Interconnector Bulgaria-Greece: Bulgaria's Key for Diversification

At the Gas Dialogues event in Budapest, Hungary, Development and Use of Natural Gas in the Danube Region: Prospects and Opportunities, Mr. Anton Pavlov, Deputy Minister of Economy and Energy, Republic of Bulgaria, said that the Interconnector Greece-Bulgaria looks to be crucial element of Bulgaria's broader overall strategy, which includes the South Stream natural gas pipeline, to embrace natural gas going forward.

Regarding the difficult situation in Ukraine, he said Bulgaria was working hard in different directions related to security and diversification of gas supplies. He pointed out: “Currently Bulgaria has only one supply of natural gas – the Russian Federation – along one gas pipeline through Ukraine.”

Mr. Pavlov said that Bulgaria's main priority was on increasing the security of gas supplies for Bulgaria, the South-east Europe region and European Union through diversification of supplies and routes.

According to him, the only real gas transportation alternative for diversification of supplies of natural gas for Bulgaria and the South-east Europe region was the Interconnector Greece-Bulgaria (IGB), which would be connected to the Trans-Adriatic Pipeline (TAP) project.

In the context of Bulgaria, he said, “Following a firm and clear position by the caretaker government for accelerating construction of IGB, we expect this autumn the shareholders to take a final investment decision, as the construction of the interconnector is to start at the beginning of 2015, and to be commissioned by the end of 2016.

“As you know, after serious efforts, Bulgaria, as the only participant in the Nabucco West project, could contract with the Shah Deniz Consortium a supply of alternative volumes of gas from Shah Deniz of 1 BCM/annum as of 2019, through Greece and the IGB interconnector. Practically the only exception for supplies of the second phase of Shah Deniz outside the countries along the TAP route was done for Bulgaria on the basis of strategic partnership between the Bulgarian and Azerbaijani states.”

Bulgaria, he said, was negotiating with Azerbaijan for supplying earlier volumes of natural gas owned by the Azeri state company SOCAR from the beginning of 2017 through Greece and the IGB connector before the volumes of Shah Deniz arrive around 2019.

Mr. Pavlov said the issue would be discussed at a forthcoming visit of the president of the Republic of Bulgaria to Baku.

Bulgaria, he reported, was also working actively for the implementation of other connectors with Romania and Serbia, but there were some geographical difficulties in crossing under the Danube River. Still, the Romania interconnector was expected by the end of 2014, or in the first half of 2015 at the latest. The pre investment preparation on the Interconnector Bulgaria-Serbia, he added, was ongoing.

“At the end of 2013 the Turkish state expressed its interest for the implementation of Interconnector Turkey-Bulgaria as previously things had been slow on developing this project. A memorandum was signed between the two countries and a working group established for the project,” he explained, adding that it was still in the study phase.

Mr. Pavlov also addressed Bulgaria's reverse-flow of natural gas with Greece in case Russian gas supplies were interrupted through Ukraine. “Considering the war conflict in the East of Ukraine, and the political tension between Ukraine and Russia, the dispute for the price of Russian natural gas for Ukraine and the opportunity for introducing sanctions on Russia and stopping the transit of Russian natural gas, we think that there are prerequisites for repeating the January 2009 gas crisis.

“The stress tests of the European Commission clearly show that among the neighboring member states of Europe, Bulgaria could only rely on reverse-flows from Greece. In this context, Bulgaria will rely on Greece for ensuring an emergency reverse of supplies on the existing transit gas pipeline in accordance with the negotiated volumes of about 3 BCM/day in case of full interruption of the Russian gas transit through Ukraine,” he said. “We'll do everything we can in order to ensure the export of the possible quantities of electricity to Greece in case of a new gas crisis.”

Regarding the South Stream project, Mr. Pavlov said the Bulgarian government held that the project needed to meet the requirements of European legislation for its offshore section on the Union's territory. “As you may well know the European participants in the offshore part of the project are the Italian ENI, French EDF and German Wintershall, and the main volumes of Russian gas are intended for the markets of Central and South Europe,” he said.

“Considering the war conflict in Ukraine, the fact that the Ukrainian government is not in control of the Donetsk and Lugansk regions through which the main transit gas pipelines through Europe go, the opportunity for introducing sanctions by the Ukrainian government against Russia, stopping the transit of natural gas, we consider that these circumstances give more reasons for constructing the South Stream project.”

In that context, he said Bulgaria would like to know the position of all participating countries in South Stream, and suggested that consultations between the countries be ongoing.

Mr. Pavlov explained that in Bulgaria gas was mostly used for power generation and industry, and in recent years consumption had gone down.

He stated that Bulgaria's strategic aims for the development of the gas market were increasing security of energy supply for the country through increasing the share of natural gas in the country's energy mix, increasing the transit of natural gas to neighboring countries, intensive development of gasification and decreasing the negative impact of harmful emissions on the environment and public health via high efficiency gas technologies.

Among the pending developments in Bulgaria's natural gas sector, he offered, were creation of a natural gas market with low pressure for heating and local power plants for direct combustion, building connections with neighbor countries like Greece, Romania, and Serbia to expand the options for the transit of Russian gas and increasing the transit capacities of existing gas pipelines, and constructing South Stream as well as active participation in projects for transit of natural gas from the Caspian region, Middle East and North Africa to the South-east Europe and the European Union, modernization and expansion of an existing underground gas storage in Bulgaria and a study of the perspectives for gas discoveries in the continental shelf in the Black Sea.

Mr. Pavlov commented, “With a view towards quick implementation and relatively less funds, it is especially important for the interconnectors with neighboring countries to be implemented. Interconnector Bulgaria-Greece should be taken into consideration in the context of the Shah Deniz Project's selection of the Trans-Adriatic Pipeline (TAP), leaving out the Nabucco West project.”

Meanwhile, he said Bulgaria was interested in newly discovered offshore natural gas finds in Israel and Cyprus, as well as a planned LNG terminal project at the Greek port of Alexandroupolis.

“Bulgaria continues to seek other alternative sources and earlier opportunities for supplies of natural gas for the country and the region and is expressing interest in possible supplies from the Eastern Mediterranean and the newly found offshore sources in Israel and Cyprus by Noble Energy.”

He added that Bulgaria was monitoring whether there would be a pipeline from Cyprus to Greece or whether there would be an LNG export terminal in Cyprus.

Bulgaria, Mr. Pavlov concluded, thought it was necessary to increase cooperation and coordination of activities between he member states of the EU in the spirit of a partnership and European solidarity.

Drew Leifheit is Natural Gas Europe's new media specialist.