Milestones achieved in Interconnector Greece-Bulgaria project in 2019

Milestones achieved in Interconnector Greece-Bulgaria project in 2019

BAKU, Azerbaijan, Dec. 23

By Leman Zeynalova – Trend:

Executive director of ICGB AD, the company, engaged in the implementation of the Interconnector Greece-Bulgaria (IGB) from Bulgaria Teodora Georgieva has outlined for Trend the key events in the project’s implementation in 2019.

On 7th February 2019 IGB obtained an installation permit on the territory of the Hellenic Republic, which combined with the issuance of the ASFA license grants the project the right to start construction activities on the Greek territory;

In March 2019 ICGB successfully completed the procedure for selection of an owner's engineer for the gas interconnector Greece-Bulgaria

On 24th April 2019ICGB selected a contractor in the procedure for construction oversight for the construction of the gas interconnector Greece-Bulgaria on Bulgarian territory;

In May 2019 ICGB completed the public procurement for line pipe manufacturing and supply for construction of IGB gas pipeline;

On 14th May 2019, ICGB completed the procedure for awarding engineering, procurement and construction of the interconnector with Greece;

On 22nd May 2019 the groundbreaking ceremony for the IGB project took place in the presence of the Prime minister of the Republic of Bulgaria and the Prime minister of the Hellenic Republic;

On 15th of June a notice to proceed to the Owner Engineering was issued.

On 18th July 2019 the project obtained a license for an independent operator of a gas transmission network which also allows construction to start on Greek territory

At the beginning of October 2019, the National Regulatory Authorities of Greece and Bulgaria adopted a joint decision for approval of a Network code and a Tariff code of ICGB by which the project company comes closer to completing the procedure for certification as an independent gas transmission operator

On 10th October 2019 during the official ceremony in the presence of the ministers of energy of the Republic of Bulgaria and the Hellenic Republic the following significant document were signed:

A long term loan financing agreement between Bulgarian Energy Holding (BEH) and European Investment Bank (EIB) in the amount of approx. EUR 110 mln and respectively an onlending agreement between ICGB and BEH in the same amount. The Long term loan financing by EIB is secured by a state guarantee from Republic of Bulgaria. The financing will be disbursed to the Project company via an onledning agreement between Bulgarian Energy Holding (BEH) and ICGB.

Binding Gas Transportation Agreements were concluded with the main shippers who have reserved capacity through ICGB.

The contracts with the selected Line Pipe and EPC were concluded and notices to proceed were issued.

An Intergovernmental agreement between Bulgaria and Greece (IGA) focused on the stabilization of the tax regime applicable for the project during commercial operation and the adoption of the mechanism for the allocation of revenues between both territories. The IGA was signed by the Ministry of Energy of Bulgaria and the Ministry of Energy of Greece.
Further in order to secure the construction process, the following additional agreements were signed by the Shareholders, during the official ceremony:

Amended Shareholder’ agreement to ensure the management and operation of the Project Company during construction, whereby the final business plan of the IGB project was adopted as well as the final budget for construction of the gas interconnector

A Shareholders’ decision for the increase of the capital of the company by EUR 42.4 million.

In terms of figures the following main contracts securing the construction process were concluded in 2019:

Engineering procurement and construction – in the total amount of EUR 144 850 000 with AVAX S.A

Line pipes manufacture and supply in the amount of EUR 58 229 760 with Corinth Pipeworks S.A

Owner’s engineer for Interconnector Greece Bulgaria in the amount of EUR 5 670 000 with Consortium Tibey

Contract for Archaeological studies on the Bulgarian site of pipeline, the contract was concluded in 2018 but additional activities were contracted in 2019 – the approximate amount of works is around EUR 2 000 000.
Construction supervision for the Bulgarian section of the pipeline in the amount of EUR 388 582
Designer supervision for the for the Bulgarian section of the pipeline in the amount of EUR 76 694;

The capital of the Project company was increased on November 1st, 2019 in the amount of EUR 42.4 mln. The money is partially used for covering the advance payments to the EPC and Line pipe and ongoing payments to the Owner Engineering in the total amount of EUR 23 443 938.

Besides the capital injection provided by the shareholders, the financing of the project will be secured by the following sources:

EUR 39 mln to be granted to the project from the European Structural Fund Financing (ESIF) allocated to Bulgaria under the Operational Program Innovation and Competitiveness 2014 – 2020
EUR 45 mln, European Energy Recovery Program (EEPR) grant financing approved for the implementation of the project.
EUR 110 mln long-term loan financing provided EIB, to be disbursed to the Project company via the onledning agreement between Bulgarian Energy Holding (BEH) and ICGB.

The envisaged financing is sufficient for the completion of the construction of the pipeline. Any potential short-term liquidity needs due to delays in the reimbursement of the grant financing shall be covered by a short-term bridge financing.

IGB is a gas pipeline, which will allow Bulgaria to receive Azerbaijani gas, in particular, the gas produced from Azerbaijan's Shah Deniz 2 gas and condensate field. IGB is expected to be connected to TAP via which gas from the Shah Deniz field will be delivered to the European markets.

The Interconnector Greece-Bulgaria project envisages a two-stage development.

In the first stage, the pipeline capacity will be 3 billion cubic meters of gas, of which 2.7 billion cubic meters will be offered for the long-term market, the remaining share of 0.3 billion cubic meters in the short term.

In a second phase, also depending on the evolution of the market, the capacity of the pipeline can be increased to 5.3 billion cubic meters of gas thanks to the addition of a compression station: 4.5 billion cubic meters of gas 0.5 billion cubic meters of short-term gas will be offered for long-term products.


Follow the author on Twitter:@Lyaman_Zeyn

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