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Gazprom ready to pay in advance €349.4 million to book capacity on Bulgarian section of Turkish Stream

In 2019, Bulgartransgaz signed a €1.1 billion contract with Saudi-led consortium Arkad for the construction of a gas pipeline, which will connect the country's existing gas transmission system with Serbia and will carry gas from TurkStream

Gazprom ready to pay in advance €349.4 million to book capacity on Bulgarian section of Turkish Stream

Sofia, July 29 - Neftegaz.RU. Bulgaria's state-owned gas transmission system operator Bulgartransgaz said that Gazprom is ready to pay in advance some €349.4 million, VAT excluded, to book capacity on the Bulgarian section of the TurkStream gas pipeline, SeeNews reported.

The offshore section of the TurkStream pipeline stretching 930 km across the Black Sea from Russia to Turkey consists of 2 parallel strings
1st string is intended for consumers in Turkey
The 2nd is intended to carry gas to customers in Europe via Bulgaria.

Bulgartransgaz said in a statement:
  • Gazprom Export 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
  • 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 €360,2 million, VAT excluded
  • When applying a discount factor of 2.7% on an annual basis the advance payment sum totals to €349,4 million, VAT excluded
Supported by the advance payment of Gazprom Export, Bulgartransgaz will be able to save a total of €54,2 million 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 & Construction Company and its Italy-based joint venture company Arkad ABB, as well as to commercial banks.

Bulgartransgaz will pay early €235,7 million to the Arkad consortium, thus the company will not owe any cost increase thereunder and will save accordingly €41 million.
In addition, in line with a proposal of the consortium, Bulgartransgaz will further save €7,4 million as a result of the additional cost increase reduction in the percentage for a 3-year period.

Bulgartransgaz will use the remaining part of Gazprom Export's advance payment amounting to €48,6 million to pay future operating, investment and financial costs, the company also said.

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