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Bulgaria Key Energy Challenges: Energy Security

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Title: Bulgaria Key Energy Challenges: Energy Security


1
BulgariaKey Energy Challenges Energy Security
Presentation at Kapital Energy Conference
Sofia, February 23, 2010
  • Peter Johansen and Claudia Vasquez
  • Europe and Central Asia Region,
  • World Bank

2
Key Energy Challenges
  • Tightening demand-supply balance
  • Economic crisis provided only temporary relief
    as demand declined while supply surplus has
    eroded
  • Gas supply security concerns
  • Ukraine-Russia gas crises demonstrated the
    vulnerability of the Bulgarian gas sector to
    external shocks
  • High energy intensity
  • Bulgaria is the most energy intensive country in
    the EU and in the Balkans. This hurts
    competitiveness
  • Underdeveloped regional energy market
  • Low electricity prices encourage wasteful energy
    use and discourage investments. Low gas
    penetration. Need for regional cooperation in gas
    transport and power trade.

3
Demand-Supply Balance Will Tighten
  • The economic crisis has slowed down demand
  • But this will only give a short breathing space
    before a post-crisis recovery boosts demand again
  • Declining Oil and gas production
  • European production of oil and gas will decline
    and import dependency will increase
  • Uncertainty about increased production in the
    large gas exporting countries in the region
  • Deteriorating assets and inadequate addition of
    generation capacity
  • In South East Europe a net loss of generation
    capacity of 1 GW occurred between 1995-2005
  • Slack created by the break-down of centralized
    economies has now disappeared

4
Key Energy Challenges
  • Tightening demand-supply balance
  • Gas supply security concerns
  • Ukraine-Russia gas crises demonstrated the
    vulnerability of the Bulgarian gas sector to
    external shocks
  • High energy intensity
  • Underdeveloped regional energy market

5
Security of Supply is a Key Priority
  • The 2009 gas crisis affected the Bulgarian
    economy severely
  • Bulgargaz had to stop domestic gas supply
  • Major industrial consumers of natural gas had to
    shut down, including 240 MW gas fired power
    capacity
  • Estimated loss to the economy gt 250M
  • There were regional impacts
  • Electricity exports suspended to supply the
    domestic market
  • Gas transit to Greece, Turkey and Macedonia was
    interrupted
  • Ordinary consumers were also hit
  • Household consumers encouraged to use electricity
    and wood for heating and cooking
  • Increases in wood and fuel prices
  • Loosing access to energy has dramatic consequences

6
High Reliance on Gas Imports
  • Gas demand
  • Domestic consumption 3.2 bcm/y evenly divided
    between district heating, the chemicals industry
    (principally fertilisers) and households
  • Gas supply
  • Limited domestic gas reserves (about 6 bcm)
  • Limited internal production (5 percent from
    offshore Galata field)
  • Import dependency 95 percent of gas imported
    from Russia
  • Limited storage capacity Chiren 0.35 bcm (plan
    to increase to 0.8 bcm)
  • bcmbillion cubic meters

7
Gas only Flows in One Direction
  • Extensive gas pipeline infrastructure
  • High pressure network 1,700 km
  • Transit pipeline 950 km

Source http//www.bulgargaz.bg/en/
8
Diversification of Gas Supply Sources and Routes
will be Possible in the Long Term
Source South East Europe Regional Gasification
Study
9
Options to Improve Security of Gas Supply in the
Short to Medium Term
  • No major new supply sources within this time
    frame
  • National solutions
  • Improving efficient use of gas, e.g., in
    district heating on both supply and demand side
    (home insulation)
  • Increasing underground gas storage capacity
  • Regional solutions
  • Construction of new or expanding of existing
    interconnections (incl. reverse flow capability)
    with neighboring systems
  • Romania
  • Greece
  • Turkey
  • Serbia

10
Key Energy Challenges
  • Tightening demand-supply balance
  • Gas supply security concerns
  • High energy intensity
  • Underdeveloped regional energy market
  • Low electricity prices encourage wasteful energy
    use and discourage investments. Low gas
    penetration. Need for regional cooperation in gas
    transport and power trade.

11
Energy Shortages Could Threaten the Region
  • Deteriorated energy infrastructure
  • Regulated tariffs in the region are still
    relatively low compared to EU countries
  • Tariffs do not support new generation investment
  • Encourage wasteful energy usage

11
12
The Unfinished Reform Agenda Limits Effective
Regional Cooperation
  • Countries have opened their energy markets, but
  • National utilities dominate national markets
  • Eligible customers prefer to stay under their
    (relatively low) regulated tariffs
  • Effective opening and switching of suppliers is
    limited

13
Bulgaria in the Regional Gas Market
  • Important gas transit country
  • 16 bcm/y (Turkey)
  • 2.4 bcm/y (Greece)
  • 0.1 bcm/y (Macedonia)
  • Potential regional role in gas storage and
    transit
  • Galata gas field can be converted into UGS of up
    to 1.8 bcm
  • Possibility of status as a regional gas hub
  • Facilitate creation of regional gas market
    South East Europe gas ring

14
Energy Community Ring Concept
Source South East Europe Regional Gasification
Study 2008
15
Bulgaria Key Electricity Exporter in South East
Europe (GWh, 2007)
Source UCTE
16
Energy Community Regional Market Approach
Nordic
UK/IE
IPS/UPS
Baltic
CEE
CWE
SEE
SWE
CSE
17
Electricity Trade in the Energy Community
  • A regional market for network energies is the
    objective of the Energy Community Treaty
  • Bilateral trading will continue but needs
    improvements and a functioning regional market
    should be developed
  • Bulgaria could consider a decentralized approach
    to electricity trade
  • Bulgaria and Serbia develop their national
    markets
  • Bulgaria and/or Serbia couple their markets with
    the already functional Romanian market (OPCOM PX)

17
18
  • Thank you!
  • pjohansen_at_worldbank.org
  • cvasquez_at_worldbnk.org
  • www.worldbank.org
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