EU support sought for half of Vertical Corridor’s €450m budgeted cost

The Vertical Corridor, a European gas-pipeline system now planned to involve TSOs of seven countries – Greece, Bulgaria, Romania, Hungary, Slovakia, Moldova and Ukraine – will require an estimated 450 million euros in investments, energypress sources have noted.

Greek gas grid operator DESFA’s share of this sum will be minimal as a compressor station at Komotini, northeastern Greece, is all it will need to contribute to the project. All other upgrades to Greece’s gas grid, which, once completed, would enable the country to serve as a Vertical Corridor entry point, are already under development.

Officials of the six other countries participating in the project through initiatives taken by local TSOs believe that 50 percent of the project’s budgeted cost would need to be covered by EU funds if Vertical Corridor is to be materialized.

Project participants will push for political commitment from the European Commission by March as the upcoming European elections and any leadership changes would result in delays.

This issue was raised during a two-day ministerial conference staged by the Central and South-Eastern European Gas Connectivity Group (CESEC) in Athens last week, a gathering attended by European Commissioner for Energy Kadri Simson, but no indications of Brussels’ stance were offered.

Vertical Corridor project members are now expected to intensify their call to the European Commission for political support regarding the project’s development.

Following an initiative taken by Slovakia, an MoU was signed at the CESEC meeting in Athens to bring Moldova and Ukraine into the Vertical Corridor project.

Besides TSOs from the seven participating countries, Gastrade, a consortium established by the Copelouzos group for the imminent Alexandroupoli FSRU at Greece’s northeastern port of Alexandroupoli, and ICGB, the consortium behind the Greek-Bulgarian IGB gas pipeline, are also involved in the Vertical Corridor initiative.

ICGB concludes non-binding phase for expansion of IGB’s technical capacity

The independent transmission system operator ICGB has announced a successful completion of the non-binding phase of the incremental capacity process launched in July to assess the market interest in increasing the IGB pipeline’s total technical capacity.

“The market interest for a few consecutive gas years is nearly two times higher than our initial expectations. While for now these indications are non-binding for the shippers, this is a great first step towards a potential expansion of the IGB pipeline’s capacity from 3 bcm/y to 5 bcm/y”, said ICGB Executive Officers George Satlas and Teodora Georgieva. The two discussed updates on the plans for the interconnector’s development with other TSOs in the region during an event dedicated to the Vertical Gas Corridor held in Thessaloniki, Greece.

“In less than a year of commercial operations, the interconnector Greece-Bulgaria became an essential part of Bulgaria’s path towards energy diversification, enhanced security of supply and energy independence. Over 82% of the total capacity for the upcoming gas year is already booked and we’re looking ahead towards plans for expansion, further strengthening Bulgaria and Greece’s roles on the region’s energy map”, Georgieva noted.

According to her, gas traders have expressed interest for up to 4 bcm/y additional capacity for the next few gas years in the interconnection points of IGB with the Greek national operator DESFA and the Bulgarian national operator Bulgartransgaz.

George Satlas highlighted IGB’s synergy with the LNG terminal in Alexandroupolis and the pipeline’s key role as part of the Southern Gas Corridor and the Vertical Gas Corridor. “With the changed security environment in the region and the change of gas flow from south to north, Bulgaria is becoming a gas transit country. Together with Greece and its growing efforts towards developing LNG projects, our two countries are showing an excellent cooperation model in the energy sector”, he noted.

IGB is the first route for diversified supplies of natural gas to Bulgaria, guaranteeing increased security of supply and diversity of sources. The gas pipeline enables the transportation of natural gas from new sources to other countries in the region as well, including Moldova and Ukraine.

The IGB (Greece-Bulgaria Gas Interconnector) project is being implemented by the joint venture company ICGB AD, registered in Bulgaria in 2011 with shareholders BEH EAD (50%) and IGI Poseidon (50%). The co-shareholder IGI Poseidon is a company registered in Greece, with shareholders the Greek company DEPA International Projects (50%) and the Italian energy group Edison S.p.A (50%).

In accordance with its charter, ICGB AD is the owner of the IGB gas pipeline, financing its implementation, distributing its transmission capacity and receiving revenues from the transmission of natural gas.

The IGB gas pipeline connects with the Greek national gas transmission system (DESFA S.A.) and the Trans-Adriatic gas pipeline (TAP AG) in the area of Komotini (Greece), and with the Bulgarian gas transmission system (Bulgartransgaz EAD) in the area of Stara Zagora. The total length of the gas pipeline is 182 km, the diameter of the pipe – 32” – and a design capacity of up to 3 billion m3/year in the direction Greece – Bulgaria. Depending on the market interest for larger capacity and the possibilities of the neighboring gas transmission systems, the capacity of IGB is designed with the option for increase up to 5 billion m3/year with additional construction of a compressor station.

 

 

IGB moves close to launch, ICGB consortium certified

The Greek-Bulgarian IGB gas pipeline has moved a step closer towards its launch, expected around the end of this month, following the completion of a certification procedure for the ICGB consortium behind the project.

The European Commission, according to information made available, has approved a certification application submitted by the Greek Regulatory Authority for Energy, RAE, and its Bulgarian counterpart, EWRC.

Greek Prime Minister Kyriakos Mitsotakis and Bulgarian leader Kiril Petkov will both attend the project’s inauguration ceremony in Komotini, northeastern Greece, this Friday, ahead of the project’s commercial launch towards the end of the month.

The two leaders are expected to highlight this project’s contribution to the EU’s ongoing effort to end the continent’s reliance on Russia’s Gazprom.

The IGB gas pipeline will offer an alternative natural gas route into Bulgaria, initially via the TAP route and, from autumn onwards, through Greece’s gas grid. From 2023, the IGB will serve as a gateway for LNG imports from coastal FSRUs in the region. LNG quantities will reach Bulgaria, Romania, even Ukraine, through pipeline interconnections.

IGB nearing completion, Bulgarian PM to visit Komotini

The Greek-Bulgarian IGB gas pipeline, whose construction is expected to be completed by mid-April, promises to contribute to the EU’s effort for drastically reduced reliance on Russian gas.

The IGB gas pipeline, a 50-50 joint venture of the ICGB consortium, involving Greek-Italian company IGI Poseidon (DEPA and Edison) and Bulgaria’s BEH, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria and be linked with the TAP pipeline that runs across northern Greece for supply of Azerbaijaini gas to the region.

The IGB pipeline will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

Last week, EU officials announced a new energy strategy, Repower EU, aiming to reduce Russian gas imports to the continent by two-thirds. The establishment of alternative energy supply routes into Europe is now a priority on the Brussels agenda.

Bulgarian prime minister Kiril Petkov is scheduled to visit the IGB project contactor AVAX’s construction site in Komotini this Friday. His Greek counterpart Kyriakos Mitsotakis has been forced to miss the occasion after being sidelined by the Covid-19 virus. Energy minister Kostas Skrekas will fill in.

IGB gas pipeline launch delayed by 8 months for late-June, 2022

The commercial launch of the Greek-Bulgarian IGB gas pipeline has been deferred by 8 months, for June 30, 2022, as a result of pandemic-related obstacles faced during the project’s development.

The gas pipeline’s technical work is now expected to be completed by the end of this year, instead of April, 2021, as was originally scheduled.

Two months earlier, ICGB, the consortium developing the project, informed companies that have reserved pipeline capacities through a market test of the unavoidable delay in the commercial launch.

Contractor AVAX, the winning bidder for the project’s construction in an international tender staged by ICGB, began developing the pipeline in May, 2019, prior to the pandemic, whose emergence and impact forced the company to drastically reschedule the IGB project.

International quarantine rules have delayed the IGB project’s progress as many workers needing to regularly cross the Greek-Bulgarian border have been forced to quarantine, each time, for days.

The quarantining rules have also complicated the transfer of equipment needed from one country to the other.

The ICGB consortium is comprised of Bulgaria’s BEH, holding a 50 percent stake, and IGI Poseidon, a 50-50 partnership involving DEPA International Projects and Italy’s Edison.

The IGB gas pipeline, to cover a total length of 182 kilometers, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria, offering a second interconnection between the two countries, in addition to the nearby Sidirokastro link.

The project is planned to begin operating at an annual capacity of 3 bcm, which could be boosted to 5 bcm at a latter date.

 

DEPA, pivotal for Greek energy plan, pushing ahead internationally

Through its strategic involvement in an array of pipeline and infrastructure projects, Greek gas utility DEPA is becoming a key driver of Greece’s geopolitical upgrade and the diversification of supply sources for the wider region of South-East Europe.

DEPA is establishing its position in the region through a series of significant international projects such as the acceleration of IGB pipeline construction, participation in the IGI Poseidon pipeline  interconnecting Greece and Italy, and, surely, booking capacity in TAP which, from 2020 onwards, will transport Caspian gas to Europe.

Developments around East Med Pipeline are also rapid, with the most recent being IGI Poseidon’s (the 50% – 50% JV between DEPA S.A. and Edison S.p.A ) BoD decision to fast-track the completion of all pending stages that will bring the project to maturity.  The €70 million Feasibility Study is being accelerated, along with every other stage, to complete the East Med pipeline’s design, which will also pave the way for the final investment decision.

All the above are just one part of DEPA’s multifaceted international activity. Prior to that, in October, a bilateral agreement was signed in Sofia for the start of IGB pipeline construction, a project overseen by ICGB AD, in which DEPA has a 25% stake.

The project is expected to go into operation in July 2021, with an initial capacity of 3 billion cubic meters. At first, the entire load of gas will come from TAP that will go into operation within 2020, delivering Azeri gas to European markets, in which DEPA has booked capacity of 1 billion cubic meters. Thus, through IGB, the company will supply the Bulgarian market with Caspian gas, “breaking” for the first time the existing Russian monopoly.

Another major development took place just yesterday, when the company’s Board of Directors approved the participation of DEPA, with a 20% stake, to the equity of GASTRADE, the company developing the FSRU project in Alexandroupolis.

The Terminal is complementary to the IGB pipeline and consists of an FSRU (Floating Storage Regasification Unit), anchored 10 km off the coastal area of ​​Alexandroupolis, with storage capacity up to 170,000 cubic meters of LNG and 22.7 million cubic meters daily regasification capacity, per day (8.3 billion m3 / year), as well as a 28 km long onshore and subsea pipeline system.

The international presence of the company is also enhanced by the Greek-Italian energy interconnection through the IGI Poseidon pipeline, as well as the CYNERGY program that “breaks” Cyprus energy isolation by establishing a natural gas supply chain in the country.

Apart from its participation in international projects, equally important are the company’s long-term supply contracts with Russian Gazprom, Turkish BOTAS, Algerian Sonatrach, IGSC (Azerbaijan) through the TAP pipeline, as well as the procurement of significant quantities of LNG through the global SPOT market, at competitive prices.

DEPA’s CEO, Konstantinos Xifaras, summed up the company’s international role:

“For thirty years, DEPA has been a leading player in the Balkan energy sector, as well as an integral part of the European strategy for energy diversification and security of supply both of Greece and Europe.

At the same time, by deploying multilayered energy diplomacy and participating in major international projects, DEPA establishes Greece as a regional energy hub and upgrades its economic and geo-strategic importance.”

DEPA’s footprint is solid in the domestic energy market as well, where it recently prevailed in a tender process for natural gas supply to PPC in 2020. The company acknowledged as one of the two bidders, with the ability to supply PPC with 2 million MWh.

Offers soon for IGB gas pipeline project tenders, nearing completion

Three tenders offering contracts for Greek-Bulgarian IGB gas grid interconnector’s project manager, pipeline procurement and construction are approaching completion.

Offers for the tender to appoint a project manager, to monitor development on behalf of shareholders, are expected this month.

Greece is well represented in the tender concerning the construction of the IGB pipeline, planned to cover a 182-km stretch and budgeted at 145 million euros. A total of five consortiums with three Greek firms on board have advanced to this tender’s second round.

Germany’s Max Streicher has teamed up with Greece’s Terna; China Petroleum Pipeline Engineering has joined forces with Aktor; and J&P Avax is the third local qualifier. Their bids are expected next week.

ICGB, the IGB project’s consortium, a joint venture involving YAFA Poseidon – a Greek gas utility DEPA half-owned subsidiary – and the state-controlled Bulgarian Energy Holding (BEH), plans to have appraised these offers within a month before announcing a preferred bidder at the end of April.

The IGB is planned to be linked with the TAP route, offering Bulgaria and the wider southeast European region access to Caspian gas as well as LNG.

 

Rush needed to overcome IGB hurdles, stick to time frame

Greek and Bulgarian officials have admitted the prospective IGB gas grid interconnector, already well behind schedule, is facing new delays and issues. A rush will be needed to overcome various hurdles and stick to the project’s time frame.

Troubling news initially emerged from Bulgaria, when it was recently reported that  tenders for sub-contractors have been bogged down by legal action taken by firms not associated with the project’s development, including a winery.

ICGB, the IGB project’s consortium – involving the state-controlled Bulgarian Energy Holding (BEH) with a 50 percent stake, as well as DEPA, Greece’s public gas corporation, and Italy’s Edison with 25 percent stakes – has confirmed this news.

Despite noting that it expects this obstacle to be cleared within weeks, the consortium expressed concern of the emergence of similar issues in the future.

Earlier this month, the consortium announced the resignation of its chief executive Elio Ruggeri, who is now in charge of the LNG division at Italy’s Snam.

In comments offered this week, Bulgaria’s energy minister Temenuzhka Petkova insisted that the project’s current schedule remains valid. She also noted that EU funding worth 37 million euros and initially intended to finance a Bulgarian-Serbian interconnection could be redirected towards the IGB. The minister did not elaborate and offered no explanations as to how such a change of plan could impact the Greek-Bulgarian interconnection’s development and time frame. Petkova also informed that the IGB consortium could secure a more favorable financing agreement.

Her Greek counterpart Giorgos Stathakis, speaking at an Athens Energy Forum event yesterday, made reference to the IGB, noting its construction is expected to commence “within 2018”. Given the consortium’s most recent time frame, scheduling work to begin by this coming June, the project, it appears, is headed for a further delay.

Dimitris Tzortzis, the recently appointed chief executive officer at DEPA, Greece’s public gas corporation, believes work on the IGB will start in the third quarter this year. He described the project’s existing schedule as demanding. “We are depending considerably on continued full support from both the Greek and Bulgarian governments for the timely completion of related host government agreements,” Tzortzis commented.

The DEPA official added that he expects the IGB pipeline to begin operating in the second half of 2020.

The IGB interconnector, a project to measure 180 kilomteres in length and offer a 4.3 bcm capacity with upgrade options, is budgeted at approximately 220 million euros.

Plenty of preliminary work is still needed before the project’s development commences.

The IGB is receiving full political support from Greece, Bulgaria the EU and US. Combined with the TAP pipeline, to run horizontally across northern Greece, the IGB promises to serve as a vertical route for the wider region. TAP and IGB officials are currently engaged in advanced talks for an agreement to interconnect the two pipelines.

 

IGB’s final market test to take place in autumn, officials agree

A final market test for the prospective IGB (Greek-Bulgarian Interconnector), entailing the submission of binding bids by gas traders for the allocation of pipeline capacity, will take place this coming autumn, officials agreed at a meeting in Sofia today involving the participation of energy minister Giorgos Stathakis and his Bulgarian counterpart Temenuzhka Petkova.

EU funding for the IGB project has been ensured through respective National Strategic Reference Framework (NSRF) programs, Teodora Georgieva and Konstantinos Karayannakos, the executive officers of ICGB, the consortium established to develop the IGB project, informed the meeting’s participants while also stressing that major progress has been made over the past two years.

The project’s licensing procedure is at an advanced stage and awaiting pending regulatory decisions, the ICGB officials informed.

Stathakis and Petkova also discussed the prospective floating storage regasification unit (FSRU) in Alexandroupoli, northeastern Greece.

The IGB and Alexandroupoli FSRU will be designed to complement each other while the development of these two projects promises to create a competitive market that will have a positive impact on regional natural gas price levels, the Greek energy ministry noted in a statement.

The productive cooperation achieved between Greece and Bulgaria in the energy sector promises to ensure natural gas supply diversification in southeast Europe, the ministry’s announcement stressed.

The two ministers pledged to further enhance the mutually beneficial Greek-Bulgarian cooperation in the energy sector.

Officials at the meeting agreed that the Alexandroupoli FSRU’s completion will need to coincide with the commercial launch of the IGB project, scheduled for early 2020.

Vertical Corridor preliminary work progressing, new MoU to be signed

DESFA, Greece’s natural gas grid operator, is expected to sign a new Memorandum of Understanding within the next few days with its counterpart operators in Bulgaria (Bulgartransgaz), Hungary (FGSZ) and Romania, (Transgaz) as well as ICGB, the consortium established to develop the prospective IGB (Greek-Bulgarian Interconnector) pipeline project. The new MoU’s aim will be to explore the possibility of interconnections beyond Bulgaria, with Romania and Hungary, a stretch that would represent a big part of the Vertical Corridor.

Activities to be carried out by authoriities as part of this process will include an examination of which projects need to be developed, as well as the technical requirements of interconnections and  compressor stations.

The anticipated MoU will come as the next step following a Joint Statement signed by the four operators and ICGB last September in Budapest, on the sidelines of a Central and South Eastern European Gas Connectivity (CESEC) meeting chaired by the European Commission.

For that statement, the signees declared an intention to bolster their efforts, at technical and regulatory levels, for the development of the Vertical Corridor, expected to be comprised of a network of short pipelines to transmit natural gas from Greece all the way to Ukraine, and vice versa. This project promises to increase the diversification of supply sources in the intermediate countries – Bulgaria, Romania and Hungary.

The IGB will carry Azerbaijaini natural gas stemming from the Shah Deniz 2 field and is expected to be linked with the TAP project, currently under construction and planned to cross northern Greece, Albania and the Adriatic Sea, all the way to southern Italy.

Construction of the IGB project is expected to begin in 2018 and completed early in 2020.

Authorities are scheduled to meet again in Sofia on July 10 and 11.

IGB launch date reset for first quarter of 2020 in revised project plan

Construction work on the prospective IGB (Greek-Bulgarian Interconnector) has been rescheduled to start within 2018 and the commercial launch set for the first quarter of 2020, according to the project’s latest timeline revision, presented by its contractor, ICGB, to European Commission officials in Brussels late last month.

ICGB presented its revised IGB plan as part of the effort to seek PCI (Projects of Common Interest) classification, which would ensure EU funds. Other European PCI candidate projects were also presented by their developers.

The IGB, whose length and diameter are planned to measure 182 km and 32 inches, respectively, will link Komotini in Greece’s northeast with Stara Zagora in Bulgaria.

Its development schedule has been pushed forward in time on a number of occasions, the latest shift caused by recent elections in Bulgaria.

As a result, a crucial third market test, during which prospective IGB users will need to submit binding offers for capacity reservations, will be rescheduled. Authorities had planned to stage the test in May or early summer.

Temenuzhka Petkova’s return, last week, to the helm of Bulgaria’s energy ministry has been viewed favorably. Regarded as being a staunch supporter of the IGB project, Petkova is expected to move fast in an effort to make up for lost time.

Officials keeping a close watch on the project’s developments believe the IGB will be developed with or without the third market test.

Concurrent progress is also being made on the floating LNG terminal in Alexandroupoli, another prospective gas project in Greece’s north. Gastrade, supporting the project’s development, plans to have completed its FEED (Front-End Engineering and Design) study by late June. Contractors and shipyards are then expected to be commissioned to construct the project’s various segments.

Gastrade is currently also exploring financing options for the project, whose total budget is estimated between 350 million to 370 million euros. Roughly half of this amount is expected to be provided by the company itself. Loans by Greek and foreign banks as well as EU funding will be sought for the remainder.