Following in footsteps of one memorandum

Cooperation between Azerbaijan and Bulgaria in the energy sector is one of the key areas of economic cooperation between the two countries. It all started with the signing in 2013 of an agreement to supply Bulgaria with 1 billion cubic meters of natural gas produced from Azerbaijan’s Shah Deniz field through the Trans Adriatic Pipeline (TAP), the last segment of the Southern Gas Corridor, and the Gas Interconnector Greece–Bulgaria, which was put into operation October 1, 2022.

Last year, the countries agreed to expand cooperation in the energy sector through the implementation of the STRING (Solidarity Ring) initiative and the opening of the State Oil Company of Azerbaijan (SOCAR) office in Sofia. In addition, Bulgaria expressed its desire to take part in the project of laying the “Green” energy corridor Caspian - Black Sea - Europe (Black Sea Energy).

This year, as part of the official visit of Bulgarian President Rumen Radev to Azerbaijan, SOCAR signed a memorandum of cooperation with the Bulgarian company Asarel Investment. In accordance with the document, SOCAR and Asarel Investment will jointly study the possibility of participation of the Azerbaijani company in the gas supply to Bulgaria.

The head of SOCAR Balkany, Murad Heydarov, speaking at the Azerbaijan-Bulgaria business forum, noted that the signed memorandum will be another step in the development of SOCAR’s business in Bulgaria.

“We are now working to expand our presence in Bulgaria and are exploring opportunities for working with end consumers. For this purpose, we plan to develop an internal gas distribution network in Bulgaria,” said Heydarov, without going into details.

Thus, Bulgaria, which (according to open sources) has a rather weak gas distribution system in Europe, plans to intensify work on gas supply to the regions and counts on the assistance of Azerbaijan, or more precisely the SOCAR company, in this matter.

The State Oil Company of Azerbaijan, in turn, chose Asarel Investment as a partner to jointly study the possibility of its participation in the gas supply to Bulgaria.

Here a natural question arises: What can unite two companies that have great financial capabilities, but are so different in the nature of their activities, and what exactly can their cooperation consist of?

The answer, as it turns out, is on the surface.

What is known about Asarel Investment?

According to official information, Asarel Investment is 100% owned by the largest and leading Bulgarian company for open-pit mining and processing of copper ores, providing more than 50% of the national copper production – JSC Assarel-Medet. The company produces and offers high-quality copper concentrate and copper cathodes to the domestic and foreign markets. Considering the specifics of the activity (a large copper mine, a huge copper smelter), it is not difficult to guess that Assarel-Medet JSC is also one of the biggest consumers of gas, which is used as fuel in ore processing processes. However, this is hardly enough to coincide with interests with SOCAR. So, let's move on.

When taking a closer look at the portfolio of projects of the Bulgarian company, the question of why SOCAR was chosen in its favor on the gas supply issues immediately disappears. As it turned out, in addition to the main mining activities, Assarel-Medet also implements projects in such areas as: wind parks, solar power plants, the use of biomass and gas supply of enterprises and the municipality of Panagyurishte.

The company, together with the municipality and the Srednogorie Med industrial cluster, has even carried out an economic assessment of the gas supply of Panagyurishte and is ready for implementation. A search for a suitable partner is currently underway to carry out the work.

Prior to the development of this project, the company was actively considering the possibility of constructing a gas distribution network to meet the needs of potential consumers such as the Assarel-Medet group, other local companies and municipal facilities.

Most likely, the State Oil Company of Azerbaijan and Asarel Investment, bound by one memorandum, will generally evaluate the possibilities of their joint activities in the field of gas supply in Bulgaria with the subsequent specification of projects. As a pilot project, they can start small - for example, with the Assarel-Medet enterprises or directly with the Panagyurishte municipality, expanding their horizons in the future.

The implementation of such a project will allow the State Oil Company to strengthen its position and expand its commercial presence in the Bulgarian energy market, especially since SOCAR already has successful experience in implementing similar projects (using the example of Georgia).