July 28 (SeeNews) - Bulgaria's state-owned gas transmission system operator Bulgartransgaz said that Russian energy giant Gazprom is ready to pay in advance some 683.3 million levs ($413.2 million/349.4 million euro), VAT excluded, to book capacity on the Bulgarian section of the TurkStream gas pipeline.
Gazprom Export, a unit of Gazprom, expressed interest and readiness to make an advance payment in the respective amount for the booking of capacity under a signed capacity booking contract for the period July 1, 2021 - June 30, 2023, Bulgartransgaz said in a statement on Tuesday.
"The total due amount for the period, calculated at a forecast annual indexation of the applicable tariffs under the effective contract, for gas years 2021/2022 and 2022/2023 of 1.7% totals to 704.5 million levs, VAT excluded. When applying a discount factor of 2.7% on an annual basis the advance payment sum totals to 683.3 million levs, VAT excluded," Bulgartransgaz said in the statement.
Supported by the advance payment of Gazprom Export, Bulgartransgaz will be able to save a total of 106 million levs by paying off earlier its liabilities to the main contractor under the project for construction of the Bulgarian stretch of the TurkStream pipeline - a consortium of Saudi-based Arkad Engineering and Construction Company and its Italy-based joint venture company Arkad ABB, as well as to commercial banks, it said.
Bulgartransgaz will pay early 461.1 million levs to the Arkad consortium, thus the company will not owe any cost increase thereunder and will save accordingly 80.3 million levs. In addition, in line with a proposal of the consortium, Bulgartransgaz will further save 14.6 million levs as a result of the additional cost increase reduction in the percentage for a three-year period, the company added.
The available funds give Bulgartransgaz an opportunity to pay early another 65 million in loans to commercial banks. When paying off early, the gas transmission system operator will save about 11.7 million levs from interest costs and will refund collaterals in the amount of 24.1 million levs.
Bulgartransgaz will use the remaining part of Gazprom Export's advance payment amounting to 95.1 million levs to pay future operating, investment and financial costs, the company also said.
In September 2019, Bulgartransgaz signed a 1.1 billion euro ($1.3 million) contract with Saudi-led consortium Arkad for the construction of a gas pipeline, which will connect the country's existing gas transmission system to the border with Serbia, and will carry gas from TurkStream.
The offshore section of the TurkStream pipeline stretching 930 km across the Black Sea from Russia to Turkey consists of two parallel strings with annual throughput capacity of 15.75 billion cubic metres of gas each. One string is intended for consumers in Turkey, while the second is intended to carry gas to customers in Europe via Bulgaria.
(1 euro = 1.95583 levs)