Srbijagas to borrow €70mn for TurkStream, as Bulgarian opposition seeks to halt project

Srbijagas to borrow €70mn for TurkStream, as Bulgarian opposition seeks to halt project
TurkStream under construction: Pioneering Spirit, one of the world’s largest construction vessels is capable of installing up to five kilometres of pipes per day at a depth of up to two kilometres.
By bne IntelliNews December 11, 2018

While Serbia is taking steps to begin the construction of its stretch of the second line of the Turkish Stream (TurkStream) pipeline, which will extend the pipeline to Europe, divisions have emerged in its neighbour Bulgaria over the benefits of participating in the project.

Russian natural gas giant Gazprom has determined the itinerary of the second line of the Turkish Stream pipeline will span Bulgaria and Serbia starting from 2020, then go through Hungary and Slovakia starting from 2021 and the second half of 2022, respectively, as reported by Kommersant daily in November. 

Serbia’s gas monopoly Srbijagas will borrow €70mn from five banks to build its stretch of Turkish Stream, eKapija reported. The company has said that Gazprom has already applied to Serbia’s Energy Agency for a permit for the construction of the section.

Societe Generale’s local arm, state-owned Komercijalna Banka, Banka Postanska Stedionica and OTP Bank Serbia have agreed to lend €10mn each, with Vojvodjanska Banka to lend the remaining €30mn.

Dusan Bulatovic, head of Srbijagas, said that the construction of the stretch could begin in the first half of March 2019.

In October, Srbijagas said that it expects investment in the country's natural gas distribution network will amount to €3bn in the next five years. The money will be spent on building a natural gas pipeline connecting the Bulgarian and Hungarian gas networks, which will be part of the Turk Stream gas pipeline.

The 109 km pipeline is one of the two large projects Srbijagas is planning, with the other being a gas pipeline from the border with Bulgaria to Hungary.

Meanwhile, in Bulgaria the opposition Democratic Bulgaria has called on the government not to sign any deal on Turkish Stream before providing solid proof that the project is worth the cost.

Earlier in December, the country's parliament gave the green light to state-owned gas company Bulgartransgaz to launch tenders to build the new 484km gas link that will carry mainly Russian natural gas from Turkey, bypassing Ukraine to the south. The construction is expected to cost €1.4bn.

According to Democratic Bulgaria, there is no guarantee that the project's cost will not exceed that sum and that Bulgaria will benefit from it.

At the end of November, Energy Minister Temenuzhka Petkova said that the country will generate a profit of €2.2bn within 20 years.

In Bulgaria, Gazprom reportedly plans to build almost 500 km of new pipelines as well as using part of the existing network. The gas will enter the country through the Nova Provadia station, while in Serbia it will enter via a new station near Zaychar. The route almost completely repeats that of the cancelled South Stream project.