Gazprom to pay $412m in advance to reserve Bulgarian pipeline capacity
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Gazprom to pay $412m in advance to reserve Bulgarian pipeline capacity

28 Jul 2021 (Last Updated July 28th, 2021 12:01)

Bulgartransgaz will use a part of the raised proceeds to partially repay debts to the pipeline developer Arkad consortium.

Russia’s Gazprom has expressed interest to pay $412m (€349m) in advance to Bulgarian gas network operator Bulgartransgaz for the Turkish Stream (TurkStream) gas pipeline.

The upfront will be paid by Gazprom’s export unit Gazprom Export for reserving capacity of the Bulgarian extension of the 474km-long TurkStream gas pipeline.

This will be effective from 1 July 2021 until 30 June 2023, Bulgartransgaz said.

According to Reuters, the Bulgarian gas network operator plans to use $278m (BGN461m) of the funds raised to repay debts to the Saudi-led group Arkad, which built the pipeline for €1.1bn.

Arcade Consortium is the main contractor for the construction of gas transmission infrastructure expansion, which runs parallel to the northern main gas pipeline to the Bulgarian-Serbian border.

Bulgartransgaz in a statement said: “Following a proposal received by Association Consortium Arkad, the gas transmission operator will pay early a sum amounting to BGN461m, thus the company will not owe any cost increase thereunder and will save accordingly BGN80m.

“In addition, in line with a proposal of the consortium, Bulgartransgaz EAD will further save BGN14m as a result of the additional cost increase reduction in the percentage for a three-year period.”

Additionally, Bulgartransgaz intends to use the remaining proceeds to repay loans of €65m to commercial banks.

The gas network operator also plans to use a part of the advance payment to fund future operating, investment, and financial costs.

Bulgartransgaz said that Gazprom’s advance payment would help the firm in realising $63.9m (BGN106m) in total savings.

The TurkStream pipeline is designed to transport Russia’s large gas reserves to Turkey’s gas transportation network.