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RF gas contract with Bulgaria provides for 20% price reduction

Document also provides for the possible reduction in the volume of obligatory gas taking under the contract in 6 years in the event of gas production growth in Bulgaria

MOSCOW, November 16 (Itar-Tass) — The long-term gas contract signed between Russia and Bulgaria on Thursday provides for the annual supply to Bulgaria of up to 2.9 billion cubic metres of Russian gas for the period until 2022, Gazprom Export said in a release.

The document provides for the delivery of gas through the traditional gas transport corridor, and from the moment of commissioning of the South Stream the gas pipeline – on this new route.

“In this document we have preserved the principle of building long-term contracts with the netback pricing and the ‘take-or-pay’ obligation. This mechanism has made it possible to create conditions for the expansion of gas consumption in Bulgaria,” head of Gazprom Export Alexander Medvedev said.

According to earlier Itar-Tass reports quoting Bulgarian Prime Minister Boyko Borisov, the contract provides for the actual 20-percent reduction of the contract price, primarily by removing intermediaries from the gas delivery scheme.

“The price of Russian gas supplied to Bulgaria is the lowest for countries in this category (Central Europe),” head of the Russian natural gas monopoly Gazprom Alexei Miller said, adding that the price reduction is made for the future strategic partnership in the gas sphere.

The document also provides for the possible reduction in the volume of obligatory gas taking under the contract in 6 years in the event of gas production growth in Bulgaria (currently about 30 percent of the need is covered by domestic production).

According to earlier Itar-Tass reports, the new contract has replaced the expired, under which gas was supplied by Overgas (50 percent of which belongs to Gazprom, 50 percent – to a Bulgarian businessman), as well as a contract with Germany’s Zarubezhgaz Management und Betayligungsgezellshaft.

In 2011, the volume of Russian gas supplies to Bulgaria totalled 2.81 billion cubic metres, of which 2.5 billion cubic metres came from Overgas.

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