Банкеръ Weekly

Briefs

BULGARIA KNUCKLES DOWN TO MOSCOW FOR THE NATURAL GAS

At the tenth meeting of the Joint Bulgarian-Russian Intergovernmental Commission for Scientific, Technical, Commercial and Economic Cooperation, held in Moscow during the week, Gazprom's representatives insisted one more time for termination of the barter payment of transit fees by natural gas, fixed in the agreement between Bulgargas and the Russian gas company till the year 2010. June 10 for when the general meeting of Gazprom's shareholders is scheduled has been set as a deadline for changing the contract.
Such an amendment will considerably raise the price of the aggregate quantities of natural gas for our country, Minister of Economy and Energy Roumen Ovcharov has pointed out repeatedly, refusing to satisfy Gazprom's demands for that reason. Meanwhile, his stance has obviously changed considerably. Instead of repeating that the terms fixed in the trade contracts should be fulfilled by both parties, Mr. Ovcharov agreed with the head of the Russian gas giant Alexey Miller that by June 30 small teams of experts would propose a scheme for amending the agreement about transiting Russian natural gas. On top of all he said in public that what we are doing is not in compliance with the willingness of one side only. Does that mean that Bulgaria also insists for changing the contract and therefore rising the price of the gas it gets from Russia?
Mass media in Sofia have calculated that the price hike will be at least 40 per cent. Of course, things will become much clearer after the experts of Bulgargas and Gazprom present the above-mentioned scheme. According to Mr. Ovcharov, it will include a number of issues, concerning not only gas transits and deliveries, but also the long-term cooperation between the two countries. He does not expect a drastic increase of gas prices, but Sofia's and Moscow's long-term interests in that sphere to be guaranteed. That is why the task now is to be able to explain to the Bulgarian society the balance of interests and exclude suspicions that something is done behind people's backs and at their expense.
But no matter who explains what the bill which all of us will be paying will be quite stiff. Both that for the natural gas prices and market and for the Bourgas-Alexandroupolis pipeline project. The construction company will be probably structured in June, Mr. Ovcharov said, adding there would be no changes in the share participation for building that pipeline - the Russian side will have 51%, Bulgaria and Greece - 24.5% each. But while Greece may add tanker shipments to its minority stake, we'll concede the control over the oil pipeline to Gazprom again, that time through its subsidiary Sibneft, renamed to Gazpromneft in the end of last week.
After the meeting of the Bulgarian-Russian intergovernmental commission it became known as well that our EU-accession wouldn't be a hindrance to the speedy development of bilateral relations. With the year 2007 approaching when Bulgaria will become EU's new member, the Russian Federation will be fully supporting Bulgaria's steps and initiatives in that direction said Sergey Narishkin, who together with Roumen Ovcharov co-chairs the commission. In his words, Russia has already considered the list of contracts - the basis for our bilateral cooperation - which Bulgaria has proposed in connection with our EU-accession.
Mr. Ovcharov's stance is that despite some positive trends, cooperation between the two countries is lagging behind the real opportunities of their economies. The disbalance in bilateral trade, which has reached the record high USD2.7BN, is an exceptional burden to us. According to Russian data, the turnover exceeded USD3BN, Minister Narishkin summarized, pointing to Glavbulgarstroy and Bulgartabac as our major investors in Russia, although their presence there has been only symbolic over the last two years. One way or the other, Bulgaria has already proposed to Russia to start preparing a new agreement for economic cooperation in compliance with the new market realities and European standards. Let's hope its future won't be the same as that of the gas agreement.

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