Interconnector Greece-Bulgaria Marks Up 'Key Milestones'

Steady progress is being made on a gas pipeline project, Interconnector Greece-Bulgaria (IGB), its developer company ICGB said September 12.

The planned 182-km pipe is to be laid from Komotini, Greece to Stara Zagora, Bulgaria and have an initial 3bn m3/yr capacity flowing north into Bulgaria. It would let Bulgaria expand and diversify its gas supply, currently dominated by Russian imports, and in a later stage improve Greek security of supply.

ICGB is 50% owned by state Bulgaria Energy Holdings, and 50% by IGI Poseidon – itself a 50-50 joint venture of Greek state-run gas grid Depa and EDF’s Italian subsidiary Edison. The consortium said September 12 that several key milestones were reached in the first half of this year.

Among these, it said that a market test, conducted in 2016, was successfully completed with the execution of the advance reservation capacity agreements (Arcas) when shippers submitted binding offers. Five companies, four of which are new to the Bulgarian market, have booked capacity in the IGB pipeline. On March 10, the Arcas were submitted to Bulgarian energy regulator EWRC and its Greek counterpart RAE.

In July, ICGB filed an application for a regulated exemption from having to provide third-party access to EWRC and RAE, which are due to decide by the end of October. A final opinion from the EU is expected by January 2018, after which the gas transportation agreements can be signed with the five shippers.

ICGB says a proposal for EU funding is well advanced, and says a sovereign guarantee worth €110mn was provided in Bulgaria’s recent state budget.

The process for establishing of land rights for some 3800 plots for the pipeline and the related sites is finalised, including the compulsory purchase of 23 plots, where voluntary agreements with owners were not reached, in July/August 2017. A construction permit filed with Bulgaria on September 1 is expected to be issued mid-September.

Tenders to be issued in coming months

The ICGB board also July 2017 approved an updated schedule which foresees most procurement tenders to be notified between now and end-2017.

The schedule broadly corresponds to what ICGB chief executive Teodora Georgieva announced in June when she told a conference: “A construction permit is expected in 3Q 2017 in Bulgaria and 4Q in Greece.” A Bulgarian government minister told the same event that it wanted to step up Azeri gas imports from the 1bn m3/yr starting 2020 currently agreed level. ICGB's two partners took a preliminary decision to invest in the project in late 2015, but this was obviously subject to all the subsequent permits, approvals and grants that the venture has sought since.

At the same time, a separate floating LNG import project at Alexandroupolis in northern Greece, which would enable LNG cargoes to be regasified there and piped via IGB to Bulgaria, is making progress towards a possible final investment decision in late 2017.

NGW put three questions to ICGB: What is the current cost estimate for IGB in its 3bn m3/yr and 182km phase?  What is its expected start-up date, contingent on all approves being secured early 2018? and Is the Greek construction permit still expected to be issued in 4Q 2017, as Georgieva said? However it has yet to hear back from the company.

Depending on the interest from the market, IGB is designed for increasing its capacity up to 5bn m3/yr to allow for physical reverse flow (from Bulgaria to Greece) with the additional installation of a compressor station.

 

Mark Smedley

 


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