Bulgaria: Gazprom Offers €5 Billion Investment In Exchange Of Lower Transit Fees

Russia's state company Gazprom and its banking arm Gazprombank are offering amendments to the long-term natural gas deal with Bulgaria aimed at cutting down the transit fees in exchange of investment commitments for some €5 billion, according to statements of Gazprombank's advisor Ilko Yotsev quoted by the local daily Dnevnik.Yotsev has been a deputy energy minister in the Bulgarian government before moving to work for Gazprombank. He points out that Bulgaria is charging now very high transit fees, which have been arranged in a package with high gas prices in the past but well below the current market rates. Bulgarian economy and energy minister Roumen Ovcharov recently indicated that Gazprom will also push for higher gas prices but the government will try to stick with the current contract. Ovcharov has hinted however that some compromises may be possible in exchange of investments.

Gazprom is reportedly interested in acquiring shares in the Bulgarian state-owned gas importer Bulgargaz and gas-dependent firms like fertilizers chemical producers. Gazprom and Gazprombak are also willing to finance the building a nuclear plant in Belene and the planned expansion of the gas transmission network of Bulgargaz, according to Dnevnik.

IntelliNews comment:

The offered changes to the gas contract with Gazprom in exchange of investment commitments would further expand the country's dependence on Russian energy sources that could be quite unfavorable for the local economy in the long run. Russia's offer would also undermine the development of the European project for building the Nabucco pipeline for transit of natural gas from Azerbaijan to Central Europe through the territories of Turkey, Bulgaria, Romania, Hungary, and Austria. However, energy and economy minister Ovcharov is seen as one of the representatives of the Russian lobbies in the country that could work in favor of the Gazprom's geo-strategic interests.