Bulgaria Wants New Deal for Gas Supply

KYUSTENDIL, Bulgaria -- Bulgaria demands a new gas agreement with Russia to secure guarantees against any further cutoff in supplies and to remove intermediaries, state gas monopoly Bulgargaz said Tuesday.

Bulgargaz chief executive Dimitar Gogov told reporters that last month's disruption in supplies, which left Bulgaria without gas for 15 days, had accelerated a planned review and renewal of supply contracts with Gazprom.

He said talks could start as early as Wednesday, when a delegation led by Bulgarian President Georgi Parvanov starts an official visit to Moscow.

"The key is for the two countries to have enough guarantees that this contract will be fulfilled," Gogov told an energy seminar in the southwestern town of Kyustendil.

"We need to agree on how our interests will be defended, if what happened [in January] happens again," he said. "Just like we provide guarantees for our payments, the supplier should provide guarantees for fulfilling the contract in good faith."

Such contract guarantees did not exist so far, he added.

The gas cutoff stemmed from a dispute between Gazprom and pipeline transit state Ukraine and affected about 20 countries. Bulgaria was among the worst hit because it relies almost completely on Russian gas and has no access to alternative pipeline routes.

Two weeks ago, Sofia submitted to Gazprom a letter demanding compensation in three possible ways -- cash, deliveries of cheaper gas or access to Russia's pipeline network for transport of gas from third countries at discount transit fees.

Gogov said Sofia would repeat its demand to replace the three intermediaries that deliver Russian gas to Bulgaria, with only one distributor, noting that Gazpromexport was Bulgaria's preferred supplier.

Gazprom delivers gas to the Balkan country via three companies, which it controls or partially owns. As a result, Sofia has three supply contracts that expire between 2010 and 2012.

Gogov said Bulgaria would seek to keep the contracts long term with a duration of at least 10 years. He reiterated that the two sides would also look into the price formula and see whether certain parameters needed changing.

Bulgargaz estimates its direct losses from undelivered Russian gas in January at $20 million and puts additional damages at 18 million levs ($11.8 million), Gogov said.

The gas crisis forced dozens of companies to shut down production and left hundreds of thousands of Bulgarians without heating in the depths of winter.

Bulgaria, which consumes about 3.2 billion cubic meters to 3.4 bcm of gas per year, received last month 157 million cubic meters instead of the requested 260 million to 270 million, Gogov said.

The European Union newcomer, whose annual gas needs are expected to jump to 6 bcm in 2020, has rushed to diversify its supplies away from Russia and sought EU aid to help it build links to neighboring countries.