State-owned gas company Bulgargaz has denied being in conflict with Overgas, the major intermediary in the supply of natural gas in Bulgaria.

“There is no conflict or opposition between Bulgargaz and Overgas”, stated Dimitar Gogov, CEO of Bulgargaz at a special press-conference in a reaction to the plans announced Thursday by Overgas CEO Sasho Donchev.

Since the fall of 2009, the Bulgarian government has been demanding a new deal with Russian energy giant Gazprom, which provides almost 100% of Bulgaria's natural gas, in order to eliminate Overgas as an intermediary.

On Thursday, the Overgas CEO Donchev declared that his company is going to enter the Bulgarian free market for direct supply to consumers and does not plan to renew its delivery contracts with Bulgargaz for the coming year. The Overgas CEO is certain of his company's capability to cover the entire market in the country.

The contract for the supply of 1 B cubic meters of natural gas expires at the end of 2010.

Overgas is the biggest Bulgarian private company in the field of natural gas, delivering about 70% of the total volume of gas in Bulgaria. 50% of Overgas shares are owned by the Russian energy giant Gazprom. Bulgargaz sells most of the gas to industrial consumers, while Overgas has a sizeable market share in gas supply for Bulgarian homes.

Bulgargaz chief Gogov downplayed Thursday's statements on the part of Overgas by claiming that they are “no news” and that there is nothing surprising about them. According to him, both Bulgargaz and Overgas are free-market companies and are to be expected to behave in competition.

The statement of Overgas's Donchev also included describing Bulgargaz as a “parasite structure”.

In stark contrast, Bulgargaz has been viewing Overgas as an unnecessary intermediary in gas supply. In a meeting with Gazprom CEO Alexei Miller in Sofia in February, Bulgargaz's Gogov, as well as Bulgarian energy minister Traicho Traikov, emphasized their desire to eliminate intermediaries. Traikov was reiterating arguments, voiced at the end of 2009, for direct gas supply from Russia to Bulgaria.

At Friday's press-conference, Gogov also interpreted the intentions voiced by Overgas as giving up Overgas's role as an intermediary between Gazprom and Bulgargaz and thus as consistent with minister Traikov's and Bulgargaz's views on gas delivery.

In April 2010 Gogov reported that negotiations between Bulgargaz and Gazprom for a new natural gas contract without intermediaries had come to a standstill. Nevertheless Gogov has been downplaying fears that failure to conclude a contract with Overgas would pose a threat for Bulgaria's economy, basing his claims on a substantial drop in domestic gas consumption.

Overgas is one of three intermediaries for gas supply in Bulgaria, the other two being Gazpromexport, a subsidiary of Gazprom, and the biggest German gas company Wintershall, which has been working in close collaboration with Gazprom.

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