The IGB project is key to gas security and natural gas supplies in Southeast Europe

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3E news
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08-05-2020 03:48:39
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Bulgaria has always been a notable factor in the transit of natural gas from East to West. And although in recent decades supplies have been tied to only one source, in the last few years the curtain of opportunities offered by the free natural gas market has already opened for Bulgaria.

How can we improve our positions on the gas map and focus on real supply diversification? Of course, with the provision of various suppliers of gas. And the most coveted such supplier at the moment is Azerbaijan. Our country has agreed for years on the supply of natural gas from the Shah Deniz 2 field, and now things are on the final straight. After years of negotiations and difficulties, the gas interconnector between Greece and Bulgaria is already under construction (the IGB project). It is at this facility that the first deliveries of natural gas are expected to start next year.

The good news for Bulgaria is that the financing of the project is already guaranteed - both with the personal participation of the shareholders and with a large loan from the European Investment Bank, secured by a state guarantee. IGB was also approved for grant funding from the European Structural and Investment Funds.

On the territory of Greece, in connection with the development of the Southern Gas Corridor, it is possible to connect IGB with the TAP gas pipeline and with the gas transmission infrastructure of DESFA S.A. –  and hence the possibility of supplying LNG from Greek terminals - the existing Greek liquefied natural gas terminal Revithoussa, as well as the one designed in Alexandroupolis, in which Bulgartransgaz is a shareholder.

The interconnection is designed to transport 3 billion cubic meters of natural gas per year from Greece to Bulgaria with the possibility of increasing capacity to 5 billion cubic meters per year. It is planned that the new gas pipeline will have the opportunity for reverse supplies of natural gas in the direction of Greece in case of need.

The deliveries will be made through the already built Trans-Anatolian gas pipeline - TANAP. From there to the Greek city of Komotini, deliveries will be made via another gas pipeline - TAP, which is supported by the European Commission and will also be completed soon.

In fact, European solidarity is key to building the gas connection from Komotini to Stara Zagora. And while for the EC projects are important, for Bulgariq IGB is really the key step towards diversification of gas supplies and creating a competitive free market. This is the reason why our country continues to invest efforts and funds in the project for supplies from Azerbaijan.

In fact, for IGB, it is planned to supply gas through liquefied gas terminals. That is why the Bulgarian government has decided to reserve about 500 million cubic meters of natural gas annually by Bulgargaz from the future LNG terminal near Alexandroupolis. These quantities of gas will be delivered to our country through the interconnector with Greece. To confirm its huge interest in the terminal project, the government has already announced that it wants to acquire 20% of the shares of the future facility. The project in Greece is being developed by Gastrade.

Supplies of liquefied natural gas

The binding phase of the market test for the liquefied gas terminal in our southern neighbor has recently been completed - this step was key to the continuation of the project. Greek and international natural gas companies, as well as end users, have confirmed their interest in reserving capacity at the terminal. The total long-term profile of binding offers is for a period of up to 15 years and reaches 2.6 billion cubic meters per year.

It will meet the growing gas demand in the region in the medium and long term, provide regional access to LNG from various sources, including LNG import from US, at prices that are related to liquid gas hubs, and will support consumers' access to natural gas and the entry of new entrants, which in fact would increase competition. The liquefied natural gas in the LNG terminal will be regasified and delivered to the markets of Greece and Southeast Europe. Not only the Greek gas transmission system will be used for this purpose, but also the IGB gas pipeline. It will be able to deliver fuel to the markets of Romania, Serbia and Hungary, and why not to Ukraine one day.

The successful implementation of the terminal can give an additional impetus to the Bulgarian-Greek interconnector, as it will allow to increase the capacity of the pipeline, which can only benefit our country. It is the possibilities for optimal synchronization and interaction of IGB with projects such as TAP, TANAP and LNG terminals that make it so important for the national interests. It is no coincidence that the project has already been marked as such of national importance by a decision of the Council of Ministers.

Regional gas security

The integration of the project with the Southern Gas Corridor and a number of other gas initiatives in Eastern Europe proves the importance of the pipeline for the real diversification of supplies regionally. Strong support for the Greece-Bulgaria interconnector is provided by the European Union, which provided grant funding for just over a third of the project cost. Bulgaria has also pledged a state guarantee for a BGN 215m loan from the European Investment Bank. IGB is also the gas highway, which can provide security and reliability in the supply of natural gas from alternative sources.

A number of established energy experts have already recommended Bulgaria to speed up the construction of the gas interconnector with Greece. Only in this way can our country ensure real diversification.

The pipeline itself is extremely important for the whole of Southeast Europe and because of its ability to transit liquefied natural gas from terminals in Greece and Turkey. This is stated in a report of the European Policy Institute, which was presented several months ago.

The authors of the report are Dr. Dimitar Belchev, Director of the Institute for European Policies and Dr. Plamen Petrov, a member of the Bulgarian Geopolitical Society. According to them, it is realistic to expect that from the middle of 2021 Bulgaria will start receiving 1 billion cubic meters of gas per year from Azerbaijan. Then, for a period of about a year and a half, Bulgargaz could find itself with a serious surplus of gas and this could force it to completely stop importing from liquefied gas terminals in neighboring countries. Of course, this is a matter of trade policy and opportunities for Bulgargaz to also export gas from Bulgaria.

However, the complete rejection of a long-term supply contract by Gazprom also carries risks, because over time the market situation may reverse and Russian gas may become cheaper than liquefaction again. The greatest hopes for diversification of supplies, as well as for new transit flows through Bulgaria, are placed on the Greece-Bulgaria interconnector, as it is designed as a northern extension of the Azerbaijani gas route east-west from the large sea field Shah. -Denise to the EU, explain the authors of the report.

According to them, there may be a problem with loading the full capacity of the IGB. At the auctions, a transmission capacity of 1.57 billion cubic meters per year was reserved, of which 1 billion is Azerbaijani gas contracted for import into Bulgaria.

ICGB gas project
regional security
energy supply
diversification