Opening of Turkey-Bulgaria LNG Deal Unlocks Quiet Corner of EU Gas Market

Turkey recently granted Bulgaria access to its liquefied natural gas terminals, providing an opportunity to diversify the European gas market. This move has opened up a previously tightly controlled sector of the market.

On Tuesday, a deal was signed in Sofia that will allow Bulgaria's state-owned Bulgargaz EAD to import liquefied natural gas (LNG) through Turkey's terminals and grid for a period of 13 years. According to Turkish Energy Minister Fatih Donmez, the capacity of the agreement is estimated to be around 1.5 billion cubic meters annually, which would meet about half of Bulgaria's domestic demand.

This agreement provides a new source of supply in southeastern Europe after Russia reduced its shipments to the region due to its invasion of Ukraine. Before this, Bulgaria's quickest way to access LNG was through Greece, where purchasers had to compete for docking spots in accordance with European Union regulations.

Turkey, which is not a part of the European Union but is linked to it through a pipeline, is not subject to the same regulations and has the ability to provide additional resources.

Bulgarian Energy Minister Rosen Hristov expressed his gratitude for the agreement that allows them to buy gas from producers around the globe. He noted that this is not only beneficial for Bulgaria and the region, but also for Europe as a whole.

Western Europe is making haste to construct new infrastructure to replace Russian gas, while Turkey has only utilized less than half of its four LNG terminals' 21.9 million tons of capacity in the past year, as reported by Bloomberg. An additional facility is expected to be operational by the end of the month.

Turkey has announced plans to establish a "global hub" for natural gas in the Thrace region, which is located on the border with Bulgaria.

Ankara is looking to expand its LNG storage capacity and is in talks with Russia and Turkmenistan to bring new supplies to Europe. However, the cost of the pipeline could be in the billions of dollars and there could be geopolitical issues between the EU and Russia that could impede progress.

In December, Turkey made progress towards its goal when Romania consented to import Azerbaijani gas through Turkey. Bulgaria is currently receiving a third of its yearly supplies from Azerbaijan through a long-term agreement.