The tender for the supply of liquefied natural gas (LNG) to Turkey, organized by Bulgargaz, has been awarded to Botas, the Turkish state gas importer. The contract covers a total quantity of 1 million MWh (3.4 TBtu) to be delivered on June 24 and 25. According to Vladimir Malinov, the contract will save Bulgargaz BGN 11.5 million (USD 6.4 million).13 companies expressed interest in the tender, and ten of them submitted bids. Botas offered a discount on the usual rate, which helped make its offer particularly attractive. This discount is in addition to the capacity reserved under the agreement signed between the two companies at the end of 2022.
Market background and analysis
The price offered by Botas for this tender was deemed unusually low by a Mediterranean-based LNG trader. This low price may be explained by Turkstream’s maintenance schedule at the beginning of June, which may have influenced market conditions. According to Platts’ assessments, the LNG price for June delivery in the Eastern Mediterranean was 9.44USD/MMBtu on May 15, at parity with TTF hub futures prices for June, or at a premium of 20cents/MMBtu to the North-West European market. For a cargo of 3.4TBtu, this would translate into a total cost of 32 million USD. However, with the discount obtained, the final cost would be around 25.7 million USD, i.e. a sales price of 7.56 USD/MMBtu. This represents a discount of 1.85 USD/MMBtu on the June TTF prices.
Economic implications and future strategies
This transaction strengthens energy relations between Bulgaria and Turkey, while enabling Bulgargaz to secure LNG supplies on advantageous financial terms. This supply strategy could serve as a model for future transactions, exploiting market opportunities and taking advantage of specific conditions such as periods of transport infrastructure maintenance. Bulgaria has previously launched a tender for a cargo to be delivered on May 18 to Alexandroupolis, with an option for delivery to Turkey in the event of delays in the Greek FSRU’s commercial operations.
Outlook for the LNG market
The LNG market in Southeast Europe is evolving rapidly, with growing demand and developing infrastructure. Future projects and collaborations with partners such as Botas will strengthen the region’s energy security. In addition, recent developments in LNG infrastructure, such as FSRU terminals and pipelines, will offer new opportunities for natural gas transactions and exchanges, supporting the European Union’s energy and climate objectives. Botas’ success in Bulgargaz’s tender to supply LNG to Turkey illustrates the importance of strategic relationships and adaptability in the energy sector. This transaction will generate substantial savings for Bulgaria and strengthen its position in the South-East European LNG market.
