By Lukas I. Alpert
Russian gas monopoly OAO Gazprom (GAZP.RS) said Thursday that it has signed a long-term natural gas contract with Bulgaria's Bulgargaz (BGAS.YY) after the two sides agreed on final investment terms for the South Stream pipeline.
Under the contract, Gazprom agrees to supply 2.9 billion cubic meters of gas a year to Bulgaria through 2022, using traditional transport corridors and the South Stream pipeline once it is operational.
"In this document we have preserved the principle of long-term contracts with oil indexation and the take-or-pay obligation. This mechanism has set the conditions for [a] gas consumption increase in Bulgaria," said Gazprom Deputy Chairman Alexander Medvedev.
The announcement came just hours after Gazprom said it had reached a final investment agreement with Bulgaria on the South Stream gas pipeline.
Earlier this month, Bulgaria's government approved the final step allowing it to build a stretch of the South Stream gas pipeline from Russia to Europe, but insisted on lower priced gas deliveries from Moscow in exchange.
The pipeline aims to be operational in 2015, with a capacity of 63 billion cubic meters a year, or about 14% of European Union gas consumption.
Write to Lukas I. Alpert at email@example.com
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