Gazprom Still Calculating Discount for Bulgaria - Russian Media

Energy | May 18, 2012, Friday // 14:15|  views

Russian media outlets have warned that energy giant Gazprom has not yet calculated the gas price discount it will offer to Bulgaria. Photo by BGNES

Bulgaria managed to negotiate special terms for the supply of Russian gas regardless of its abrupt withdrawal from the Burgas-Alexandroupolis oil pipeline and the Belene NPP energy projects, Russian media outlets note.

Gazprom is expected to offer Bulgaria a discount of 11.1% on gas prices in 2012 and may also eliminate intermediary companies from the supply chain in exchange for the country's support for the South Stream gas pipeline project, Russian business daily Kommersant writes, commenting on the ongoing talks between Bulgarian Economy and Energy Minister Delyan Dobrev and Gazprom President Alexei Miller in Moscow.

Although Bulgaria claims that it has Gazprom's firm commitment, the long-term contract from 2013 on is yet to be prepared and the promised discount is yet to be calculated, the newspaper informs, citing sources familiar with the matter.

The Russian business daily claims that the discount will not be calculated on the basis of gas supply prices in 2011 but on the basis of the average price of Russian gas supplies in the period April to December 2012 and the price reduction will be applied retroactively.

The removal of intermediaries from the gas supply chain has not been agreed yet, although the issue has been discussed extensively for years, Kommersant writes, as cited by the Bulgarian Telegraph Agency (BTA).

The contract with the two intermediary companies expires in 2012, BTA reminds.

"Bulgaria obtained discounts from Gazprom relatively easy and there is nothing strange about this. The energy giant would waste no time quarreling with a country on which the implementation of the South Stream gas pipeline depends. It is much easier to offer the country the discount of 10-11%, which is standard for Europe," a Russian expert at the IDF-Kapital group is quoted as saying.

The analyst further mentions Bulgaria's profits from transit fees once the gas pipeline becomes operational.

According to an expert at the Troika Dialog investment house, Bulgaria does not rely solely on contacts with Gazprom, but is also showing active interest in liquefied natural gas supplies from the Mediterranean Sea and natural gas supplies from Azerbaijan via Turkey.

According to reports of another Russian daily, Moskovskiye Novosti, Gazprom wants to launch the South Stream gas pipeline project at any cost and aims to start construction works in December.

The newspaper notes that Italian Eni, French GDF Suez and German Wintershall, which participate in the designing of the sea section of the pipeline, have already received discounts and other concessions on the gas supply terms.

Russia is also said to have granted a substantial price reduction to Turkey in exchange for a permission to build the pipeline in the Turkish section of the Black Sea.

Bulgaria, where the pipeline is to surface, is a key partner in the project and has also decided to use the opportunity, the Russian daily writes.

The newspaper claims that Bulgaria's decision was not so much triggered by the price reduction of USD 50 but rather by the idea to win time.

Gazprom automatically extended all of Bulgaria's gas supply contracts from the expiry date in end-2011 to end-2012, thereby giving Bulgaria time to negotiate supplies from Azerbaijan too and to reduce the share of Russian gas in its balance, the newspaper notes.

We need your support so can keep delivering news and information about Bulgaria! Thank you!

Tags: gas supplies, natural gas, liquefied natural gas, Gazprom, intermediaries, Belene NPP, South Stream gas pipeline, Burgas-Alexandroupolis oil pipeline


» Related Articles: