The problems and delays that have kept the IGB project “frozen” for several years seem to come to an end, under the pressure added by the Ukrainian crisis which highlights that having multiple sources of supply constitutes a critical factor for energy planning in Europe, Greece and Bulgaria.
As it seems, construction works for the IGB pipeline (the Interconnector Greece-Bulgaria) will eventually start at the end of the year or early in 2015 at the latest. In fact, that is why the Bulgarian government has been trying to secure natural gas supply from Azerbaijan and Israel.
The interconnection of the Bulgarian gas network with the Greek one, through the IGB pipeline, is absolutely necessary to give shape to Bulgarian government plans for securing multiple sources of supply. This is also the reason why ultimately the problems with the environmental licensing of the project in Bulgaria have been solved and as it looks in the autumn we will have the final investment decision and in 2016, as planned, a gas flow from Greece to Bulgaria.
Greek Environment and Energy Minister Yiannis Maniatis and Bulgarian Deputy Minister of Economy Krasin Dimitrov have already agreed to speed up procedures, as much as possible, so that the new pipeline could operate simultaneously with the TAP pipeline that will transport natural gas from the Caspian to Europe. In fact, the project is now considered to be very mature and also very important because it will contribute to the security of energy supply in the greater region.
According to the plans, IBG will have a capacity of 3 billion cubic meters of gas per year, expandable to 5 billion.
In fact, the launch of the project is directly linked to Bulgarian government plans for securing multiple sources of supply. That is highlighted by a recent statement by Bulgarian Economy Minister Dragomir Stoynev, who said that the construction of IGB will start by the end of 2014 or in early 2015 at the latest. This statement came after the meeting he had with his Azerbaijani counterpart, Natig Aliev, in Sofia, where they discussed among other things the possibility to supply Bulgaria with Azeri gas through the TAP and IGB pipelines.
Mr. Stoynev even admitted that the preliminary preparation phase for the IGB pipeline has been significantly delayed and, as known, the longest delays were due to the Bulgarian side, both in shaping of the corporate structure, and obtaining the necessary environmental approvals, despite the fact that the EU places great importance to the project, as it will also supply the countries north of Bulgaria, in order to reduce their dependence on Russia.
IGB is set to be constructed by a consortium formed by Bulgarian Energy Holding (BEH) with a 50% stake and Greek-Italian Poseidon with another 50% (50% DEPA, 50% Edison).
As for the issues of gas supply, through the pipeline, the Bulgarian side allegedly expresses concerns about the quantity it will receive from Azerbaijan, invocating infrastructure issues. At this point, it should be noted that both Bulgaria and Greece, through DEPA, have agreed on a supply of 1 billion cubic meters a year by 2019, which is the year that theoretically the TAP pipeline will become operational. According to other information, Bulgaria, due also to the crisis in Ukraine, wants to have inflows of Azeri gas through the Turkish network well before 2019. This however requires an appropriate level of preparedness from Turkey, in a period when the Turkish network is facing adequacy problems in the Bosporus area due to the high demand in Istanbul. As a result, any exports to Greece have been carried out with interruptions.
Bulgaria’s strong interest in importing gas from Azerbaijan had been also evident at the recent discussions that Prime Minister Plamen Oresharski had in Baku, and the matter will be high on the agenda during the visit of President of Azerbaijan, Ilham Aliev, in Bulgaria this June.
At the same time, Bulgaria has been trying to gain access also to Israeli natural gas, something that cannot be done without the IGB pipeline. This issue was discussed at the meeting of Bulgarian Prime Minister Plamen Oresharski with his Israeli counterpart Benjamin Netanyahu in Tel Aviv where the first was on official visit, with the participation of Bulgarian businessmen.
According to statements by Mr. Oresharski, Bulgaria could receive gas from the new reserves of Israel’s Exclusive Economic Zones (EEZ) through the Greek network. However, Bulgarian Prime Minister pointed out that this prospect is something considered in medium-term, and as he said “it is too early at the moment to discuss quantities and prices”.
However, irrespective of the emphasis that Bulgaria puts on the construction of South Stream (the new Russian pipeline) that will cross its territory, Bulgaria continues to have a strategic interest in upgrading the security of its energy supply by expanding its gas supplier base.
Moreover, it should be noted that the Revithoussa LNG Terminal, where upgrading works have already started, will play an important role in supplying Bulgaria, as well as other countries of SE Europe.
As announced by DESFA (the Greek National Natural Gas System Operator), works for the construction of the third tank, that will increase storage capacity from 130,000 to 225,000 cubic meters, the upgrading of port facilities to accommodate vessels with capacities of up to 260,000 cubic meters, and a 40% increase in LNG regasification capacity, have already started.
Finally, it should be noted that Bulgaria is still interested in the participation of a Bulgarian state company in the construction plan of the floating liquefied gas terminal in Kavala planned by DEPA.