Bulgaria agrees Gazprom price hikes

Dual-agreement guarantees Russian gas deliveries to Bulgaria until 2030.

    Gazprom chief Alexey Miller, left, and Bulgarian prime minister Sergey Stanishev, toast the agreement

    "The total deliveries guaranteed are 17.8 billion cubic metres a year," said Alexey Miller, Gazprom's chief executive.

     

    He also assured that the long-term contract "will allow the transition to market prices to be absolutely painless to the Bulgarian consumer".

     

    Key player

     

    Bulgaria was almost entirely dependent on Russian gas for its domestic consumption of 3.1 billion cubic metres in 2005.

     

    The Eastern European country used to buy over 40 per cent 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 metres of gas.

     

    "Bulgaria is a traditional partner of Gazprom who has ensured reliable transit in the region in the past decade."

    Alexey Miller

    In turn, Russia did not pay any transit fees for using the Bulgarian gas network to channel gas exports to Turkey, Greece and Macedonia that in 2005 reached 15.5 billion cubic metres.

     

    Under a second contract also signed in 1998 which strictly regulated deliveries, Bulgaria paid $258 per 1,000 cubic metres.

     

    The difference in price between the two contracts allowed Bulgargaz keep domestic prices relatively low, at $183 per 1,000 cubic metres.

     

    The two deals were due to expire in 2010.

     

    Bulgaria was initially reluctant to accept the increase in prices and also feared it might lose its strategic position as a key energy player in the region if Russia decided to decrease the volume of gas piped through its territory.

     

    "Bulgaria is a traditional partner of Gazprom who has ensured reliable transit in the region in the past decade … New, considerable volumes can be transferred through Bulgaria in the future," said Miller.

    SOURCE: Al Jazeera and agencies


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