Bulgaria to sign a new contract for gas supplies without intermediaries

A new contract for gas supplies will be signed between Bulgargaz and Russian Gazpromexport. This became clear after the yesterday's meeting between Prime Minister Boyko Borissov and Alexey Miller, Chairman of the Board of Directors of Gazprom. “The contract will not include participation of intermediaries in the supply process,” said Minister of Economy, Energy and Tourism Traicho Traikov, who attended the meeting.

This confirms the intention of both sides declared a year and a half ago that two of the current gas suppliers - Overgas and Wintershall - should drop out from the process of gas imports to the country. The new contract is expected to be finalised by the end of the year. The period for the future gas supply under the new contract is yet to be specified. The present contracts with the three companies expire at the end of December and the largest volumes of gas so far have been supplied by Overgas.

“Gas prices will be tied to the quotations on the spot market, not to the oil market,” Traikov explained. This change will also be introduced in the new contract. The Minister added that in a month or two the reduction of natural gas prices under the new contract with Gazprom would become clear. So far, Bulgaria has managed to negotiate discounts of around 7%. Because of the price increase of natural gas on world markets, however, Bulgargaz has already requested a price increase of nearly 27% as of April 2012.

The South Stream gas pipeline project was discussed at the meeting with Prime Minister Borissov as well. It was agreed that the research activities would be completed in the coming months. This will allow for the final investment decision on the construction of the pipeline on Bulgarian territory to be made in November.

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