By Michael Winfrey
Bulgaria is rejecting a Russian attempt to raise the price it charges for its gas, Bulgarian officials said yesterday, days after Russia and Ukraine ended a price dispute that temporarily disrupted gas supplies to Europe. Russian gas giant Gazprom now supplies former Soviet satellite Bulgaria with a large part of its gas at lower-than-market prices for acting as the main conduit to its neighbors Turkey, Greece and the Former Yugoslav Republic of Macedonia (FYROM). Bulgarian officials said Gazprom is pushing the Balkan state to switch to a system under which it pays transit fees in cash and Sofia buys all of its gas at market prices. But they have rejected the proposal, saying their contract with the Russian company is good until 2010. “The demanded change in the gas transit contract is unacceptable for Bulgaria,” Energy Minister Rumen Ovcharov said through a spokeswoman.
Also yesterday, Turkey said it may seek international arbitration against Russia if talks begun late last year fail to reduce the price it pays for Russian gas, which is indexed to the price of oil. But Alexander Medvedev, the head of Gazprom’s export unit, said the company was delivering gas at competitive prices. “Deliveries of gas to all our European partners, and in particular Turkey, are taking place on competitive terms, taking into account transport costs,” he said in Moscow.
Gazprom sparked fears of economic and political turmoil when it cut off Ukraine, the gateway for most Russian gas flowing to the rest of Europe, over a price dispute on Sunday. The two sides later signed a new five-year deal, ending the standoff.
Analysts say the prospect of eliminating or reducing below-market-priced gas sales to countries formerly in the Soviet sphere underpins the Gazprom investment case.
Turmoil not expected
Moscow has lost political clout over its former satellites, which gravitated to NATO and the EU after the fall of communism but has re-emerged as a major investment force in the region, particularly in the energy sector. Bulgaria, which still enjoys warm ties with its Cold War master, said any lasting dispute with Gazprom would be decided in court and they did not expect a Ukraine-like supply squeeze. “We can’t compare the two cases. The problem with our situation is only whether to renegotiate part of our contracts... whereas Ukraine is only now signing that type of deal,” said Elena Yotova, a press officer at Bulgaria’s Energy Ministry.
Gazprom now pays transit fees to Bulgaria in the form of gas at a price now set at around $83 per thousand cubic meters, compared with the $257 Bulgaria pays for supply not covered by the transit contract, according to the Energy Ministry.
The ministry insists the transit deal contains no clause to change payment terms and that Bulgaria was at a disadvantage when it first signed the contract in 1998, as Russia charged it a higher-than-market price for gas. Asparuh Pilosof, head of the ministry’s press office, said Bulgaria’s gas monopoly Bulgargaz will officially reject Gazprom’s request to renegotiate the contract on Friday.
The Black Sea country of 7.8 million people mostly relies on other energy sources and consumed a modest 2.73 billion cubic meters (bcm) of gas from January to November of 2005. But, according to Bulgargaz, it supplied an estimated 14 bcm to its neighbors, accounting for all of FYROM’s needs, 60 percent of Turkey’s and around 50 percent for Greece.
(Reuters)