Bulgaria seeks support from EU, Russia for €1.5bn natural gas hub

Bulgaria seeks support from EU, Russia for €1.5bn natural gas hub
By Dimitar Koychev in Sofia September 6, 2016

Bulgaria will initiate trilateral meetings with the European Commission and Russia on plans for the Balkan natural gas hub, Prime Minister Boyko Borissov told an investor roundtable intended to drum up support for the project on September 5. Bulgaria wants to store gas from Russia and the Caspian region at the planned hub at the Black Sea port of Varna, which could cost up to €1.5bn to build. 

Bulgaria has been looking at options to boost energy security ever since Russian President Vladimir Putin cancelled plans for the South Stream gas pipeline project in December 2014, in favour of a potential Turkish Stream pipeline. South Stream was designed to deliver gas to Europe under the Black Sea, bypassing Ukraine entirely. The move was a heavy blow to Bulgaria, which currently imports almost all of its natural gas from Russia through Ukraine.

Bulgaria has already received EU support for the gas hub proposal, according to Borissov. However, Russia does not seem to share Borissov’s vision or enthusiasm. 

Georgi Gegov, executive director of state-owned natural gas transmission and storage operator Bulgartransgaz, said that the investment in the natural gas hub would be between €1.4bn and €1.5bn, 24 chasa daily reported. The planned annual capacities are 45bn cubic metres and 37bn cubic metres respectively, the executive noted.

Gegov also announced that a company Gas Hub Balkan will be created and a 50% stake will be offered to investors. The hub will be operated by Bulgartransgaz. By November, the state-owned company will submit a request for financing for a feasibility study for the hub to the EC.

The Bulgarian government hopes to make its final investment decision on the hub in 2020, Gegov said according to Reuters.

On September 6, Klaus-Dieter Borchardt, director of internal energy market at the EC’s Directorate-General for Energy, said that the project for the regional gas hub will be developed regardless of what happens with North Stream 2 or Turkish Stream, BTA reported. He added that the EC is ready to participate in trilateral meetings with Bulgaria and other countries interested in the project, regardless of whether they are Russia, Turkey or another country.

A day earlier, the EU official said that work on the regional gas hub project had been in progress for six months, Focus news agency reported. He added that Southeast Europe also has the right to take advantage of its location as a gas transport route, which would bring a lot of benefits to the region, such as investments, new jobs and infrastructure improvements.

Despite hopes in Sofia that Russia would also get involved in the project, Russian Energy Minister Alexander Novak told journalists that Russia is not discussing the possibility of building a gas pipeline under the Black Sea through Bulgaria, RIA Novosti reported on September 3. According to Novak, the cancelled South Stream project is not on the agenda.

Commenting on the renewed work on the alternative Turkish Stream pipeline, Novak said that the road map on the project’s implementation may be coordinated in October, TASS reported from the Eastern Economic Forum on September 2.