft, as presented by the national TSO, Bulgartransgaz,
with a price tag above USD 2 billion.
Although this might not be the latest update, as it does
not fully accommodate developments from Turkish Stream, the map is a fine
departure point for an analytical exercise, explicitly demonstrating the
virtues and the shortcomings in the conceptual design and implementation phase.
The
key question is – what does Bulgaria strive to achieve?
To begin
with, the country’s energy policies should not be exhausted with the overriding
perception that Bulgaria’s role should be confined to mediation of others
countries’ plans to transact with energy resources, focusing on a short segment
in the mid and mostly downstream of the gas industry, ignoring the upstream and
a range of opportunities in gas-fired power generation, chemical industry,
transport and trade.
Ab
initio, state institutions are tasked with securing basic consumer gas demand
at competitive and affordable prices. No one expects the state to prioritize
doing business with gas and earn profits trading energy via state-owned
companies (SOEs). This should transpire
as the red thread in the governance philosophy in the area of natural gas –
encourage competition between suppliers, supply routes for a liquid and
functioning gas market and provide ample choices to consumers at all times.
The fact
that natural gas trade is more important than transit is further testified by
the respective financial flows implied – below $100 million for
Bulgartransgaz’s (BTG) transit business and between $0.6 and $1.4 billion in
gas imports by Bulgargaz. The direct and indirect benefits for public finances
from transit and trade proceeds also trail an identical pattern. This has
little relevance to the asset base – as BTG’s assets are worth more – not that
trade can happen without transport. But it is a fact that once infrastructure
reaches a critical point of minimal capacity sufficiency, adding new
infrastructure against lowering occupancy rates, engaging in capital-intensive
billions of euro investment programs, projects become exponentially riskier and
less bankable.
That’s
why the Balkan Gas Hub (BGH) is worth a preliminary bird’s eye overview and a
“reality check” – juxtaposing conceptual metaphysics with the gravity of market
basics. Moreover, the Bulgarian government, the companies involved and the
public in general deal with a wide range of probables and variables – there are
no fixed contracts and guaranteed revenues for transit and capacity take-up
that warrant planet-stricken project enthusiasm. Sales of gas and transport
capacity add uncertainty shifting from long-term and fixed to short-term and
spot markers.
Let’s
take a look and weigh in the assumptions made that reflect on the project’s
viability.
On the
project inputs – assumptions on quantities.
There is
no chance for a new “stream” of Russian natural gas – 62 billion cubic meters –
coming in directly from the Black sea. Gazexport could in theory change the delivery
terms or threaten to terminate the contract. It should concurrently release
capacity in the TBP. However, this is not a fact yet – all statements made at
political or corporate level in Russia carry no legal weight until procedures
are activated.
Russian
gas for Bulgaria will for the time being continue to be delivered to the point
specified in the supply contract – Isaccea. As for the transit contract –
Negru-Voda via Trans-Balkan gas pipeline (TBP).
Unless
Bulgaria agrees to shift the delivery point of the supply contract – Gazprom
might end up in arbitration court with substantial penalties and loss in market
shares. Releasing capacity in key transit infrastructure invites competition
and alternative shippers. Bulgargaz has strong cards if it chooses to play hard
ball, which is less likely, if it opens up to alternative supplies from
northern and southern routes. Gazexport loses substantial market shares.
Regrettably, the latest exchange between Gazprom and the Bulgarian authorities
alludes to an arrangement where Bulgaria would offer not to contest the shift
in the delivery point in the supply contract to Turkish-Bulgarian border in
exchange for vague promises for hypothetical transit via Bulgarian territory of
15.7 billion cubic meters (on the map above 20 billion) of Russian gas to
Serbia and Romania.
Forecasts
for incoming gas from Turkey, do not perceive any volumes that could par the
current transit of Russian gas through Bulgaria, even if Sofia honors Moscow’s
wishes. Unless Gazprom’s monopoly falls, and the other Russian companies start
making up for the loss of market share and capacity take-up, there is little
chance that the transit of Russian gas via Bulgaria will reach levels anywhere
near the ones indicated in the Balkan Hub chart.
Despite
attempts to present Commissioner Canete’s recent letter as validating the EC’s
consent to allow any quantities of Russian gas to enter the EU in Bulgaria,
regardless of entry points, the reality is somewhat different.
The
problem with securing free flow for Russian gas within the EU is beyond the
command and control of the Bulgarian authorities, well into the domain of the
direct EC-Gazprom dialogue. The European Commission has not passed any final
judgement so far. It will certainly greenlight an interconnector with Turkey to
assist cross border gas flows, helping to create balance in both systems. When
the project talk assumes a mini-Nabucco format, considering mainly Russian gas
and volume levels well above interconnector parameters, nothing should be taken
for granted.
The
Balkan gas hub, in many ways, justifies its own existences on the credibility
of the assumptions on the quantities entering Bulgaria from the east and the
southeast. At the moment when 15 billion cubic meters of Russian gas seek to enter
the EU market at the Turkish border with Bulgaria, then the EU regulations take
precedence and the TPA and 50% capacity cap rule become a must.
There
have been speculations that the gas at Turkey-Bulgaria Interconnector (TBI),
although sourced from Turkish Stream, should not be treated as Gazprom, but
will feature new owners – Turkish companies, EU partners of Gazprom (watch
President Macron’s visit for French ones), even Bulgarian companies. This is
theoretically possible but not probable.
Gazprom
can’t easily swap its national for an EU hat, using its subsidiaries – WIEE,
Wingas, WIEH or European partners in key states. Compliance with EU directives
takes more than place of registration and touches on control.
In the
case of the Turkish stream, Gazprom has made a deliberate effort to relinquish
ownership in its Turkish subsidiaries, serving a strong notice that it is
unlikely, at least for the moment, to allow Turkish, Greek or Bulgarian
companies the same right it has awarded German and French companies in Nord
Stream to broker its gas in the Turkish stream.
„What
is permissible for Jove is not permissible for the bull“
We
should make a clear distinction when referring to regulatory compliance and the
‘greenlight’ in Commissioner Canete’s letter between the import of Russian gas
for Bulgaria’s own needs – where the Commission would not mind – and the
transit of Gazprom gas destined to the EU. When delivery points for transit
changes from the Romanian-Bulgarian to Turkish-Bulgarian border, the EC regulatory
compliance procedure starts from scratch.
The case
for shifting the delivery point of Gazprom’s 3 billion cubic meters of gas
imports to Bulgaria, reflects the gas mix and the self-imposed 100% dependence
levels on Russian gas. Sofia could easily translate this into arguments for
exemption from the capacity cap and TPA restrictions, citing national energy
security grounds. The transfer of five times larger gas flows, owned by
Gazprom, to Bulgaria’s Serbian or Romanian borders is a somewhat different case.
The
shift in delivery points has already been contested in the letter of the
interim government to the DG COMP at the end of April. The new energy team in
the government of Boyko Borissov has left the door deliberately open.
It is
logical to expect that should Gazprom’s natural gas export monopoly fall, other
Russian gas exporters could step in as ‘third parties’ in the North, Turkish
and Blue streams, making full use of the spare capacities in the transit system
of Ukraine and the TBP. These scenarios should also be accommodated in the
Balkan Gas Hub concept as their probability ratios are in incremental
mode. For now, it seems that the Kremlin
would keep Gazprom’s pipeline gas export monopoly, while allowing Russian LNG
exporter Novatek access the EU market. Things could change – one man decides at
the Kremlin.
The main
question while assessing the virtues of the BGH concept is whether it will use
Gazprom mainly or only pivot in design and planning phase, determining the
investment size, routes, extensions, expansions, etc. in the development plan
of the transit and transit network of the country, or try to balance it off
with a non-Russian paradigm.
Despite
reassurances that gas re-export bans will be lifted, Gazprom officials have
repeatedly stated that they do not plan to use a Bulgarian-based company to
trade gas in the region beyond their short-term excess gas, which might emerge
on their balances. This should come as no surprise. Neither Bulgargaz nor
Bulgartransgaz have demonstrated the will and the ability to build up on their
national champion claim and expand into the regional realm. Both companies have
consistently demonstrated a lack of character, against an overwhelming practice
in CEE, backed by the EC, to seek compensations for gas overpricing by Gazprom
– where the estimate goes above USD 1.5 billion (Bulgargaz) or artificially low
transit tariffs – the underpayment ranges over USD 650 million (BTG). A small
fraction of these geopolitical bonuses, which Gazprom receives on a regular
basis, returns to Bulgaria to ‘oil’ the leniency of the top management and
politicians, sustaining the perception in Gazprom headquarters that “when it
comes to Sofia, anything goes” and “they do not have a capacity to act as
regional partners”.
Gazprom’s
strategic partners in the EU have well established trading networks and client
base across Europe, including the CEE region. Bulgargaz has not sold a single
cubic meter of gas outside the country. How credible could be its potential
pledge to Gazprom that it could safely trade all or part of the 15 billion
cubic meters of Russian natural gas that BTG could help transit from the
Turkish border?
This is
a key assumption for the BGH team when trying to sift the content for
substance. The other option is for Bulgaria’s domestic gas demand to grow to
match the offering – which is unlikely.
Unless
some of the EU majors agree to consolidate regional market demand in SEE and
partner with Gazprom, Turkish Stream’s extension into the EU seem implausible,
hence the Balkan Gas Hub project would be perceived as unrealistic with the
dominance of Gazprom gas.
The Balkan Gas Hub – a bridge or
barrier to the Southern Gas Corridor?
The need
to move beyond the Balkan Gas Hub “Russia-only” or “Russia-mainly” paradigm
seems indispensable if the ‘hub’ project – in the broad sense – has any chance.
The talk
of billions of cubic meters of natural gas from non-Russian sources deserves a
serious look to the north, but mostly to the south – The Southern Gas Corridor.
The
likelihood of non-Russian gas emerging both at the Bulgarian borders with
Turkey and Greece is both imminent and substantial, yet is seems unaccounted
for in the BGH scheme. Azeri, Iraqi, Israeli, Egyptian, Cypriot, Qatari, US and
any other gas could help balance off regional demand and compete with
Gazexport, but could concurrently help Russian gas accommodate the 50% capacity
cap or third parties access requirements. Such quantities should first emerge
in Turkey, then be redundant in order to seek exit and transit routes to Italy
via TAP or appear at the Bulgarian-Turkish border bound for the northern
routes.
The fact
that the Azeri SOCAR and Bulgartransgaz have entered into a cooperation
agreement should not be overlooked – Baku does not have additional spare
quantities of natural gas above those declared by Shah Deniz – 2. Analysts draw
attention to the import of Russian gas in Azerbaijan, which seems essential in
freeing quantities from the domestic market for export contracts.
The
assumptions on the project map of the Balkan Gas Hub for locally produced Black
Sea gas inputs are too speculative to be considered. In the Khan Asparuh block
there is not yet to a second well, which is expected to be drilled in October.
In the Silistar block, Shell is still evaluating seismic data – again a long
shot before anything could be assumed.
If we
test the viability of the Balkan Hub as a commercial project, the first and
foremost condition would be to engage in a full set of feasibility studies –
market, financial, economic, commercial, legal, technological, etc. Once a
financial model has been prepared and the deal gets a structure, then judgments
can be passed. Not now.
The
Balkan Gas Hub project has been developed as an in-house work within
Bulgartransgaz, without the involvement of external independent consultants or
investors.
Similar
assumptions to the ones made in the BGH map above could hardly find place in a
professional report, without a clear argumentation base and indicated sources.
The
project presentation begs a serious investigation of the non-Russian
alternative to feed the Balkan Gas Hub.
To start
with, there is a genuine chance to load up and utilize the direct and backhaul
capacity of the Trans-Balkan gas pipeline with gas produced in Romania’s
offshore area, and the 2 billion cubic meters indicated seem more than
credible, even modest. One needs to incorporate into the potential supply base
of the BGH the excess gas that could emerge in the gas systems of Slovakia,
Ukraine and Romania after 2020, which might seek clients in Turkey and along
the TAP.
The gas
arriving in the BGH from Greece alone is not specified - LNG or pipeline, yet it could easily
exceed 3-4 billion cubic meters, mainly via the IGB. Moreover, more than half
of the fixed direct and reverse capacity of the interconnector has been booked.
There is not a word on that in the Balkan Gas Hub illustrative map, nor on the
major source for fresh gas liquidity from the new LNG terminal at
Alexandroupolis.
Key
shortcomings of the Balkan gas hub project include the absence of a market test
and its static and schematic nature. The concept does not account for dynamic
shifts in the gas market and infrastructure developments, driven by demand,
rather than supply. In its present format the Balkan gas hub project is Gazprom
biased, not neutral to the diverse alternative options for gas flows and
traders. The BGH has been carefully calibrated mainly and almost exclusively to
service Gazprom and its attempts to retain market shares in the CEE gas market.
There is
a huge loophole in identifying the potential sources for substantial gas flows
to Bulgaria and via the Balkan gas hub from the Caspian Sea, the Middle East,
the Eastern Mediterranean and the global liquefied natural gas market to the
CEE region.
Developments
plans and investments in the Bulgarian gas transmission system should not be
driven by the idea to serve any exclusive supplier or trader. The BGH project,
judged against the backdrop of projected additional capacity of 120 billion
cubic meters for transmission in Europe by the year 2023, with declining
occupancy rates for current transmission and transit capacities (around 40
percent), invites a troublesome conclusion
– that project grandeur often ends up in heavy losses and unredeemed
investments.
Another
potentially critical weakness of the Balkan hub project is that there is no
relevant Bulgarian gas company that could feature an expanding and diversified
business geography and gas services portfolio, functioning as a genuine
regional-scale player that could undertake the role of a project anchor and
consolidator. On the contrary, Bulgargaz is further bound to lose market share
and reduce traded volumes and remote interest in the hub idea.
Even one
billion cubic meters per annum gas purchase under the Shah Deniz-2 contract
presents a challenge for the company’s management.
It is
hard to conceive how Bulgargaz could play a significant role as a business and
market maker for the gas hub “Balkan.”
The
BTG’s idea of an isolated transit pipe serving Russian gas as an extension of
Turkish Stream into the EU, crossing Bulgaria without connection to the
transmission or transit network in Bulgaria is absurd and implausible.
Bulgaria’s
national gas champion – Bulgargaz – is the only gas supplier in the SEE that
sees no other role for itself beyond the classic routine – one supplier, one
contract, one route – which in time, will inevitably lead to the company’s
self-marginalization.
BTG’s
argument that Bulgaria should invest for the hub’s sake, driven by a vision and
an insight to attract future gas flows by the allure of a wide range of
services and capacities, sounds not only superfluous, given the company’s track
record in managing projects and success in attracting non-Russian gas clients,
but dangerous, as these investments serve as an expense base when determining
high tariffs.
Investments
in interconnectors have been dragging on for years, with the saga of the
‘eternal’ laggard – the Chiren UGS expansion – inspiring even less confidence.
Bulgaria
has been slow to develop and introduce a trading platform for short-term gas.
In general the TSO is behind schedule with everything that constitutes the soft
infrastructure of the Balkan gas hub, especially in comparison with processes
in neighboring countries.
The
planned investments in the development of the gas transmission system and the
new connections with the Romanian gas transmission system at Oryahovo are
necessitated by the push to resurface the South Stream project with Russian gas
under one form or another.
Unless
the authorities are secretly breastfeeding a new darling to replace Bulgargaz
directing cashflows via inflated projects costs, there is no logic to stake
over € 2 billion on speculative schemes without market verification.
The
argument that we need to invest “to boost capacity” — given that our
transmission system has a lot of unused capacity, that there are no built-in
and functioning interconnectors with any of the neighbors, that there is no
expanded gas storage in Chiren USG, and especially that there is no real
trading platform that offers gas outside Gazprom’s terms — is a sure sign of
future losses and especially of a lack of direction.
BTG’s
pride – the bidirectional gas compressor stations (GCS) – are essential for
short-term trading with direct or reverse flow capacities trailing fluctuations
in gas demand. However, in parallel to the demise of long-term fixed contracts
and the declining security of revenues, excess or underutilized capacity in
compressor stations can easily become a liability, since there is no demand for
these services or income from the business from which to recover investments.
And these developed and fixed operational costs at low occupancy rates again
end up in higher earnings projections, i.e in higher tariffs applicable only to
Gazprom’s competitors.
Without
securing a backhaul or reverse flow capacity via the Trans-Balkan Pipeline at
Negru-Voda (fixed reverse capacity is not offered) Bulgartransgaz will
effectively dump the chance for any significant quantity of gas originating in
the Southern Gas Corridor to reach markets in the CEE, as the only ‘option’
would be the low-capacity interconnector at Rousse-Giurgiu.
Bulgartransgaz
has yet to master the necessary skills of corporate governance, needed to make
the Balkan gas hub a reality. With projected earnings of just over € 140
million and a roughly identical record for project scale involvement, the
company will hardly convince banks and clients to manage or provide funding for
a project over two billion euros. Suffice to allude to the recent looping
Lozenetz-Nedyalsko with net cost (without land alienation and permits) of 51
million leva for 20 km for 3 years!? These costs ultimately are covered via the
customers.
After
October 1st, the system operator, BTG, will replace the post stamp with the
entry-exit tariffs system. Although the regulator still approves the company’s
annual business plan and earnings, the level of tariff rates, including all
additional service charges, will be determined by the TSO at its discretion in
accordance with a methodology approved by the regulator. This makes possible,
in view of the company’s history, the discrimination between entry and exit
tariffs at different points in the gas system, including reverse and reverse
flows. Changing the tariff model entails a reciprocal shift in tariff structure
with a higher share weight for short-term, three-month and one-month tariffs,
which are more expensive. Against the backdrop of rising fixed costs on lower
occupancy rates, higher tariffs may be a serious impediment for new shippers.
Higher
entry tariffs for gas imports via interconnectors or on reverse routes from
Turkey or Greece via Siderokastro Kulata or Lozenetz-Kirklareli can easily
discourage gas flows from the Southern gas corridor to the north, including LNG
via the terminals and through the interconnector Greece-Bulgaria (at an entry
point in Stara Zagora), which could seriously undermine their economic
viability - especially in the absence of free capacity and sustainable back
flow in TBP.
According
to BTG, after October 1, when the new entry-exit system will come into effect,
the new system will not apply to Gazexport.
The transit of Russian gas will continue to be
subject to the terms of the old contract and the old tariffs. On a cumulative
basis, BTG provides Gazexport with a non-market advantage of a minimum of 12
dollars per thousand cubic meters, and this is just on the territory of
Bulgaria at the expense of Bulgargas, the Bulgarian customers and all other
shippers and traders, which get charged more. This is difference in the access
and transmission costs for gas entering Bulgaria via Siderkastro-Kulata for any
shipper and the transit charges for Gazexport gas.
BTG’s
approved annual earnings are BGL 277 million, which is roughly Euro 140
million. The share of earnings from Gazexport for booking 17 bcm transit
capacity is roughly USD 111 million. The 8.5 % depreciation of the US dollar
denominated transit tariff rates has effectively shrunk the Russian transit
proceeds in the last year in the BGL earnings base of BTG – which is approved
by the regulators – by BGL 18 million. Respectively the transmission system
earnings – that will have to cover the difference in the BTG total earnings
base, i.e. until BGL 277 million approved by the Regulator, will have to be
reflected in the entry-exit tariffs, after October 1, and paid by Bulgargaz and
all other traders and shippers. Whereas the transmission services of BTG had
generated in 2016 only BGL 70 million, in the next ‘gas’ year the figure jumps
to BGL 95 million (a 35% increase!?) on 3 billion cubic meters of natural gas
sold in Bulgaria. While BTG could claim that for annual product – the
cumulative entry and exit tariffs – things won’t change much, shorter term
products – for one and three months – that will be most in demand, the shippers
will take the brunt. The net effect is
that the spread between Gazexport tariffs on one side and Bulgargaz and all
other traders is further widening with the Bulgarian gas users being asked to
pay the bill. All this is garnished with
the usual EU-to-blame verbiage and an almost pious inculcation that BTG is eternally
and intrinsically bound to ’cooperation’ with Gazprom.
These
facts contradict the claims of the Bulgarian government that it is pursuing a
common European energy security policy to protect Bulgarian and EU consumers
and seeks the success of the Southern Gas Corridor.
Natural
gas suppliers and consumers have already interpreted these actions by the
Bulgarian government and the TSO as a deliberate attempt to shield Gazprom’s
interest and market shares in the region.
If the
Balkan gas hub ever stands a chance, the policy and the message behind it have
to be altered. Instead of servicing and adapting to Gazprom’s strategy as a
junior partner, BTG should start implementing EU policy – attract and
facilitate gas flows from all possible directions, effectively mediating
between the Southern Gas Corridor and the gas systems of countries in
Southeastern, Central and Eastern Europe, encouraging competition to Russian
gas.
Instead
of succumbing to the political glamour associated with the Balkan gas hub,
efforts should be focused on achieving practical and immediate results –
without much hassle, quietly and gradually substantiating the content of what
is generally understood as a “hub” – high capacity occupancy rates, large
quantities of gas shifted in different directions and high volumes of gas traded
at competitive and affordable tariff rates.
Changing
the tariff model implies a change in the structure, with a higher share of
short-term, three-month and one-month term tariffs, which are more expensive.
And against the backdrop of low occupancy and high fixed costs, the change
could be a serious impediment for shippers.
The
to-do list starts with connecting the Bulgarian transmission and transit
system with Serbia, completing the regional interconnection on the initial
level and gradually upscaling to the level needed.
Second, as it is unlikely that Bulgargaz
will change its management pattern, i.e. by adopting a more expansionist and
independent policy, instead of persisting on acting as a local Gazprom
representative, Bulgaria will need to attract the energy majors in Europe to
provide a corporate anchor or promote the Balkan gas hub project. They could
balance off and serve as a counterweight to Russian gas dominance. Instead of
picking favorites or winners, the government should seek to apply rules and
equal treatment.
Third, the government must accelerate the
liberalization and diversification of the Bulgaria gas market by freeing up
transmission capacities and redefining national interests in the field of
energy security. Instead of providing security of supply through a public
supplier, the mode should be shifted to guaranteeing security through
functioning markets and enhanced competition. The idea of a public supplier of
last source is worn out as the market has long since moved from a state of natural
gas deficiency to sustainable and substantial gas abundance.
Bulgargaz
is trying to tie the hands of consumers by imposing on them ‘voluntarily’
advance booking for gas purchases with
long lead time, which is an antithesis to the liberal market. The government
should simply stop trying to shield Bulgargaz from healthy market competition
and by default protect Gazprom’s interests.
The
Bulgarian Government should speed up any project that leads to material
diversification – from local gas extraction to leasing capacity at LNG
terminals and improved capacity management.
Fourth, the terms of use of the
transmission and transit grid should be harmonized and the exceptions made for
Russian gas immediately revoked as contravening European Law. Gazexport should
not be entitled to guaranteed capacities, while all other companies have to bid
for often limited capacities at auctions, or wait until Gazexport frees up
space in the pipe.
If all
“competitors” of Gazprom have to overpay two or more times for access or
long-term capacity, direct and reverse, both fixed and interruptible, the
market is captured. Gazexport at the moment would pay annually for transport –
access and transmission – to ship gas from Negru-Voda to Bulgaria slightly more
than 9 leva ($ 5.8) per 1000 cubic meters. For any competitors to Gazprom gas
from the entry point in Siderokasto-Kulata, the cost skyrockets to 30 leva
($18.6) per 1000 cubic meters. Competing with Gazprom then becomes a mission
impossible.
In
practice this amounts to unlawful state aid that deprives Bulgarian and other
consumers in SEE and CEE, both individual and corporate, from the benefits of
price competition and the best market terms of trade.
What’s
even more absurd, not only is Gazexport spared due competition by being
exclusively granted the lowest tariffs and guaranteed transmission capacities
through Bulgaria, but the TSO sits idle while the Russian company offers
transit services to its European partners, depriving Bulgartransgaz of
legitimate earnings.
Fifth, the work on bundling, integrating
and harmonizing tariffs and on cooperation agreements between system operators
in Greece, Turkey, Romania, Hungary, Serbia, Ukraine and others is sine qua
non. Preferential treatment, when possible, should be granted on a reciprocal
basis. Arbitrarily high tariffs for transmission by the Greek DESFA – well
above $ 24 per 1000 cubic meters, in practice, kill the competitiveness of
alternative gas supplies originating at the Revithoussa LNG terminal across
Greece to and beyond Bulgaria. This seems odd against the low average occupancy
rates at the terminal and in the transmission system.
Bulgartransgaz
should immediately stop double charging for the use of the transit (backhaul
from Greece) and the transmission systems.
Sixth, Bulgaria could hardly hope to
attract significant gas flows for transit and provide sufficient liquidity as
the gas hub at these low levels of local gas demand. There is a significant
“sleeping” potential for a substantial increase in local consumption through
gas power generation, increased use in the chemical industry and mass
gasification.
The
critical watch list on the Balkan gas hub is probably two or three times
longer.
The
European market slowly but irreversibly moves towards full integration and
harmonization of national gas segments, which would marginalize the notion of
national gas “hubs”.
In gas
trading these days, gas prices could be referenced to relatively remote EU hubs
such as the TTF. Tomorrow the price benchmarks could move even further – across
the Atlantic – to the Henry Hub in the United States. Such processes will
intensify alongside with the globalization of the gas market.
Therefore,
it will be too naive to expect that the Balkan gas hub will ever reach a status
of a regional price benchmark.
Some
things just will not happen, at least anytime soon.
With the
paradigm of serving “only” or “mostly” Russian gas, the Balkan gas hub seems a
fiction. By stubbornly pursuing serving Gazprom’s interests in the region,
instead of becoming a bridge between the South Gas Corridor and the CEE and SEE
markets, Bulgaria might become a genuine barrier. And the EU will not let that
happen.
Уточн
