Bulgaria calls attempts by Gazprom to review gas contract 'unacceptable' Mon Jan 9 18:03:00 PST 2006
SOFIA, Bulgaria (AP) - Bulgaria's national gas provider said Friday that a request by Russia's state-controlled gas monopoly OAO Gazprom to renegotiate its gas contract was "unacceptable."
The head of Bulgaria's state-owned gas provider Bulgargaz, Valentin Ivanov, wrote in an official letter to Gazprom that there is no option in the contract for its review or cancellation before the end of its term in 2010.
"The existing contracts for delivery and transit of Russian gas are signed after the transitions of the economies in both countries toward a market economy and are based on the principles of the (free) market," state news agency BTA quoted the letter as reading.
On Thursday, Economy and Energy Minister Rumen Ovcharov also rejected Gazprom's offer as "unacceptable."
"We see no reasons and no conditions that could lead to a review," the minister said.
Gazprom, which settled a dispute with Ukraine over gas prices this week, delivers about 97 per cent of Bulgaria's gas imports. It sells natural gas to Bulgargaz under two contracts: one for direct delivery and one in exchange for Bulgaria's transiting Russian gas to Turkey, Greece and Macedonia. Both contracts expire in 2010.
In Moscow, a Gazprom spokesman promised the disagreement with Bulgaria would not be a rerun of the Ukraine fiasco, and that the problem would be settled "in a civilized manner."
But the spokesman, Sergei Kupriyanov, said the current arrangement was unacceptable.
"Everyone understands that this (transit price) doesn't correspond to the reality of the market," Kupriyanov was quoted by Dow Jones Newswires as saying.
The transit contract fixes a delivery price at less than $100 US per 1,000 cubic metres, while under the direct delivery contract prices depend on currency fluctuations and international oil prices. The current price is $257 per 1,000 cubic metres, Ovcharov said.
But the reduced price of the transit contract allows Bulgargaz to keep domestic prices much lower. As of Jan. 1, Bulgargaz sells gas to local consumers for $180 US for 1,000 cubic meters.
Gazprom wants to cancel the gas-for-transit agreement and receive direct payment for all gas deliveries. Bulgaria fears that in this case, the Russian company would decrease the volume of gas piped via Bulgaria and use an alternative pipeline to Turkey under the Black sea.
"The situation in the country could become really worrying if we agree with such contract review," Ovcharov said, adding that Bulgaria was ready to negotiate any new conditions only for the period after the current agreements expire.
In 2004, Bulgargaz imported some 2.85 billion cubic metres of gas and transited 13.5 billion cubic metres of Russian gas to Greece, Turkey and Macedonia.
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