Russia’s Gazprom halts gas supplies to 50%-owned Bulgarian distributor Overgas

By bne IntelliNews January 4, 2016

A major gas row unfolded in Bulgaria at the turn of the new year, as Russia’s state-owned natural gas major Gazprom suddenly halted direct natural gas supplies to Bulgaria’s Overgas Inc., in which it has a 50% stake.

Late on December 30, Zhaklen Koen, CEO of Bulgaria’s state-owned public gas supplier Bulgargaz, told local media he had received a copy of a letter from Gazprom Export to Overgas, in which the Russian company informs it is stopping supplies to Ovrergas as of January 1. A day later, prime minister Boyko Borissov assured Overgas’ 55,000 household subscribers they will not be left without gas.

Meanwhile, Overgas agreed deliveries from Bulgargaz in order to not interrupt deliveries to households. It told its industrial clients to turn directly to the state-owned monopoly. At the same time, Bulgargaz said it was assured by the Russian corporation it will receive the additional quantities at a 10% premium relative to current contractual prices.

So far, Overgas and Bulgargaz accounted for 10% and 90% of the natural gas supply to Bulgaria. In turn, Bulgargaz bought more than 93% of the quantity from Gazprom, whereas the balance is domestically produced.

Gazprom has reportedly agreed to sell its 50% stake in Overgas Inc. to Overgas Holding, controlled by local businessman Sasho Donchev. The deal, which will give Donchev full control over Overgas, is expected to be finalised by end-April.

The only available comment from the Russian side was made by the country’s foreign ministry which said that talks for settling accumulated commercial issues between Gazprom and Overgas Inc. continue, Capital weekly reported.

On the other hand, the Bulgarian company said it has no liabilities to its Russian partners and its natural gas supply contract expires in 2017. It also hinted at attempts for its business to be stolen by Bulgargaz.

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