European Commission lights green to IGB project
The project of Greece-Bulgaria interconnector, which envisages the transportation of natural gas from Greece to Bulgaria, is close to the construction stage.
The development of this interconnector will allow the delivery of Azerbaijani gas to Bulgaria, which will contribute to 40 percent of Bulgaria's gas demand.
European Commission’s latest decision on the Interconnector Greece-Bulgaria (IGB) to approve the support measures by Greek and Bulgarian governments for the project opens the way for starting the construction of IGB, Greek Minister of Environment and Energy Giorgos Stathakis said.
The minister noted that the IGB will help diversify energy sources and enable natural gas to be delivered via Trans Adriatic Pipeline (TAP).
“It is a strategic project that highlights Greece as an energy hub of the wider region of Southeastern Europe and a key energy gate for the Old Continent, contributing to the prospect of unifying the European energy market,” Stathakis added.
The European Commission has found Bulgarian and Greek plans to support the construction and operation of a natural gas interconnector to be in line with EU state aid rules.
“The new gas interconnector between Greece and Bulgaria will increase the security of energy supply and enhance competition, to the benefit of citizens in the region. We have approved the support measures to be granted by Bulgaria and Greece because they are limited to what is necessary to make the project happen and therefore are in line with our state aid rules,” Commissioner Margrethe Vestager, in charge of competition policy, said.
The measures approved by the Commission will support the construction and operation of a cross-border gas interconnector (called IGB) between Greece (Komotini) and Bulgaria (Stara Zagora). The gas interconnector is designed to transport 3 billion bcm per year of natural gas from Greece to Bulgaria by 2021. Later, the capacity may reach 5 bcm per year.
IGB will be owned by ICGB AD, a 50-50 joint venture between the IGI Poseidon consortium (which includes Edison of Italy and Greek gas incumbent DEPA) and BEH, the Bulgarian gas incumbent.
The total investment cost for the realization of the IGB interconnector amounts to 240 million euros.
The European Union attaches great importance to this project and has allocated 46 million euros for its funding. The project will be financed through the European Energy Programme for Recovery (EEPR), which is centrally managed by the European Commission, in the amount of 45 million euros.
The European Investment Bank (EIB) will also provide a loan of 110 million euros to BEH (and subsequently passed-on to ICGB AD).
As many as 39 million euros will come as a direct financial contribution from the Bulgarian State budget via the Bulgarian Operational Programme "Innovation and Competitiveness" 2014-2020 (OPIC).
The IGB project was supported by Greece and Bulgaria governments within Memorandum of Understanding signed in 2009. Bulgaria through Bulgargaz EAD company has already concluded a contract with the Azerbaijani state-owned company SOCAR for the delivery of 1 billion cubic meters per year from the second phase of Shah Deniz gas field. These volumes represent about 2530 percent of the consumption of natural gas that Bulgaria expects by 2020 in our country.
IGB is a gas pipeline which will allow Bulgaria to receive Azerbaijani gas, in particular, the gas produced from Azerbaijan's Shah Deniz 2 gas and condensate field. IGB is expected to be connected to TAP, to create an alternative source to Russian gas flowing to Bulgaria.
TAP in turn is a part of the Southern Gas Corridor which provides for the transportation of 10 billion cubic meters of Azerbaijani gas from the Caspian region through Georgia and Turkey to Europe.
The project is also supported by the U.S., which views the IGB as an important alternative for eastern European countries, because the U.S. is interested in reducing EU’s gas dependence on Russia.