EWRC Decision for Consecutive Decrease of Natural Gas Prices
With a Decision „Ц-4“ of 31 March 2016, EWRC set a natural gas price for the Public Provider “Bulgargaz” EAD effective from 01 April 2016 at 312.21 BGN/1000 Nm3, being a decline of 40%, compared to its level of April 2015.
Natural Gas Price of the Public Provider “Bulgargaz” EAD
Natural Gas Marginal Sale Price of “Bulgargaz”, BGN/1000 Nm3
Prices continue to follow a clearly defined downward trend for the fourth consecutive year after the historical peak of 733.23 BGN/1000 Nm3 in July 2012. As a result of the current decision the natural gas price drops to the levels of 2006-2007.
Total natural gas amount to be supplied by “Bulgargaz”-PP, ordered through contracts in the second quarter of 2016, is 680 076 km3 and the whole quantity will be supplied by OOO “Gazprom Export” in accordance with the contract clauses. No forecast quantities of natural gas to be purchased from a local production company are requested by “Bulgargaz” EAD for this period.
According to data, provided by Bulgargaz, the following factors had a downward influence over the natural gas prices:
- Lower prices of alternative to natural gas fuels, namely decrease of 22% of the prices of heavy fuel oil with a sulphur content of 1% and decrease of 17% of the prices of gasoil with a sulphur content of 0.1% during the last 9 months.
- Lower prices according to the contract for purchase of natural gas with OOO “Gazprom Export” – by 19% on average.
- Lower BGN/USD exchange rate by 1.32%, compared to that approved by EWRC for the previous price period.
The prices for the second quarter of 2016 of the natural gas supply contract between OOO “Gazprom Export” and “Bulgargaz” EAD are calculated from the company at a calorific value of 8240 kcal/Nm3. The Public Provider notes that natural gas calorific value also influences supply prices. For comparison, in the first quarter of 2015, the calorific value of the natural gas is about and above 8200 kcal/Nm3 and in the second quarter of 2015, it increases. In the current year, the trend of the calorific value is an upward one. Therefore, the Public Provider estimates that the calorific value of natural gas will remain around 8240 kcal/Nm3 in the second quarter of 2016 and the company will pay additionally about 4.5USD/1000 Nm3 for the increased calorific value of the supplied natural gas, in accordance with requirements of the supply contract. As per the clauses of the 2015 EWRC Decision for the prices of the natural gas, the additional calorific value is paid at prices between 7,5 USD/1000 kcal/Nm3 and 8USD/1000 kcal/Nm3.
The Public Provider price is formed of the following components:
1) Price of natural gas at the entry of the gas transmission network
The regulator approves that the price of the natural gas at the entry of the gas transmission network is 285,69 BGN/1000 m3 and is calculated as the costs for purchasing natural gas are divided on the forecasted total quantities of natural gas for the second quater of 2016.
2) Natural gas Public Provider services price
To the natural gas price at the entry of the gas transmission network there is added the price of the services of the Public provider of 6.79 BGN/1000 m3, which drops down by 2%, compared to the first quarter of 2016.
3) 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.
