INTERNATIONAL ENERGY AGENCY ENERGY CHARTER SECRETARIAT Gas Seminar in SE Europe: Investment, Transit, Trade

Bulgargaz in the new SEE gas scene Nikolay MILEV Head of R&D Division, Bulgargaz EAD PhD, Assoc.prof., Petroleum Engineering, Economics

Istanbul, May 5-6, 2004 Focused on

• Bulgargaz: in brief • Local market development strategy • New Energy Act: Bulgargaz market positioning • Bulgargaz: International dimension Gas Market Players

• Bulgargaz • 28 small scale GDC in 33 municipalities • 2 production companies NATIONAL GAS TRANSMISSION NETWORK

CS Kardam 2 CS Kardam 1 ROMANIA Gen. Toshevo

Kubrat Isperih Dobrich Russe Montana UGS + CS Chiren Varna Razgrad Pleven Levski Biala CS Provadia YUGOSLAVIA Vratza Roman CS Polski Senovetz Lovech Turgoviste Sofia Zlatna Panega Sevlievo Botevgrad Sliven Burgas Pernik CS Lozenetz Elin Pelin Stara Zagora Debelt Iambol Rakovski

Nova Zagora CS Ihtiman CS Strandja Plovdiv Pazardjik

Parvomaj Dimitrovgrad Asenovgrad

Haskovo TURKEY CS Petrich Legend: Main gas pipeline Gas pipeline branch Transit gas pipeline Compressor station GREECE Gas reduction station Indigenous Gas Production 2003

120,0% 99,6% 100,0%

80,0%

60,0%

40,0%

20,0% 0,4% 0,0% Import Indigenous Bulgargaz: x TSO & Whole Supplier x Vertically integrated company x 100 % state owned x Licensed for: - transmission within Bulgaria - transit - storage - distribution Bulgargaz at Present

Deals with: % ‰ Import (single source) 100 ‰ Production 0 ‰ Supply 100 ‰ Transmission 100 ‰ Transit 100 ‰ Storage 100 ‰ Distribution 0.004 Bulgargaz: Strategic Axis

• Local gas market expansion support

• Security of supply

• Transit security

• Preparation for market liberalization Recent Investments

Million Leva (1 Leva = 0.5 Euro)

400

200

0

1998 1999 2000 2001 2002 2003 Total Gas Transit 1987 – 2002 BSCMY

16

14

12

10

8

6

4

2

0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Gas Consumption (BSCMY)

8

7

6

5

4

3

2

1

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Gas Consumption Structure - 2003

6% 5% Heat and Power 4% 2% Chemistry 39% Metallurgy

Cement

14% Glass

Gas Distribution

29% Others Gas Distribution Companies Sales (MMSCMY)

147

160 113 89140 93 120 100 80 60 40 20 - 2000 2001 2002 2003

Black: granted Red: under tendering Bulgargaz Among the New Energy Act Market Players Today

Market Player Bulgargaz: % as per New Energy Act:

• Public supplier 100 • Public retailers (distribution) 0 • Production companies/operators 0 • Storage operators 100 • Transmission operator (TSO) 100 • Distribution operators (DSO) almost 0 • Traders 0 • Eligible consumers – • Consumers, apart from the eligible consumers – • Transit operators 100 Summary (Bulgargaz) New Energy Act: Activities At Present, Perspectives, % % (Immediate to mid- term) Import 100 100 to 0 Gas fr.local producers 100 100 to 0 Supply/Public Supply 100 100 or 0 Retail/Public Retail Distrib. 0 (0.004) Gas production 0 0 Transmission (TSO) 100 100 (keep 100) Storage 100 100 (m.b. d 100 Distribution (DSOs) 0.004 0 Trading n.a. 0 Transit 100 100 (m.b. d 100

Botash - Nabucco Project On territory of Bulgaria

CS K ardam 2 CS K ardam 1 ROMANIA General. T os hevo CS Vulchi dol Kozloduj Kubrat Dobrich Russe Isperih Montana UGS + CS Chiren Var na Razgrad P leven Levski Biala CS P rovadia Vratza Roman YUGOSLAVIA CS P ols ki S enovetz Turgoviste Lovech Sofia Z latna P anega Sevlievo Botevgrad Sliven Burgas Pernik CS L oz enec E lin Pelin Stara Zagora Debelt Iambol Rakovski

Nova Zagora CS Ihtiman CS S trandga Plovdiv Pazardgik

Parvomai Dimitrovgrad TURKEY As enovgrad

Haskovo Legend: CS P etrich Main gas pipeline Gas pipeline branch GREECE Transit gas pipeline Compressor station Gas reduction station Nabucco project Nabucco Project On territory of Bulgaria

¾Length: 400 (250 mi)

¾Compressor stations: 1 or 2

¾Investments: Euro 450 m Potential Gas Interconnection & Expansion

CS K ardam 2 CS K ardam 1 ROMANIA General. T os hevo CS Vulchi dol Kubrat Dobrich Russe Isperih Montana UGS + CS Chiren Var na Razgrad P leven Levski Biala CS P rovadia Vratza Roman SERBIA CS Polski S enovetz Turgoviste Lovech Sofia Z latna Panega S evlievo Botevgrad S liven Burgas Pernik CS L ozenec Elin Pelin S tar a Z agor a Debelt Iambol Rakovski

Nova Zagora Dupnitsa CS Ihtiman CS S trandga Plovdiv Pazardgik

Parvomai Dimitrovgrad TURKEY As enovgrad

CS P etrich Haskovo Legend: Main gas pipeline Gas pipeline branch GR E E CE Transit gas pipeline Transit gas pipeline in a project Compressor station

Gas reduction station BulgargazBulgargaz

Bulgargaz is a reliable gas transit partner

…was and remains