Bulgaria's future natural gas supply from Russia has again become a hot topic.

On December 6, the Government's press centre announced that the council of the tripartite coalition had told Energy Minister Roumen Ovcharov to continue negotiations with Russia's gas supply company Gazprom. That means no specific decision has been taken on a Russian demanded for a new long-term contract for supplying natural gas until 2030.

At a meeting with the coalition, Ovcharov presented the memorandum between Bulgaria's gas supply company Bulgargaz and Gazprom. It was prepared almost a year after negotiations for amending the existing contract began. That contract expires in 2010.

"Our Government must take a strategic decision as to whether it should defend the transit contract that is currently favourable for Bulgaria or try to ensure economic stability with a new long-term contract," Ovcharov said before the meeting.

The Gazporom - Bulgargaz saga has a year-long history. At the end of 2005, Alexander Medvedev, the deputy chairman and gas export chief for Gazprom, called for a change of the transit contract that would force Bulgaria to pay 40 per cent more for natural gas.

Negotiations for the proposed change of contract began in February when Ovcharov visited Moscow. At the time, Russia's position was significantly easier as a result of a meeting between Ovcharov and his Russian counterpart, Victor Hristenko, and Gazprom's management.

After their meeting, Russia's initial requirement for a new contract was replaced with a mutual agreement to further regulate the transit and supply of natural gas. Observers said this mutual agreement came about because Obvcharov was stalling for time. It seems his time is up.

In November Ovcharov told Parliament's energy committee that should Bulgaria choose to defend the current contract, after it expires in 2010 the country would see a minimum of a 40 per cent rise in the cost of natural gas, as well as reduction of the supply coming from Russia.

Since November, Ovcharov has been making similar comments, hinting that Bulgaria should accept Russia's requirements for higher gas price and sign a new long-term contract with Gazprom before the current one expires in 2010.

The current contract allows Bulgaria to receive natural gas for lower prices in exchange for lower transit taxes Russia pays to export its gas elsewhere in Europe. Bulgaria now pays $257 per 1000 cu m of natural gas, but this price is compensated for by the large quantities Bulgaria delivers through its transit pipelines from Russia to Macedonia, Greece, Turkey and Serbia.

Some critics say that Bulgaria's commitment to a new long-term contract with Gazprom would make meaningless the provisional inclusion of the country in the alternative project Nabuko. The envisaged construction of a Nabuko pipeline would allow for gas from Central Asia to pass to Europe through Turkey, Bulgaria, Romania and Hungary.  After the gas war broke out between Russia and Ukraine, this project has become increasingly important.

The joint project of Bulgargaz, OMV of Austria, Transgas of Romania and Hungary's MOL is expected to start in 2011. It aims to reduce Europe's dependence on Russian for "blue fuel," or natural gas. But some of Ovcharov's previous statements reveal that should Bulgaria participate in Nabuko in 10 years, it could see itself with pipelines but no steady supply of natural gas.

The final decision about a possible new long-term contract between Bulgaria and Russia was supposed to be taken between December 11 to 15. By the time The Sofia Echo went to press, no further information was revealed. However, some believe that in fact it has already been taken, that a new contract would be signed, and that Foreign Minister Ivailo Kalfin has already signed it in Russia during his official visit to Moscow between December 6 and 8.

During his visit, Kalfin met Russian foreign minister Sergei Lavrov. Asked about the contemplated new agreement with Gazprom, Lavrov said that at the talks, the sides voiced satisfaction with the negotiations. "I trust that the concord achieved so far between Gazprom and the Bulgaria side will turn into a specific agreement," Lavrov said.

Kalfin also gave a vague reply and said the "duration and guarantee for the natural gas supply" is what lies in the agreement between the two countries. He said that negotiations with Gazprom were at an advanced stage and only a few questions remain to be clarified.

He expected that an agreement could be signed by the end of this year.