Southern Gas Corridor has key importance for energy supplies to Europe

Trend’s exclusive interview with Bulgaria’s Minister of Energy Temenuzhka Petkova on the occasion of the Southern Gas Corridor Advisory Council Ministerial Meeting in Baku

Question: How do you see the prospects for energy cooperation between Azerbaijan and Bulgaria?

Answer: Bulgaria and Azerbaijan have traditionally good, friendly relationship and I am pleased that in the energy field it develops in an excellent way. Both countries are a natural bridge between the Caspian and the Black Sea and hence the natural route of gas supplies from the Caspian region to Southeast and Central Europe. Azerbaijan is the main driving force for the implementation of the Southern Gas Corridor project, which is a key to diversifying sources and routes for natural gas supply not only for our country, but also for Europe. As you know, we have a contract for delivery of 1 billion cubic metres of natural gas from Shah Deniz 2 field. During the recent visit of Prime Minister Boyko Borissov and the Bulgarian government delegation in Baku, the state oil company SOCAR expressed its interest in taking part in the household gasification in Bulgaria. You also know about the signed Memorandum of Understanding between Bulgartransgaz EAD and SOCAR, which main purpose is to explore the possibilities for additional routes for supply of natural gas, as well as for transit through Bulgaria to other markets in Southeast Europe. All of these are examples of the lasting interest of both countries to deepen their traditional good relations in the energy field. I am confident that this mutually beneficial cooperation will continue and its outcome will be diversification of natural gas supply sources and routes for the whole region.

Q.: Currently, together with its foreign partners, Azerbaijan is implementing the Southern Gas Corridor project. What is the significance of this project for Europe, in particular, for Bulgaria?

A.: The Southern Gas Corridor project is of key importance for energy supplies in Europe. I take this opportunity to thank our Azerbaijani partners for the active work on the implementation of this project, which will help implement one of our main priorities – diversification of natural gas sources and routes. By building the Southern Gas Corridor whose main driving force is Azerbaijan, European consumers will be able to receive gas from the Caspian region, the East Mediterranean and from other distant destinations through LNG terminals. Integral parts of the Southern Gas Corridor project are the interconnectors between Bulgaria and the neighboring Greece and Turkey, on the implementation of which we are actively working. Regarding the construction of the gas interconnector with Greece, we are currently at the stage of selection of an owner’s engineer and line pipe supplier. We're planning to start the construction by mid-year.

TANAP that connects Azerbaijan with Georgia, Turkey and Greece will be completed by the end of the year. In July this year, we will also complete the extension of the gas pipeline with Turkey, which will allow the flow of additional quantities of gas along the transit gas pipeline at the Bulgarian-Turkish border. These routes will be diversified with the construction of other interconnectors at a further stage.

Q.: Bulgaria will receive Azerbaijani gas via the Interconnector Greece-Bulgaria (IGB). At what stage is the process of the implementation of this project?

A.: The interconnector with Greece is one of the key projects that will help diversify energy supplies in Europe. Since the project had been delayed for years, during our previous government mandate we signed the Final Investment Decision that made the implementation of the project irreversible. Now we are working intensively to build the interconnector through which we will have access to new sources of natural gas. As it has already become clear, there is an ongoing tender procedure for the selection of an owner’s engineer and a pipe supplier. The tender procedure for EPC contractor is forthcoming and actual construction activities will begin around the middle of the current year. We plan to start commercial exploitation of the interconnector in 2020.

Q.: Could you update on the amount of financial resources approved for IGB project?

A.: The total investment cost of the project is 240 million euros. The project has an approved grant of 45 million euros under the European Energy Program for Recovery. A procedure related to the possibility of approval by the European Commission of a transfer of 39 million euros from the Interconnector BulgariaSerbia project to the Interconnector Greece- Bulgaria is currently ongoing. These funds are under the Innovation and Competitiveness Operational Program. We expect the project to receive funding from the Greek Structural Funds in the amount of about 12 million euros.

I would also like to stress that for several consecutive years a sovereign guarantee for IGB project of 110 million euros of the budget of the Republic of Bulgaria has been confirmed, which is an unambiguous sign of the importance the Bulgarian Government gives to the implementation of the interconnector. This guarantee allows the project company to negotiate for more favourable loan conditions than the European Investment Bank and the European Bank for Reconstruction and Development offer.

Q.: Bulgaria’s Bulgargaz has a long-term contract for 25 years with Azerbaijan’s state oil company SOCAR for supply of 1 billion cubic meters of natural gas per year from Shah Deniz 2. Is Bulgaria interested in increasing those volumes?

A.: Bulgaria through “Bulgargaz” company has concluded a contract with the state-owned company SOCAR for the delivery of 1 billion cubic metres per year from the second phase of Shah Deniz gas field. These volumes represent about 2530 percent of the consumption of natural gas that we expect by 2020 in our country.

Bulgaria has an interest in possible additional supplies of natural gas from Azerbaijan in the development of the new Azerbaijani gas fields in the Caspian Sea and upon agreement of competitive prices. I would also like to underline that we are ready to ensure the transit of Azerbaijani gas for Southeast and Central Europe by using the well-developed Bulgarian gas infrastructure and the “Balkan” regional gas hub project currently under realization. In this respect, I believe there are still many opportunities for sustainable energy cooperation between Bulgaria and Azerbaijan.

Q.: How do you assess the prospects for SOCAR’s entering Bulgaria’s energy market? What about SOCAR’s participation in Chiren project?

A.: The possibility for the stateowned SOCAR to invest in household gas supply in Bulgaria was one of the topics discussed in the recent visit of Prime Minister Borissov and the government delegation to Baku. As we know SOCAR has implemented a similar project in Georgia and its entry on the Bulgarian household gas supply market would benefit consumers: the increase of competition reduces prices and improves quality. One option is Azerbaijani gas to be included in energy aids as an alternative to heating vouchers. This perspective will be analyzed in detail in order to clarify the exact parameters.

Regarding the underground gas storage Chiren, the future for cooperation under the project for the storage expansion is regulated in the memorandum signed last year between the two companies – Bulgartransgas and SOCAR. The possible involvement of SOCAR in the project would be another opportunity for our country to enhance its cooperation with Azerbaijan.