Bulgaria proposes bill for setting up a gas exchange market

Bulgaria

In line with last year's amendments to the Bulgarian Energy Strategy, which calls for the establishment of a Bulgarian gas hub, and following recent discussions between the Energy Commission with the Bulgarian Parliament, on June 19 lawmakers suggested amendment to the Energy Act, creating a Bill that is now going through the house.

The aim of this Bill is to introduce:

  • a transition from a price-regulated gas market to freely negotiated gas prices in compliance with the rules for trade with natural gas; and
  • a single license for organising the gas exchange market for the entire country.

In drafting the Bill, lawmakers focused on de-monopolising the market and stimulating competition within it. This is to be achieved by creating a single trade platform where deals are forged with freely negotiated prices based on rules for trade with natural gas approved by the Regulator. Rules will also be set to determine which deals should be made on the gas exchange market and which deals can be concluded directly.

For example, according to the Bill, producers, gas storage operators, LNG facility operators and clients, are permitted to freely negotiate prices and deals on the organised gas exchange market. The same goes for the public supplier when it is supplying liquidity volumes, buying volumes beyond what was contracted (by the date the Bill enters into force) or is concluding a natural gas sale that is not related to the public interest. 

Gas will not be sold on the exchange market if the deal is based on regulated prices. 

The Bill also allows producers and clients (including foreigners) to connect through direct gas pipelines and do deals on the volumes running through these pipelines as long as the deal is concluded on the gas exchange.

As for other provisions of the Bill, gas producers should offer at least 25% of their production on the gas exchange. The public supplier must offer 35% of the gas consumed during the preceding year on this exchange until 2024. End users and suppliers consuming more than 300 GWh of natural gas must buy certain volumes for their needs (25% until 2024, calculated by the volume purchased the preceding year) directly from or through a trader on the exchange.

In certain cases, the public supplier must be able to execute deals on freely negotiated prices, such as when it is operating as a supplier of liquidity volumes.

Parliamentary commissions will review and comment on the Bill. Afterwards, it will be voted on for the first time as a whole. Following the first vote, proposals for changing separate provisions may be made within seven days.

For more information on this Bill and opportunities in Bulgaria's energy market, feel free to contact one of our local CMS experts.