Russ Oil-Gas

01-23-2009 - Upstream OnLine - Russian gas giant Gazprom will look into Bulgaria's demands for compensation over the cut in Russian gas supplies in line with existing contracts, Gazprom's deputy chief Alexander Medvedev said today. Bulgaria's Economy & Energy Minister Petar Dimitrov submitted a letter to Medvedev, who arrived in Sofia today, demanding either direct financial compensation to affected industrial consumers or deliveries of gas at a discount price. Dimitrov told a joint news conference with Medvedev that a third option for compensation envisioned access to Russia's pipeline network for the possible transport of gas from third countries, possibly Caspian, at discount transit fees. Medvedev said he expected Gazprom would reply to the Bulgarian demand in two weeks. "The signed contracts between the supplier and the consumer clearly determine the conditions (for compensation)," he said, speaking through an interpreter. "We think force majeure conditions took place and we did not have the physical possibility to provide gas to Europe, including to Bulgaria," Reuters quoted Medvedev as saying. "Despite that we think the sanctions which we may bear might not fall under the force majeure conditions and that is why we are reviewing the possibilities with our partners of solving these issues strictly in line with the signed contracts." Medvedev said he did not see the need for Bulgaria, which is almost fully dependent on Russian energy, to transit gas from other countries as Russia had enough supplies. Gazprom declared force majeure on its exports to Europe via Ukraine on 13 January. The cut-off stemmed from a dispute between Gazprom and pipeline transit state Ukraine which affected roughly 20 countries. Russia and Ukraine have blamed each other for the cut-off. "Even if there are no formal legal grounds, it is in the interest of Gazprom and the good co-operation...compensations to be paid to gas consumers in Bulgaria," Dimitrov said. Bulgaria was left without any deliveries for 15 days and estimates direct company losses at about 200 million lev ($133 million). Dozens of companies had to shut down production and hundreds of thousands of consumers were also left without heating in the depths of winter, provoking widespread public anger and street protests in the European Union's poorest nation. "I would like to express my sympathy to the people and companies which have suffered from the gas crisis," Medvedev said. Dimitrov reiterated his country's demand to review supply contracts and remove intermediaries. Gazprom now delivers gas to Bulgaria via three distributors, which are controlled or partially owned by the Russian gas giant.