Bulgaria seals cheaper gas deal with Russia

Written by on August 28, 2012 in Business - No comments

Bulgaria will pay, on average, 11 per cent less for Russian natural gas bought until the end of this year, Bulgarian Economy Minister Delyan Dobrev said after meeting the deputy chief executive of Russian state gas monopoly Gazprom, Alexander Medvedev, in Varna.

After months of negotiations, Dobrev and Medvedev sign three agreements in Varna – one concerning the gas price cut, which will be retroactively applied to all gas bought after April 1, and two memorandums in which the two parties agreed to sign a long-term gas deal by November 15, as well as make a final decision on the construction of South Stream gas pipeline, also by November 15.

Medvedev said that although the negotiations had been protracted, he expected matters to move a lot swifter in the coming months. According to the two officials, the talks included also the construction of gas-powered power plants, expansion of Bulgaria’s gas storage at Chiren and the question of South Stream financing.

Russia has already started construction of South Stream’s infrastructure on its end and expected to begin laying pipes on the Black Sea floor in December. Gazprom expects South Stream to become operational in 2015.

Cheaper gas this year would result in no gas price hikes for consumers in the last quarter of the year, the head of the State Energy and Water Regulatory Commission, Angel Semerdjiev, said. More importantly, central heating prices were expected to remain unchanged as well.

But a price cut was also unlikely, as the cheaper gas price deal with Gazprom would mainly offset the continued increase in crude oil and oil derivates on international markets, Dobrev said earlier in an interview with local daily Trud.

Russia is the main source of gas for Bulgaria and diversification of supplies has been one of Sofia’s goals since the month-long disruption in deliveries in January 2009, which came as a consequence of price disputes between Russia and Ukraine.

Since then, there has been little progress on getting the European Union-backed Nabucco pipeline closer to starting construction, but Bulgaria has started work earlier this month on an interconnector pipeline with Romania. A similar interconnector with the Greek gas grid is still in the works.

Bulgaria has also been issuing exploration licenses, most recently in July to France’s Total (as leader of a consortium that also included Spain’s Repsol and Austria’s OMV) for a large block offshore in Bulgaria’s exclusive economic area in the Black Sea.

(Photo: jarpur/sxc.hu)

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