Construction of EU-funded gas interconnector between Bulgaria and Serbia begins

Construction of EU-funded gas interconnector between Bulgaria and Serbia begins
/ Srbijagas
By bne IntelliNews February 2, 2022

Construction of the gas interconnector between Serbia and Bulgaria started on February 1 

The gas pipeline, with capacity of 1.8bn cubic metres (bcm) per year, will help diversify gas supplies to Serbia, which is currently dependent on imports of Russian gas.

The pipeline will be ready for operation by October 2023, which will improve energy security in Serbia and the region, Serbian Prime Minister Ana Brnabic said at the ceremony to mark the start of construction, a government statement said. 

The gas interconnection with Bulgaria, with the support of the EU, will mean a better quality of life for everyone in Serbia – new investments and jobs, the prime minister emphasised.

Head of the EU delegation to Serbia Emanuele Giaufret said that the project is another step towards connecting Serbia and the EU, and will significantly increase the amount of gas for households and industry.

He added that thanks to that gas pipeline, Serbia will have more choice and be less dependent on existing sources of supply. While Giaufret didn’t spell this out, Russia is currently Serbia’s main gas supplier, and the pipeline will enable access to alternative sources such as gas from Azerbaijan in future. 

Serbia imports almost all of the natural gas it consumes from Gazprom. In November, when Sebia’s long-term gas supply contract was about to expire, President Aleksandar Vucic reached an agreement with his Russian counterpart Vladimir Putin under which Serbia will continue to buy Russian gas at a price of $270 per 1,000 cubic metres for the next six months. The price is considerably lower than that charged to other Southeast European countries like Moldova, which recently elected a western-leaning government and president.

The Serbian government seek to balance its ambitions to join the EU with friendly relations with Russia, China and the US. 

The Bulgaria-Serbia interconnector has been declared a project of common interest for the EU and the Energy Community, as well as one of the seven priority projects within the CESEC Interconnection in Central and South-Eastern Europe initiative.

The cost of the project is €85.5mn, of which €25mn is a loan from the European Investment Bank (EIB), €49.6mn is a grant from the EU IPA Fund, while the remaining €10.3mn will be provided from the Serbian budget and approximately €600,000 from Srbijagas. 

The pipeline, which will have the possibility of reverse flow, will run from the southern Serbian city of Nis to the state border near Dimitrovgrad then on to the town of Novi Iskar, north of the Bulgarian capital Sofia.

“I expect that by October 2023 at the latest, the Bulgaria-Serbia gas interconnection will be completed and will help expand the opportunities for our country to access the European gas market. It will provide Serbia and other countries in the region with access to various gas sources through the Southern Gas Corridor and the liquefied natural gas terminal near Alexandroupolis,” said Bulgarian Minister of Energy Alexander Nikolov. 

The final investment decision on the LNG terminal near Alexandropolis was recently approved, paving the way for construction of the terminal that together with the Greece-Bulgaria interconnector is “crucial for achieving diversification for Bulgaria, Greece and the Balkans, boosting competition and enhancing the security of gas supplies in the region”, the developer of the interconnector said. Construction of the interconnector is underway but was delayed by the pandemic. 

“The current situation of high energy price volatility requires targeted and effective measures in which active cooperation and further integration of energy markets in the region will allow us to meet the challenges. In this sense, the Bulgaria-Serbia gas interconnection project is an example of how sustainable cooperation between our two countries and the European Commission can ensure mutual benefits for both countries and for the entire region,” Nikolov added.