Energy Sector in the Spotlight

Energy Sector in the Spotlight

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Legislation and Strategic Changes in the Bulgarian Energy Sector: Several amendments were made to Bulgaria’s energy laws in 2018 facilitating the further liberalization of the energy market. Renewable energy producers exceeding 4 MW installed capacity that enjoyed offtake of their energy at Feed-In Tariff (FiT) were introduced to a different support scheme: Contracts for Premium (CfP), which became effective on January 1, 2019. Under CfP, renewables sell their electricity to the free market – either to the Independent Bulgarian Energy Exchange (IBEX) or to their balancing group coordinators.

Latest Changes to the Bulgarian Energy Strategy to 2020

Bulgaria’s Parliament included the construction of the Balkan Gas Hub as a priority project in the National Energy Strategy Until 2020 by amendments and supplements introduced in late 2018. The amendments were necessitated by the changing gas flows in South-Eastern Europe and the desire to preserve and develop Bulgaria’s role as a leading transit center in the region.

Large-Scale Energy Projects

Nuclear Energy in Focus

The re-start of the Belene Nuclear Power Plant (the “Belene NPP”) was announced in late 2018, and Bulgaria’s Government has approved the draft framework for the selection process of a strategic investor for the power plant. It is anticipated that the investor selection process will start sometime in February 2019 and will take up to 12 months. According to the Energy Minister, investors willing to acquire a minority share or industrial consumers interested in power supply will also be given the opportunity to take part in the procedure. The terms of disposal will include a blocking quota for the state and participation of local companies in the construction. According to the Bulgarian Government, companies from China, Korea, and France have demonstrated interest in the Belene NPP.

Balkan Gas Hub Project 

The ambitious Balkan Gas Hub project, which is a Project of Common Interest for the EU, involves expanding the country’s gas transit network and using part of the Trans-Balkan Pipeline, currently delivering Russian gas to the Balkans through Ukraine, in reverse mode to transport gas volumes from the second string of TurkStream to Serbia and on to Central Europe. 

In January 2019, Bulgartransgaz EAD registered a subsidiary company, Gas Hub Balkan EAD, to construct a long-awaited gas distribution center on the territory of Bulgaria. This distribution center has all the potential to become a major contributor to energy security in South-Eastern Europe, due to the country’s advantageous geographic location. The new subsidiary company is designed to create a gas-trading platform – a gas exchange with an additional segment for bilateral trade – but it will be mostly involved in developing the hub.

Green Light for the Interconnector Greece-Bulgaria

On November 8, 2018, after declaring them in line with EU state aid rules, the European Commission gave the green light to Bulgarian and Greek plans to support the construction and operation of a 182km cross-border gas interconnector between Komotini in Greece and Stara Zagora in Bulgaria. The interconnector will contribute to the objectives of security of supply, diversification of energy sources, and increased competition in EU energy markets. The project, which was originally scheduled for completion by 2020, will have a key year in 2019, involving EPC contractor selection and the commencement of construction.

Start of the Sofia EfW Project 

The Bulgarian Government approved the installation of RDF technology in the Sofia Thermal Power Plant in November 2018 after debate lasting over several years. The RDF installation is the last stage of the largest waste treatment system for Bulgaria. It will produce electrical and thermal energy for use by the Sofia District Heating company. 

Offshore Exploration in the Black Sea 

In late 2018 Bulgaria’s Government approved the transfer of 30% of the exploration rights on offshore Block 1-14 Khan Kubrat from the current sole holder, Shell, to the local branch of Woodside Energy.

The third deep-water exploration well in Bulgarian offshore block, 1-21 Han Asparuh in the Black Sea, which is being carried out by Total E&P Bulgaria (40% for Total, and 30% for each OMV and Repsol), started in December 2018. 

The launch of the tender procedure for oil and gas exploration in the Tervel offshore block is expected to take place in 2019, thus completing the tendering of the three major offshore blocks in Bulgaria.

By Kostadin Sirleshtov, Partner, and Elena Yotova-Yordanova, Associate, CMS Bulgaria

This Article was originally published in Issue 6.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.