Slovakia's Eustream to begin key talks on grand CEE gas link project

By bne IntelliNews January 13, 2015

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Slovak gas transmission system operator Eustream is set to push Eastring - its ambitious scheme to link Central and Eastern European gas markets - to the next level, it said on January 13. 

Talks on the route with the proposed partners on the project - which was introduced in late 2014 as an alternative to Russia's now defunct South Stream - are expected to kick off in the week of January 19, Michal Lalik, head of strategic analysis at Eustream told bne Intellinews.

The Eustream official claims preliminary talks with Romania, Bulgaria and the European Commission have produced "only positive feedback". Lalik says the response "gives us a very good signal for future cooperation".

"We have agreed a continuation of the negotiations on all relevant levels [high level as well as the expert level]," he added.

The Eastring project 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 from Russia through Ukraine, while Eustream operates the main line through Ukraine and to Western Europe.

It plans to connect Slovakia's existing gas infrastructure to Romania and on into Bulgaria. Eustream chairman Tomas Marecek claimed in November that the proposed pipeline would allow the likes of Bulgaria and Serbia to receive gas even if Russian supplies via Ukraine are halted. Marecek said the pipeline could transport gas either from Russia or Western Europe.

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

Power in a union

The need for finding alternative sources for gas supplies and cutting reliance on Russia has become even more urgent in Europe after Russia announced on December 1 that it has dropped plans to build South Stream, which would have carried 63bn cubic metres per year into Southeast and Central Europe. As a result, energy ministers from countries that would have hosted the route have agreed to work together on alternative ways to diversify gas supplies. 

Bulgaria, Romania and Greece have signed a deal on the Vertical Gas Corridor, an inter-connector linking the three countries' gas grids, which will transport gas from Greece's Revithoussa LNG Terminal and - when it becomes operational - the Trans Adriatic Pipeline (TAP), which is set to transport Azeri gas into Europe starting in 2019.

Meanwhile, Eustream's push on Eastring comes as Bulgaria is looking to raise its role in the region's gas markets, as it bids to put disappointment over South Stream - and the cheaper gas and large transit fees it would have offered - behind it.

Bulgarian Prime Minister Boyko Borisov said at a meeting in Brussels on January 12 that his country plans to turn itself into a gas hub for EU member states in the region. Bulgaria, which imports almost all its natural gas from Russia, also confirmed its commitment to building an EU Energy Union - a plan which aims to build closer cooperation between member states and leverage the bloc's huge energy demand with suppliers.

Top of the agenda at the talks was gas infrastructure development priorities for Central and South Eastern Europe, according to a European Commission statement. The meeting confirmed creation of a High Level Working Group to push the most important cross-border diversification projects in the region. 

The European Commission's Vice-President responsible for Energy Union, Maros Sefcovic - himself a Slovak - repeated the Commission's willingness to assess how existing financial support mechanisms can help to secure the financing and swift implementation of cross-border projects.

However, Borisov - who has been hectoring the EU over the losses it will suffer due to the South Stream stoppage - has recently been pushing for the resurrection of the bloc's Nabucco-West project, albeit with an altered route. The Bulgarian PM suggested Western companies could build a pipe to collect Russian gas from Varna on the Black Sea coast and carry it to Austria. It would likely be bad news for the Slovak project should Brussels support run this scheme.

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