The Bulgarian Natural Gas Market:

1
The Bulgarian Natural Gas Market The TSOs point
of view
Angel Semerdjiev, Executive Officer,
Bulgartransgaz EAD
30 January 2009, Sofia
2
Development of the gas market in Bulgaria

• 1963
• 1974
• 70 - ties
• 1993
• End
• of 2006
• September
• 2008

• Discovery of Chiren - gas field with limited
  resources
• Transformation of the depleted gas field into an
  UGS
• Construction of the main gas pipeline from the
  former USSR
• to Bulgaria and the national gas transmission
  system
• Establishment of Bulgargaz EAD successor of the
  Oil
• and Gas state owned company.
• Activities production, transportation,
  distribution, storage
• and sale of natural gas
• Unbundling of Bulgargaz in compliance with
  Directive
• 2003/55/EC. Establishment of Bulgartransgaz as a
  TSO
• Establishment of Bulgarian Energy Holding (BEH)
  with

3
Bulgarian Energy Holding EAD

• BEH EAD subject of activities is generation,
  production, transmission, transit, storage,
  management, distribution, sale and/or purchase of
  natural gas, electricity, thermal power, coals,
  as well as any other type of energy and raw
  materials for energy production.
• The Holding includes the following companies
• ? Mini Maritsa East EAD ? Maritsa East 2 TPP EAD
  ? Kozloduy NPP EAD ? NEK EAD ? Electricity System
  Operator EAD ? Bulgargaz EAD ? Bulgartransgaz EAD
  ? Bulgartel EAD.

4
Bulgarian Energy Holding EAD

• With the establishment of BEH, Bulgaria has one
  of the largest energy companies in the region
  with
• assets EUR 4.3 billion
• consolidated revenue EUR 1.8 billion
• number of employees 21 000 people.
• All companies of the holding structure preserve
  their operational independence and licenses, as
  they are all owned and directly subordinated to
  the corporate centre BEH EAD.

5
Present situation of Bulgarian gas market (1)

• Main players
• Public supplier (Bulgargaz) imports gas from
  Gazprom
• (through contracts with three trading companies
  Overgas Inc., Gazpromexport, WIEE)
• TSO (Bulgartransgaz) natural gas transmission
• SSO (Bulgartransgaz) storage of natural gas
• Producer (Melrose Resources) - Galata field
• Five gas distribution regions

6
Present situation of Bulgarian gas market (2)

• One source and one route of natural gas full
  dependence on Russian-Ukrainian conflicts
• Contract for transmission only between the TSO
  and the Public supplier Public supplier holds
  all the contracts with different customers and
  represents their interests - No direct contact of
  the TSO with individual customers, no contracts
  for balancing with individual customers
• Transmission Tariff Post stamp.

7
The licenses of Bulgartransgaz EAD

• The gas companies carry out their activity as per
  licenses, granted by the State Energy and Water
  Regulation Commission (SEWRC).
• SEWRC has granted to Bulgartransgaz the following
  licenses
• License on natural gas transmission the only
  one for the territory of the country
• License on transit transmission of natural gas
• License on natural gas storage.

8
Bulgartransgaz EAD is owner and operator of

• Domestic gas transmission network in
  Bulgaria1700 km of gas pipelines4 compressor
  stations with total installed capacity 60 MW
• Transit network in Bulgaria to Balkan region 945
  km of gas pipelines
• 40-48- 740 km 20-28 - 195 km
• 6 compressor stations with total installed
  capacity 214 MW
• Underground gas storagethe only one within the
  territory of Bulgaria.

9
Gas Transmission Infrastructure in Bulgaria
10
Organizational Structure of Bulgartransgaz

• The structure of Bulgartransgaz EAD includes
  headquarter in Sofia and regional offices in
  Botevgrad, Stara Zagora, Chiren, Ihtiman, Valchi
  dol and BTRV and Repair.
• Main divisions of the headquarter office

11
Gas transmission for domestic Market Capacities
and utilization of the pipelines

• The transmission of natural gas for domestic use
  during the last five years shows a slight
  increase.
• At the time the main system was built there were
  more working facilities using natural gas and at
  present there is a lot available capacity.
• Natural gas transmission in Bulgaria in 2008
• 3.65 bcm (44 of the capacity of the pipeline)
• Although there is a lot of free capacity in the
  domestic pipelines a future congestion near the
  town of Varna is expected.

12
Gas transmission for TransitCapacities of the
pipelines and real use

• Bulgartransgaz transits natural gas to Turkey,
  Greece and Macedonia.
• Total transit in 2008 16.7 bcm.
• Transit by counties
• Turkey 13,71 bcm (81.5 of the capacity of the
  pipeline)
• Greece 2.85 bcm (61.4 of the capacity of the
  pipeline)
• Macedonia 0.12 bcm (12.4 of the capacity of the
  pipeline)
• There is a long-term contract for the quantities
  of natural gas to the three countries and a
  reasonable change in these quantities in the next
  five years is not expected.

13
National gas storage Status quo plans
2011

• One storage with total volume of working gas
  560 Mcm 850 Mcm
• Number of injection-withdrawal wells 22
  40
• Maximum injection capacity daily 4 Mcm
  8 Mcm
• Maximum withdrawal capacity daily 4.3 Mcm
  10 Mcm
• In year 2008
• 308.4 Mcm of gas were injected and 246.6 Mcm were
  withdrawn.
• Present production field near Galata is expected
  to become also
• a storage facility after year 2010.

14
Investment activities - domestic

• Construction of about 150 km gas transmission
  pipelines Dobrich-Silistra and UGS
  ChirenKozloduyOryahovo.
• To be accomplished by the middle of 2012 with
  own resources and financing from Kozloduy
  International Decommissioning Support Fund.
• Additional drillings and over-ground facilities
  aiming at expanding the UGS Chiren working gas
  volume, injection and withdrawal capacity.

15
Lessons drawn from Winter crisis 2009

• There is an urgent need of diversification
• Bulgaria is the most vulnerable European country,
  with full dependency on Russian gas and only one
  supply route through Ukraine
• Negotiations and agreements for new volumes and
  capacities in order to differentiate the routes
  and sources of supplies
• Interconnections to neighboring countries
• Expanding UGS Chiren capacities and speeding up
  the conversion of Galata gas field into second
  Bulgarian underground gas storage
• Research of opportunities related to natural gas
  production and LNG terminal(s) construction.

16
Other tasks of Bulgartransgaz for the near
future

• 1. Application for new Tariffs before SEWRC
• Tariffs for transmission and storage
• Tariffs for access and connection to network
• Tariffs for balancing.
• 2. Elaboration of Network code.
• 3. Work on transparency requirements
• On-line booking and publication of available
  capacities in transmission system and UGS, etc.
• 4. On-line protocol for communication with
  customers

17

• Thank you for your attention!