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Thursday, January 29, 2009

Bulgaria Bills Gazprom

//Seeks Compensation for 19-Day Outage; Firm Blames Ukraine
01-25-2009 - Wall Street Journal by Jacob Gronholt-Pedersen - MOSCOW - Bulgaria said it will claim compensation from Russian gas monopoly OAO Gazprom for the losses it incurred during a 19-day Russia-Ukraine gas dispute that cut off supplies to Europe. Russian gas flow to Europe resumed this week after Moscow and Kiev signed a 10-year supply contract that the two parties insist will guarantee future shipments aren't interrupted. Bulgaria's Economy and Energy Minister Petar Dimitrov on Friday handed Gazprom's Deputy Chief Executive Alexander Medvedev an official request for compensation during talks in Sofia. Gazprom says it has no intention of paying and that Ukraine is to blame. The Ukraine government press office couldn't be reached for comment. Bulgaria's move suggests Gazprom will bare the brunt of compensation claims for damages that some of the worst-hit countries in Eastern Europe are estimating at hundreds of millions of dollars. Mr. Medvedev was scheduled to meet to discuss the same issue later Friday with Slovakia's Prime Minister Robert Fico, who said Slovakia's economy lost €100 million daily due to the stoppage in gas flows. Mr. Medvedev said Gazprom faced "force majeure conditions (that) made it impossible to fulfill our contract obligations. We did not have the physical possibility to supply gas to Europe." Some experts disagree with Mr. Medvedev, saying European importers have agreements with Gazprom, not with Ukraine. "All contracts say Gazprom has to deliver gas to a specific point west of Ukraine's border with the European Union," said Mikhail Korchemkin, an independent gas analyst based in Pennsylvania. It remains unclear whether Gazprom would legally be able to redirect claims to Ukraine, as the company's European export contracts have never been made public. Western European nations have so far been quiet on the issue of compensation, with many suffering far less than have the newer EU members. Some, including Italy and Germany, enjoy friendly ties with Russia and may not want to rock the boat too much, especially with projects like the Nord Stream gas pipeline -- set to bring Russian gas to Europe without passing through Ukraine -- important to longer-term diversification plans. European Commission President Jose Manuel Barroso indicated earlier this week that individual companies are free to sue Russia for the New Year disruptions.

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