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28/09/2016

Bulgaria and Greece start building gas interconnector

Energy

Bulgaria and Greece start building gas interconnector

Map of IGB, the Interconnector Greece-Bulgaria [IGB]

Sofia and Athens yesterday (10 December) signed a final investment agreement to build a natural gas pipeline to help Bulgaria reduce its almost complete reliance on Russian gas supplies.

The 180 kilometre pipeline will be built by a Bulgarian-Greek joint venture that also includes Italian energy group Edison SpA.

After years of delays, construction of the Interconnector Greece-Bulgaria (IGB, also known as Stara Zagora-Komotini pipeline) with an initial annual capacity of 3 billion cubic metres (bcm) per year is expected to start in October 2016.

“This signing gives the real start of the project, which is strategic not only for Bulgaria and Greece, but also for all southeastern Europe,” Bulgarian Energy Minister Temenuzhka Petkova said after the ceremony, also attended by her Greek counterpart Panos Skourletis.

The pipeline aims to tap gas from Azerbaijan, and will also be able to carry gas from Greece’s liquefied natural gas (LNG) terminal after 2018, when it is expected to become operational.

It is estimated to cost about €220 million and will be partially financed by an EU grant of €45 million.

Bulgaria’s state owned energy holding company BEH has a 50% in the joint venture, while Greek state energy firm DEPA and Edison hold 25% each.

Bulgaria hopes to become a regional gas hub and transport both Russian and Caspian gas to central Europe and Prime Minister Boyko Borissov said Bulgaria will aim to boost the IGB’s capacity to 20 bcm in the future.

Consecutive governments have declared connecting Bulgaria’s network to its neighbours to diversify gas supplies a priority after a price spat between Russia and Ukraine left the country in the cold for two weeks in January of 2009.

The centre-right government of Boyko Borissov has stepped up work on the gas links, backed by its allies in Brussels and Washington, and has also voiced plans to turn itself into a regional energy hub.

Earlier this week, US Secretary of State John Kerry praised Greece for embracing strategic energy projects that will cut Europe’s dependence on Russian gas, including the IGB pipeline.

A gas connection with Romania is now expected to be ready by the middle of 2016 and a gas pipeline with Serbia should also be ready in 2018, the energy ministry said.

IGB is one of the “Projects of common interest” recently presented by the Commission as the infrastructure backbone of the Energy Union.

>> Read: Commission outlines Energy Union legislative path

Background

The European Commission reproached Bulgaria for getting carried away with gigantic projects which fail, like Nabucco and South Stream, instead of building less spectacular projects, such as interconnectors, with its neighbours.

>>Read: Bulgaria lacks political will to build interconnectors, says Commission

The IGB (the Greece-Bulgaria interconnector, also known also as Stara Zagora-Komotini pipeline) has been on the table for at least 10 years. In 2008, €45 million was earmarked for the project. At that time, it was seen in the context of the Southern Gas Corridor and the ITGI project (the latter now defunct, replaced by TANAP across Turkey and TAP across Greece and Albania, to Italy).

>>Read the Links Dossier: The energy conundrum in Bulgaria and Greece

Further Reading