In the context of Europe’s changing energy architecture, the partnership between Bulgaria and Azerbaijan in the gas sector is becoming increasingly strategic. One of the key elements of this cooperation is the hybrid gas supply project, implemented jointly by M-Gaz and the regional office of the State Oil Company of Azerbaijan (SOCAR) in the Balkans.
In an interview with Report, Gergana Manolova, International Cooperation and Business Relations Director at M-Gaz Ltd, spoke about the start of Azerbaijani natural gas supplies to Bulgaria, the consumption structure, the challenges of connecting social facilities, and plans to expand the project beyond the country.
Report presents the interview:
– When did the hybrid gasification project in Bulgaria start, and the deliveries of Azerbaijani natural gas to M-Gaz begin? Can you provide separate data for customers allocated to the industrial sector and for social facilities, including municipal utilities and residential buildings?
– The hybrid gas supply was initiated in the implementation of an agreement between the presidents of both countries to promote gasification in Bulgaria through direct supplies of Azerbaijani natural gas to end industrial and social customers. In the implementation of the decision of the two presidents, SOCAR Regional Office in the Balkans and M-Gaz developed the idea of hybrid gasification. The project kicked off on June 18, 2024, following the signing of the contract between M-Gaz and SOCAR Trading with the collaboration of the SOCAR Regional Office in the Balkans. M-Gaz started to supply Azerbaijani natural gas for the five largest industrial customers approved by SOCAR on June 18, 2024. For the calendar year 2024, a major part of the volumes was delivered to industrial clients, and 1/8 were supplied to social facilities – hospitals, schools, kindergartens.
– How would you characterize the current strategic partnership between M-Gaz and SOCAR? What key achievements have been reached, and what major challenges have you faced during the project’s implementation?
– The opening of the SOCAR Regional Office in the Balkans and its active work have encouraged and developed several times cooperation between the two countries in the field of natural gas. SOCAR is now a major supplier of natural gas to Bulgaria, traded on the Balkan Gas Hub. SOCAR, through M-Gaz, has access and directly supplies end customers in Bulgaria. The strategic partnership between M-Gaz and SOCAR supports gasification in Bulgaria for industrial, social, administrative, and household consumers who do not have access to gas transmission and distribution networks. This is a new niche in the Bulgarian gas distribution market, including new customers in the natural gas market. We have started supplying Azerbaijani natural gas to five large industrial customers, and by the end of the month, we will reach 25 industrial and 2 social consumers – a school and a kindergarten. When gasifying social customers, there are difficulties for municipalities to provide financing for changing the fuel base. In this regard, M-Gaz covers the costs of changing the fuel base of social customers, such as schools and kindergartens.
– Is an increase in gas import volumes from Azerbaijan planned for 2025? Is the expansion of the number of Bulgarian industrial enterprises and social institutions connected to Azerbaijani gas supplies under discussion in the next project phases?
– More significant natural gas supplies from SOCAR to M-Gaz have been agreed for 2025. Accordingly, by the end of October this year, we plan to reach 30 industrial clients and three social clients – a school, a kindergarten, and other social clients.
– What impact has the partnership with SOCAR had on M-Gaz’s financial indicators and market position? Has the company’s market share in Bulgaria’s domestic energy market increased thanks to Azerbaijani gas supplies?
– In 2024, SOCAR, through M-Gaz, took fourth place in terms of delivered volumes in the gas distribution market. For the first half of 2025, we expect to take third place and, at the end of 2025, second place in terms of delivered volumes in the gas distribution market.
– Is M-Gaz considering expanding operations beyond Bulgaria in cooperation with SOCAR, for example, to organize Azerbaijani gas deliveries to Southeast Europe or the Balkans as a whole? Are negotiations underway with potential partners in this direction?
– M-Gaz and SOCAR plan to extend the hybrid gasification project to North Macedonia and Albania. We plan in the beginning of November this year to start supplying industrial and social clients in the town of Strumitsa in North Macedonia in partnership with CNG Systems Ltd. It is planned to start the supply of natural gas to two industrial and two social customers – a school and a kindergarten. The possibility of supplying CNG also to customers in Albania is currently being studied. We explore the possibility of constructing a new gas filling compressor station for CNG supplies on the territory of Albania near the town of Korca, where SOCAR develops a project for the gasification of the city.
– What other international partnerships and alliances with energy companies or financial institutions is M-Gaz considering to strengthen its regional position? Are there plans to invest in infrastructure projects, modernize the gas transmission system, or shift to more environmentally sustainable technologies?
– Currently, M-Gaz is working and developing its strategic cooperation only with SOCAR. We hope to jointly develop with the SOCAR Regional Office in the Balkans a hybrid gas supply in other countries in the Balkan region, such as Albania, North Macedonia, and others.