Банкеръ Daily


Light Mist Is Lingering over the LNG Terminal near Alexandroupoli

"Life is an illusion," the ancient Hindus said, and Bulgarian economic life confirms this wisdom every day. We will see in the future whether it will also be confirmed by Bulgaria's acquired share in the future liquefied natural gas regasification terminal near Alexandroupoli. For now, we cannot but have the right to doubt.

At the end of August, the Bulgarian state-owned company Bulgartransgaz enthusiastically announced the signing of an agreement to acquire 20% of the share capital of the Greek private company Gaztrade S.A., which is to implement the project for the construction of a liquefied natural gas (LNG terminal) regasification terminal near Alexandroupoli.

 At the time of the signing, it was announced that the future terminal "will be a new, independent energy gateway for the markets in South-East and Central Europe". Through Greece's gas transmission system, it will be connected with the  Komotini – Stara Zagora interconnector, currently under construction, through which non-Russian natural gas, supplied on a new route other than Russia and Turkey will reach the Bulgarian consumers. Thus, the dream cherished for decades to diversify the suppliers and routes of blue fuel for our country will finally come true.


Okay, but it


"sounds too good to be true"!


And the entry of Bulgaria with 20% capital into a private foreign project really raises a bunch of questions, to which, at least so far, no one has given adequate answers.

First, do you have to acquire a share in an LNG terminal in order to receive gas through it? The question sounds more understandable like this: Do you have to become a shareholder in an infrastructure to use it? Or even more clearly - should every driver of a car or every carrier become a shareholder in the Trakia Motorway in order to drive on it?


It's ridiculous, isn't it?


Why then do we applaud the acquisition of a 20% state share in a private company that will one day build a terminal, of whose capacity we will use only 9% per year? In practice, its capacity will be 5.5 billion cubic meters of gas, and our other state-owned company Bulgargaz already has preserved deliveries of 0.5 billion cubic meters per year, for the next 10 years!


The example of the LNG terminal on the island of Revitusa, not far from Athens, through which Bulgarian companies supply liquefied gas from the UNITED States and Qatar to our consumers without even owning one share in it is sufficiently indicative!

Not to mention that within the EU you do not need to own an infrastructure to have an access to it and use it. By the way, which is more profitable - to have access to it only when you need it, or to participate as a shareholder, which means to have expenses as an investor, for maintenance, etc.?


Secondly, if the project is so good,

why doesn’t the rich Kopeluzu family realize it on their own,

and stop talking about it for more than 10 years? Practice shows that when a project is really good, no one rushes to share it with anyone in order to acquire the entire profit from it accordingly. In this particular matter, that is clearly not the case. In February, the binding phase for capacity reservation in the future LNG terminal ended, with less than 50% of it being reserved - only 2.6 billion out of 5.5 billion cubic meters. And almost 1/5 of this reserved capacity is for Bulgargaz. Why was there no interest in the remaining 2.9 billion cubic meters?


Third, the picture becomes even clearer once we see who the participants in the project are. These are the Greek-based international company GasLog Cyprus Investments Ltd. (20%), as well as the Greek state gas corporation DEPA (20%), which is in the process of privatization in addition to Gaztrade, S.A. (40%) and the new shareholder Bulgartransgaz (20%). In Greece, even the children know that the Kopeluzu family is most interested in it. So, if the billionaire family buys DEPA, it will suddenly find itself with a 60% stake in the future terminal. It is not difficult to guess who will dictate the conditions then.


Fourth, the state in the person of Bulgartransgaz has already paid "a little over 13 million euros" to acquire 20% of the shares of Gastrade SA, which means that its capital is nearly 70 million euros.


However, the design value of the terminal is just over 282m euros


This implies that for its construction Bulgaria will have to pay a total of over 56 million euros of own funds or debt capital. And according to the decision of the Council of Ministers, the state's participation in the project is limited to 16.8 million euros, whatever that means!


Fifth, when the state decides to invest in a project, a separate limited-budget project company is usually established so as not to distort financial flows and to limit any risk. Thus, project companies were created for Belene Nuclear Power Plant, for the construction of new facilities on the Kozloduy nuclear power plant, etc. But now we witness the direct participation of the state "Bulgartransgaz" with a minority stake in the capital of a foreign private company. And it is curious if any clerk has ever thought about how this would affect the financial situation and the tariff policy of our company in the near future?


Sixth, against this background, isn't it more than strange that the Greek analogue of Bulgartransgaz, the operator of the entire Greek gas transmission network DESFA, is not involved in the project? Why? Given that the gas from the future terminal near Alexandroupoli will move to the Bulgarian as well as  the other borders of Greece, namely through Greek pipes?


Seventh, has the Romanian company Romgas wrestled with all these questions after they gave up participating in the venture with 20% share capital?


Last but not least, it is worth asking whether Bulgaria's participation in a regasification terminal would be justified at a time when


liquefied natural gas prices have risen sharply?


Finally, yes, it is great to build new infrastructure so that traders and consumers have more opportunities to deliver cheap blue fuel. But let's not forget that Russia invests huge amounts of money and is already becoming the largest exporter of liquefied natural gas in the world. What if its LNG is much cheaper, having travelled several times shorter distance to Alexandroupoli than American or Qatari LNG? Then we may ask ourselves:  ”Why have we been slaving away?” Or are we going to buy the more expensive US shale gas from Pennsylvania out of pure political stubbornness because it's going to smell better?


Of course, no normal person in our country likes our energy dependence on Russia and its use to exert pressure. But the most interesting thing is why, since the Americans want so much to supply us with their gas and take us out of Russia's energy custody, their huge company, Shenie, a liquefied natural gas exporter, is not investing alone in building the terminal near Alexandroupoli. This way it will keep both the gas and the terminal – and everything will depend on it!

Biser Lipov

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