The Russian side has started playing rougher with Bulgaria regarding gas negotiations between the two countries, according to recent statements by Economy and Energy Minister Roumen Ovcharov.
If Bulgarias long-term interests are not protected, the contracts with Russias Gazprom for the supply and transit of natural gas until the end of 2010 will not be changed, Ovcharov said at a conference on Bulgaria and Energy Security Policy in Sofia.
Negotiations on guaranteeing the delivery and long-term transit of gas with Gazprom are going on. The position of the Bulgarian Government is that Bulgaria wants to have a contract with that company, but so far the parties have not agreed on any mutually acceptable arrangements.
If the existing contracts are not changed, this will lead to arbitration proceedings and serious problems for Bulgaria after 2010 when the price of gas will be considerably higher and the gas will be carried through other countries, its transit bypassing Bulgaria, Ovcharov said.
We have a contract and if it has to be changed, it should first be clear how Bulgarias financial losses will be compensated and what is our national interest from the change, he said, adding that he would implement an active policy of looking for other sources of natural gas. This includes talks with Turkey, Egypt and Kazakhstan.
The opportunities for negotiations with Algeria are being studied, as well as the possibility of a connection with the gas-carrying systems of Turkey, Greece and Italy, which may prove to be a way of diversifying gas deliveries for Bulgaria.
Ovcharov said gas supplies from sources other than Gazprom would be impossible in the following two years. Even if gas deliveries are negotiated with Iran or Algeria, the prices will not be lower than those of Gazprom, he said.
Facing this difficult choice, Bulgarias Cabinet is currently discussing four options in the negotiations with Gazprom.
Under the first option, no changes will be made to the existing bilateral agreement until it runs out in 2010. After that gas transit volumes will decline to six billion cu m a year.
A total of 15.5 billion cu m of natural gas were transited via Bulgarian territory to Turkey, Greece and Macedonia in 2005, up two billion cu m over 2004.
Under the second option, the bilateral gas supply agreement will be revised to outline new methods of payment and pricing tariff.
According to Ovcharov, the best way to go is to extend the agreement with another 20 years and increase the transit volume to 20 billion cu m.
It was agreed at a Bulgarian-Russian meeting in Moscow in May that the two sides should approximate their positions by the end of June when Gazprom will hold a general meeting of shareholders.
Moscow is insisting to pay for the transit in cash and not in gas deliveries at fixed prices.
At the moment, Bulgaria receives 1.4 billion cu m of natural gas annually as transit fees at a price of $82 for 1000 cu m. That arrangement allows Bulgaria to maintain relatively low domestic gas prices.
