Azerbaijan and Bulgaria’s gas hopes

Oil&Gas Materials 27 May 2015 22:00 (UTC +04:00)
One of the important events within the project on supply of Azerbaijani gas to Europe can take place in early June.
Azerbaijan and Bulgaria’s gas hopes

Baku, Azerbaijan, May 27

By Aygun Badalova - Trend:

One of the important events within the project on supply of Azerbaijani gas to Europe can take place in early June. Bulgarian Energy Minister Temenuzhka Petkova said that Bulgaria and Greece plan to sign the final investment decision on the construction of the IGB (Interconnector Greece-Bulgaria) on June 12.

She also added that the construction of this gas pipeline should start before March 2016 and be completed in 2018.

Thereby, Bulgaria can become the first European country to receive Azerbaijani gas which at the same time will be the first alternative supply source for it. The other European countries will get this gas within the Trans-Adriatic Pipeline (TAP) project in 2020.

Bulgaria is one of the countries that has great need for diversification and alternative supplies, since Russia is the only gas supplier to the country. To be more precise, Bulgaria's dependence on the import of Russian gas is 95 percent. The gas consumption in the country stood at 2.6 billion cubic meters in 2013, according to BP.

Bulgaria's need for alternative supplies increased in 2009 when as a result of the gas conflict between Russia and Ukraine, the country was left without gas for two weeks. Bulgaria lost the opportunity to get an alternative route of supply of that Russian gas in 2014 as a result of the failure of the South Stream project.

Bulgaria has expressed a desire to resume the Nabucco gas pipeline project, more precisely, its part running through the country's territory, which proves Bulgaria's great need for alternative gas.

Bulgarian Prime Minister Boyko Borisov said in early March that it is intended to submit this project to the European Commission. Gas to be produced as part of the Stage 2 of development of Azerbaijan's Shah Deniz field was considered as the initial source for this project and the consortium for the development of this field preferred its rival TAP which is being rapidly implemented today.

Thus, today, all the hopes of Bulgaria are associated with Azerbaijan's gas, which is the only real source that Bulgaria will be soon able to receive.

Bulgaria already has an agreement on Azerbaijani gas supplies in the amount of one billion cubic meters per year.

The IGB project is important not only for Bulgaria. Its significance also lies in that the pipeline will become a strategic gas transport infrastructure, providing the diversification of gas supplies for the countries in the South-Eastern Europe as well.

And the work in this direction is already underway. In April, Bulgaria signed an agreement with Romania and Greece on the construction of a connection among those countries' gas transmission systems, which has been called the Vertical Corridor.

The Vertical Corridor is scheduled to go into operation in 2018.

Azerbaijan's gas, supplied as part of this corridor, in particular can reach countries such as Moldova and Hungary, which have connections with the Romanian gas transmission system.

IGB enjoys political support from both Greece and Bulgaria, which in 2009 inked a memorandum of understanding on the project.

The project has also received the political and financial support of the EU, which is very important for its successful implementation. IGB is among the projects for implementation of which the EU will allocate 45 million euros under the European Energy Programme for Recovery (EEPR).

Aside from that, the IGB project has received support from the European Bank for Reconstruction and Development (EBRD), which signed a mandate letter with the ICGB, the company responsible for the development, financing and construction of the gas pipeline. The mandate letter creates bases for negotiations on the long-term financing of the project.

Currently, the project is at the stage of obtaining a permit to build a pipeline in Greece and Bulgaria, and the completion of this process is expected this year.

The IGB project, which would pave the way for deliveries of first alternative gas volumes to Europe, has all the prerequisites to be successfully implemented.

Edited by CN


Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova