Gazprom said in a statement that chief executive Alexei Miller and Rumen Ovcharov had discussed cooperation in the oil and gas sector, including a new payment mechanism for the transit of Russian natural gas via Bulgaria, which is almost 100% dependent on gas imports from Russia.
Gazprom wants Bulgaria to pay in cash for natural gas supplies, totaling 3.1 billion cubic meters in 2005, thereby eliminating a gas-for-transit scheme in a contract signed by its export arm, Gazexport, and Bulgaria's state-owned Bulgargaz that will expire in 2010.
In 1998 the companies signed two contracts - for direct delivery and for gas in exchange for transit. Under the first contract Bulgaria currently pays about $260 per 1,000 cu m, but the gas price under the gas-for-transit contract is $83 per 1,000 cu m. This allows Bulgargaz to keep domestic prices at about $180 per 1,000 cu m.
Miller and Ovcharov agreed that transition to a market payment mechanism should be part of a well-balanced and mutually advantageous joint gas-transit program based on an increase in Russia's natural gas supplies via Bulgaria and the creation of a gas-distribution network in the country, with experts to draft such a program soon, Gazprom said.
According to Bulgargaz, Gazprom's natural gas deliveries for Turkey, Greece and Macedonia via Bulgaria amounted to 15.5 bln cu m in 2005, up about 15% from the previous year.
Gazprom said Russian-Bulgarian cooperation could involve building gas supply networks to allow direct supplies to customers, including via joint venture Overgaz Inc., which accounted for 73.8% of direct natural gas deliveries on the Bulgarian market in 2005, and in which Gazprom has a 50% stake.
In January, Bulgaria rejected Gazprom demands to review its gas-for-transit contract with Bulgargaz. Ovcharov then was reported to have said that $258 per 1,000 cu m was unacceptable for the country.
