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Revithoussa LNG

  Last week the Bulgarian PM inspected work progress at the Interconnector Greece-Bulgaria, noting that it is a landmark project for energy security in the region. Two days later, he flew to Thessaloniki to meet the Greek PM and the US ambassador to Greece, repeating praise for Greek-Bulgarian cooperation in the energy field and commitment to buy more LNG.   DEPA, Kolmar, and the Bulgarian company Energiko have managed to import partial or fully LNG sourced gas into Bulgaria via the Greek terminal at Revithoussa. Due to outdated regulatory practice and lack of liberalization of the gas market, the margins between the “buy” and “sell” prices have been collected by the traders, including Bulgargas. Lower international prices of gas have failed to reflect into a proportionate decrease in gas prices

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lng_vessel

  The effect of LNG and newly sourced gas in the Southern Gas Corridor will spread across the CEE and the SEE and put the heat on Russia’s gas monopoly. In other words, if hidden and overt preferential treatment for Gazexport is revoked, this will result in lower prices or market shares for the incumbent monopoly. Reverse supplies via the Trans-Balkan Pipeline could start as early as January 1st, 2020, bringing gas from Turkey, Greece, and the Southern Gas Corridor to clients in Romania, Moldova, Ukraine, and Slovakia even before Turk Stream gas crosses the Bulgarian border.   Demand for Nord Stream-2 south and eastbound gas exports via Opal and Eugal gas pipelines should wane with lower price differentials amid rising competition from the Southern Gas Corridor and LNG.  

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Ukraine-Russia-Pipelines1

  Loss of Ukrainian gas transit does increase the risk of military conflict.     In October 2013, I came across an anonymous blogger’s note about Russia forming a separate air assault brigade to stop shale gas development in Eastern Ukraine [1]. It was several months before the Ukrainian revolution of 2014 [2], and I dismissed the news as fake. However, after the start of combat activities in the Ukrainian provinces of Donetsk and Luhansk, the note made a lot of sense.   Coincidentally or not, the gas supply system of Gazprom was ready for the war in Ukraine.  For many years Rostov-on-Don and two more provinces of Southern Russia were receiving gas through Eastern Ukraine. In 2007, Gazprom commissioned a bypassing pipeline enabling “to directly supply gas to Russian

This entry was posted in Bulgaria, Europe, The Region and tagged , , , , , , by Mikhail Korchemkin.

About Mikhail Korchemkin

Dr. Mikhail Korchemkin is the founder and managing director of East European Gas Analysis, a consulting company that specializes in cost-benefit and financial analysis of natural gas projects in the former Soviet Union. His previous experience includes performing numerous feasibility studies for the USSR Gas Ministry, predecessor of Gazprom. Prior to going into full-time consulting Mikhail taught at the University of Pennsylvania. He has also had visiting scholarships at Harvard University and Erasmus University in Rotterdam. Mikhail has consulted numerous corporate and governmental clients including ABN-AMRO Bank, Amoco, BP, British Gas, Chevron, Conoco, Ernst & Young, ExxonMobil, Gas Strategies, Gasunie, Neste Oy, Osaka Gas, OTA of the U.S. Congress, Ruhrgas, Shell, Statoil , Swedegas, Total, Vattenfall and The World Bank. He has acted as expert witness in arbitration cases concerning natural gas business in Russia and Eastern Europe.
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gasprom-bulgargaz

  Last week deputies and members of the Energy Commission voted on the amendments to the Energy Act which launches the Balkan gas exchange, thus pushing the process of liberalization of the gas market. This belated action is due in part to the pressure from the European Commission as Bulgaria remains a blank spot on the EU gas market.   The gas exchange and the trading platform are a key element in the overall concept of the Bulgarian gas hub, the crown jewel in the efforts of the Bulgarian government in the gas sphere over the recent years.   The liberalization of the gas market is closely related to the existence of a trading platform and the goal of attracting sufficient gas liquidity for distribution through the “hub”.   The

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lng_vessel

Sorry, this entry is only available in Bulgarian.

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gasprom-bulgargaz

  Bulgartransgaz has been noticeably absent from the public debate around the fate of South Stream-turned-TurkStream-turned-Balkan Stream, a project than can be summed up with the lone common denominator, ‘Borissov’ Stream.   Consider the arguments. We are told that the TSO, Bulgartransgaz, is facing an existential threat – bound to lose money as Gazexport dries up transit via Ukraine and consequently via Bulgaria. That is a valid argument insofar as there is no alternative or plan B, and the threat is imminent, credible and verifiable – i.e. gas transit cancellation via Ukraine is a given. Yet both hypotheses are speculative in varying degrees.   Since January 21, 2019, Gazprom and Naftogaz have been negotiating, with the help of the European Commission, a new ten-year gas transit contract through Ukraine. The

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GAZ 1

  The first non-binding phase of the market test for the capacities of the floating LNG terminal in Alexandroupolis has generated unexpectedly high demand – more than 12 billion cubic meters in bids, which is more than double the FNLG’s planned capacity of 5.5 billion cubic meters. Twenty companies submitted intent to book capacity.   In the next binding phase, the digits for capacity take-up will fall significantly, yet the message from the LNG gas market could not be more unequivocal – gas traders trust they can offer competitive prices for natural gas and gain market share in Southeast and Central Europe. In other words, they are confident that gas from the global LNG market can compete with Gazprom’s pipeline gas for the cash of customers.   Another important deduced

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lng_vessel

The article first published in instituteforenergyresearch.org on 12/14/2018.   On Oct. 17, 2018, Poland’s largest energy company PGNiG signed a contract with two American LNG companies to deliver up to 1 million tons of gas each over the next 20 years. It is the first large U.S. LNG contract in Eastern Europe, and it won’t be the last. Indeed, it is very likely that American LNG companies will become major suppliers to Eastern Europe in the near future.   There are a number of reasons for this, both politically and economically. It is, of course, well-known that oil and gas exports, and particularly the latter, have long been used by Russian rulers as political weapons to achieve specific policy objectives—more often than not directed against Western interests. So none of this