Natural Gas Price Dropped to levels of 2010

EWRC issued a decision about natural gas prices valid since 01 April 2015

With a decision “Ц-13” of 30 March 2015 EWRC set the price of natural gas at 523.72 BGN/1000 Nm3 for the Public Provider (PP) Bulgargaz, valid since 01 January 2015, being a decline of 13% compared to the first quarter of 2015.

After their historical peak of 733.23 BGN/1000 Nm3 in 2012, natural gas prices have a downward trend for the last two years, corresponding to the trend of liquid fuels prices, but a with a delay of several months. With the current decision the price of natural gas drops to the level of end 2010.

Total natural gas amount to be supplied by Bulgargaz-PP, ordered through contracts in the second quarter of 2015, is 632 812 km3 – 96% import and 4% local production respectively.

According to data, provided by Bulgargaz, natural gas prices of import and local production contracts vary downwards, respectively:

of OOO „Gazprom Export” contract for purchase of natural gas – by 20.59%;
of natural gas purchase and sale contract between “Bulgargas” EAD and “Petroceltic Bulgaria” EOOD – by 14.29%.

According to Bulgargas, in the second quarter of 2015 natural gas supply prices will be partially under the influence of the alternative to the natural gas fuels on international markets – heavy fuel oil with a sulfur content of 1% and gasoil with a sulfur content of 0.1%.

In the opposite direction forming the prices of the Public Provider in the first quarter of 2015 the following factors have an influence:

higher calorific value, which results in additional payment of over $8/km3, in accordance with natural gas supply contract
higher exchange rate of BGN to USD by 7.63%, compared to the one approved by EWRC for the transitional pricing period.

Public Provider price is formed by the following components:

1) Price of natural gas at the entry of the gas transmission network

EWRC decides, that the natural gas price at the entry of the gas transmission network is 489.26 BGN/1000 Nm3 and it is calculated as the cost of natural gas purchase is divided to total natural gas quantities for the second quarter of 2015. There is a decline by 15% compared to the previous quarter.

2) Natural gas public provision price

To the natural gas price at the entry of the gas transmission network there is added the public provision price of 9.12 BGN/1000 m3, which drops down by 1.4%, compared to the previous period.

3) Surcharge – recovery of outstanding revenue from previous periods

According to Art. 17 para. 12 of the Ordinance on Natural Gas Price Regulation, in the process of approving of the periodic changes in natural gas prices, if there is a difference found between the forecast and reported natural gas amounts, and the respective provision costs for a previous price period, prices can be adjusted by this difference. In this respect, to the natural gas price at the entry of the gas transmission network, a surcharge of 5.61 BGN/1000 m3 is added.

4) Transmission price

The last element included in the composition of the marginal price of natural gas is the transmission price, which remains unchanged and is 19.73 BGN/1000 m3.