Bulgaria and Gazprom sign broad gas deal

Apr 29, 1998 02:00 AM

Bulgaria's government and Russia's Gazprom were very positive about the deals they had signed and said the accords would be instrumental for their future policy.
Gazprom's chief Rem Vyakhirev said the deals -- on Russian natural gas supplies to Bulgaria and its transit to Balkan markets through Bulgaria -- would help his company to expand to the south.
"We need to expand the network to Turkey, build a pipeline in Serbia and in future we think there will be one to Albania," Vyakhirev told after meeting Bulgarian Prime Minister Ivan Kostov. "All this will go through Bulgaria," he said adding that the Bulgarian network would eventually be linked to central Europe.
Kostov told the deals would serve as a basis for new-style ties with Moscow and help resolve other outstanding issues between the two. "I admit that we want to use this breakthrough...in other areas and we don't want to waste time," he said.
He said he hoped soon to meet Prime Minister Sergei Kiriyenko to discuss bilateralissues.
But the Bulgarian public was left guessing what price the country would pay for the government's apparent political victory in its stand-off with the powerful Multigroup private business conglomerate.
Few details of the deals were made public and both sides agreed to keep secret the price for gas supplied to Bulgaria and the amount of transit fees it would get.
Both the price and the fees would fluctuate and be adjusted from time to time.

The accords said gas volumes transiting through Bulgaria to Turkey, Greece and Macedonia were to rise to 18.7 bn cmpy from the current level of 6 bn cmpy until 2010. Of the total 14 bn cmpy were for Turkey.
Russia was prepared to increase supplies to Bulgaria to 8 bn cmpy from 5 bn cmpy.
The third document, a memorandum, said Russia was prepared to go over 8 bn cmpy but set no timeframe. Bulgaria pledged to expand its transit capacity up to 30 bn cmpy after 2004.

Talks on the gas deals lasted for over a year and were hindered not only by financial bargaining but also by the attempts by the Bulgarian government to cut out of any future deal the Bulgarian-Russian gas supply company Topenergy.
The government had said its strategic interests were too important to be left in the hands of private firms serving as intermediaries but Multigroup and its gas arm Overgas had been refusing to sell their Topenergy stake to the state.
A solution was found when Gazprom agreed to increase its stake in Topenergy to 100 % from 50 %. Multigroup agreed and the deal is to be sealed by an extraordinary meeting of Topenergy shareholders on May 5.
Topenergy will sell gas to Bulgarian state company, Bulgargaz, which also sold its Topenergy equity to Gazprom.
Gazprom now not only supplies all of Bulgaria's gas but also enjoys an important degree of control over the movement of gas within the country and beyond.
"This was an epic fight and for the first time Bulgarian national interests were defended on a new basis -- that of equality, mutual benefit and mutual respect," Kostov said.

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