In order to apply the plan of price increase in July 2021, Bulgarian state-owned gas supplier Bulgargaz has proposed higher wholesale natural gas price.
The statement from the company said that the price for June should be around 21.8 euros/MWh, some 13 % higher compared to the price approved for May – 19.3 euros/MWh, which was a 13.5 % increase compared to April. In early May, Bulgargaz proposed that the price for July should be further increased to 23.9 euros/MWh.
The company justifies the requested increase with what is happening on the European natural gas markets. According to the formulas used to determine the price of natural gas, supplies from Gazprom Export are tied to the prices of major European hubs. 70 % of the price is formed by themovement of these gas markets. The rest is the so-called oil component, i.e. the price of alternative fuels – gas oil and fuel oil.
The price of Bulgargaz’ other source, gas from Azerbaijan, depends entirely on the movement of the prices of alternative fuels, taking their values with a delay of nine months.
In March 2020, Bulgargaz and Gazprom Export have finalized an agreement on 40.3 % reduction of the price at which Russia supplies natural gas to Bulgaria, backdated to 5 August 2019. Bulgaria was the last of eight EU Member States of Eastern Europe to strike a deal on a price cut with Gazprom, in the wake of a settlement reached between the European Commission and the Russian monopolist on an anti-trust investigation. The agreement with Gazprom prompted the change in determining regulated wholesale gas prices, which is now set on monthly, rather than quarterly basis.
