Bulgargaz to lower gas prices by about 9% as of January

Bulgargaz JSC is to offer the State Energy and Water Regulatory Commission (SEWRC) a 9% reduction in the wholesale price of natural gas for the first quarter of 2013, announced the head of the company Dimitar Gogov, adding that a proposal, containing the exact scope of the price change, will be filed with the regulator at the start of next week. The price cut was made possible by the new contract for gas supply Bulgaria signed with Gazprom in November, marking significant concessions by the Russian company. Gogov predicted that, in 2013, total consumption of natural gas will stay roughly unchanged from 2012 at about 3 billion cubic metres.

Having finally agreed the terms of the new contracts with its corporate clients, Bulgargaz will start signing one- and two-year contracts as of Friday, Gogov said. The ideal case is for the contracts to be finalised next week, since, by the end of the year, Bulgargaz has to place its order with Gazprom for gas supply in 2013.

In order to make certain that gas supplies are paid on time, Bulgargaz has included a contract term stipulating that clients have to pay for what they have ordered for the month at the start of the period or a few days after the current month is finished, in which case a bank guarantee should be secured beforehand. Similar conditions were negotiated between Bulgargaz and Gazprom, Gogov said. Firms will be required to pay for ordered but eventually not purchased supplies of natural gas only if Gazprom makes similar demands of Bulgargaz at the end of that same year. Such a scenario is unlikely to play out in 2012, added the head of the Bulgarian energy company. The more complicated question arises when, usually during the winter period, firms end up needing more natural gas than they have ordered. In this case, Gazprom could demand a higher price, which will force Bulgargaz to do the same.

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