The Bulgarian Post
2006-12-18 09:31:11

Bulgaria and Russian gas giant Gazprom sign a new gas deal that is expected to lead to a gradual increase of gas prices, Economy and Energy Minister Rumen Ovcharov said.

Gazprom CEO Alexei Miller arrived in Sofia to sign the memorandum that will be in force until 2030, AP news agency reported.

It will amend the current gas-for-transit agreement, under which Bulgaria was able to buy gas at a reduced price of US$83 (€68) in exchange for Gazprom's using Bulgarian pipelines to ship gas to Greece, Turkey and Macedonia.

With the new arrangement, gas prices in Bulgaria will rise by up to 10 percent in the first quarter of 2007 and will continue to rise until 2012, Ovcharov said.

"This is a smooth transition to market prices ... avoiding the risks of sudden hikes and crises for the industries dependent on gas supplies," he added.

According to Ovcharov, by accepting the price increase, Bulgaria has managed to secure itself long-term income from gas transit.

"Guaranteed long-term revenues from transit fees for Bulgargaz will rise from their current level of 1.2 billion leva (€600 million) to at least 4.7 billion leva (€2.3 billion) with an option to reach leva 7.8 billion (€3.9 billion) by the end of 2030," Ovcharov said.

Bulgaria's current gas agreements expire in 2010, but Ovcharov has repeatedly warned that if the government refused to accept Gazprom's demand for early review, the Russian giant might choose to stop shipping gas through Bulgaria. Bulgaria is almost entirely dependent on Russia for its gas and oil supplies.

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