Slovakia claims preliminary deal on Romania, Bulgaria gas link imminent

By bne IntelliNews January 29, 2015

Slovak gas transit operator Eustream hopes to sign a preliminary deal with counterparts in Romania and Bulgaria on Eastring - its proposed pipeline to link CEE gas markets - within a fortnight, CEO Tomas Marecek said on January 28.

Speaking on the sidelines of a conference, Marecek told Reuters: "We expect to sign a memorandum of understanding with both Romanians and Bulgarians within, let's say two weeks."

At the beginning of the year, Michal Lalik, head of strategic analysis at Eustream, told bne Intellinews that talks with Romania, Bulgaria and the European Commission have produced "only positive feedback". Talks on the route of the project were expected to kick off in the week of January 19, he said at the time.

Marecek added that his company - operator of the Slovak section of the mainline gas route that carries Russian gas into the EU via Ukraine - is still in talks with "many counterparties who could theoretically participate as shareholders." The pipeline should cost €750mn-1.2bn, depending on the route.

Eustream - utlimately controlled by closely-held Slovak financial group J&T via Czech-based energy holding EPH - is eyeing a joint venture with international partners, the CEO says. The company plans to hold talks with major German players, as well as Austria's OMV and Gaz de France, he claims. 

Eastring looks to tap into the EU's increased focus on finding alternative routes to Russian deliveries because of energy security concerns. The Balkan region is particularly dependent on supplies piped from Russia through Ukraine.

Eastring would offer a route connecting the region to Western European gas hubs. Romania and Bulgaria were amongst the worst hit when "gas wars" between Moscow and Kyiv cut supplies in 2006 and 2009.

The initial capacity of the pipeline is planned at 10bn cubic metres per year. However, that could be doubled in the future, Eustream has suggested.

Marecek said as he introduced Eastring in late 2014 that the pipeline will also be able to transport gas from Russia into Central Europe. That east-west flow could now be the more important of the two directions, with Russia saying it plans to divert gas exports away from Ukraine and via Turkey. 

Coming in the wake of Moscow's cancellation of the giant South Stream pipeline, the proposed "Turk Stream" has states across CEE hastily scouring for projects that would offer them a slice of the action.

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