Bulgaria signed a memorandum yesterday with Russian gas giant Gazprom to gradually increase the price it pays for Russian natural gas and to pay market prices by 2012, the country’s energy minister said.
“For the first time Gazprom signed a contract that allows for a gradual increase in prices” with the first hike to take place by April 1, 2007, Economy and Energy Minister Rumen Ovcharov told a press conference. He did not say however how much Bulgaria would have to pay.
Gazprom and Bulgaria’s state-owned gas provider Bulgargaz also signed two agreements that will guarantee Russian gas deliveries to Bulgaria until 2030 as well as the transit of Russian gas through the country for the same period of time. “Bulgaria guarantees... until 2030 the deliveries of natural gas for its economy and population and guarantees increased revenues from the transit of natural Russian gas through Bulgaria from 1.2 billion leva (–0.6 billion, $0.8 billion) to 4.7 billion leva with an option for a further increase to 7.8 billion leva,” Ovcharov said.
“The total deliveries guaranteed are 17.8 billion cubic meters a year (domestic consumption included),” Gazprom Chief Executive Alexei Miller said.
He also assured that the long-term contract “will allow the transition to market prices to be absolutely painless to the Bulgarian consumer.”
Bulgaria was almost entirely dependent on Russian gas for its domestic consumption of 3.1 billion cubic meters in 2005. But it used to buy over 40 percent of its Russian gas at preferential prices, under a gas-for-transit agreement it signed with Gazprom in 1998. Under this agreement Bulgaria paid $83 per 1,000 cubic meters of gas.
In turn, Russia did not pay any transit fees for using the Bulgarian gas network to channel gas exports to Turkey, Greece and the Former Yugoslav Republic of Macedonia that in 2005 reached 15.5 billion cubic meters.
Under a second contract also signed in 1998 that strictly regulated deliveries, Bulgaria paid $258 (–213) per 1,000 cubic meters (35,000 cubic feet).
The difference in price between the two contracts allowed Bulgargaz keep domestic prices relatively low, at 297 leva ($183, –151) per 1,000 cubic meters. The two deals were due to expire in 2010. Bulgaria was at first reluctant to accept the hike but also feared it might lose its strategic position as an energy hub in the region if Russia decides to decrease the volume of gas piped through its territory.
(AFX, 18/12/2006)