New prospects through the IGB pipeline
The Intergovernmental Agreement for the IGB pipeline (Interconnector Greece-Bulgaria) was signed in October in Sofia, Bulgaria, by the Greek energy and environment minister, Mr. Kostis Chatzidakis and his Bulgarian counterpart, Mrs. Temenuzhka Petkova.
“I am personally connected to the IGB pipeline that will soon connect Greece and Bulgaria, since I commenced the project in 2009 when I was still energy minister. It took as 10 years to reach the signing, but I am glad that once again, through my contribution during the last three months, all remaining obstacles were cleared and we move from theory to action. IGB enhances Greece’s geostrategic importance and supports energy security in the region”, said the Greek minister during the signing ceremony.
Bulgarian minister, Temenuzhka Petkova, said that “this project is vital for the country’s energy strategy and our security of supply with natural gas. The pipeline’s realization is now irreversible”.
What was signed
Afterwards, in presence of the two ministers, followed the signing of a series of deals such as:
– The revised Shareholders Agreement between companies of the ICGB consortium tasked with realizing and operating the project, that is Bulgarian BEH (50%) and IGI Poseidon holding the rest 50%, equally divided between DEPA and Italian Edison.
– Expanding ICGB’s shareholding capital.
– A 110 million Euros loan agreement from EIB.
– The deal to transfer gas with Bulgartransgaz.
Commercial operation in 2021
The first construction contracts were also signed for a total pipeline length of 182km and a total cost of 250 million Euros, running from Komotini (where it will be connected to TAP) through to Stara Zagora, Bulgaria.
Its initial capacity is 3 bcma with the option to expand to 5 bcma. Works are expected to begin immediately and be concluded within 18 months. IGB’s commercial operation is expected in July, 2021.
It should be noted that IGB has been included in the list of Projects of Common Interest (PCI)by the European Commission and its funding has already been approved with an extra 84 million Euros through the EEDR program and EU structural funds.
The intergovernmental agreement is a significant milestone for Greek energy strategy, since it upgrades the country in natural gas transfer from Caspia to Bulgaria and onwards to Serbia, Romania and other countries of Central and Eastern Europe.
The pipeline’s optional upgrade either through additional Caspian quantities or LNG imports, as long as IGB is connected to the planned Alexandroupolis FSRU, is expected to further enhance Greece’s central position in the Southern Corridor’s European strategy.
Other bilateral issues
Furthermore, Mr. Chatzidakis and deputy minister, Mr. Gerasimos Thomas, discussed a series of bilateral energy issues with their Bulgarian counterparts. Among those:
– Coordination of decisions for the Alexandroupolis FSRU.
– Progress in the power interconnection Nea Santa-Maritza.
– Looking into the prospects of greater cooperation between the Greek and the Bulgarian energy exchanges. Mr. Thomas and the exchange’s chairman, Athanasios Savakis, had a separate meeting with the chairman of the Bulgarian stock exchange, as well as the country’s energy exchange.
Xifaras: Investment horizons
DEPA was represented by chairman, Ioannis Papadopoulos, CEO, Constantine Xifaras, coordinator of international activities, trade and supply, Dr. Constantine Karagiannakos and international activities director, Mr. Dimitris Manolis.
DEPA CEO, Constantine Xifaras, said: “The interconnection to Bulgaria is a significant step that creates new prospects in energy security and adequacy of the wider region. Our vision it to contribute decisively to widening our investment horizon and to multiply business opportunities across the range of energy activities, inside and outside of Greece, since it is important to create the requirements for supplying the market safely, competitively and in the long term”.
Apart from the intergovernmental agreement, which sets construction and operation terms by ICGB, as well as other obligations, there was also the signing of:
– The revised shareholders agreement for ICGB by IGI Poseidon chairman and DEPA CEO, Constantine Xifaras, IGI Poseidon CEO, Pierre Vergerio, ICGB’s directors Mrs. Teodora Georgieva and Dr. Constantine Karagiannakos and on behalf of BEH, Mrs. Ina Lazarova.
– The loan agreement between EIB and BEH, as well as the on lending agreement between BEH and ICGB.
– Shipping contracts with natural gas users.
– Supply contract with Corinth Pipeworks for pipes and
– Construction contract with AVAX.
Greece’s role becomes strategic in energy
This is, according to DEPA’s announcement, a project creating new prospects both for DEPA and for the gas market in the wider SE Europe. The project enhances Bulgaria’s energy mix on one hand through a competitive cost and it is also a new field for the Greek gas market, highlighting the strategic role it can play in gas supply for the wider SE Europe.
Through IGB, the gas network of Greece will be connected to Bulgaria’s and other countries as well as indirectly to markets in Central and Eastern Europe (Hungary, Austria, Ukraine).
The project is included in the 3rd PCI list of the European Commission based on regulation 347/2013, while since July 2015 it is included in the priority projects list of Central and South Eastern Europe Gas Connectivity- CESEC. Its funding by the EU as part of the EEDR program has already been approved with 45 million and through structural funds with 39 million.
The pipeline has been designed to operate in two phases. During the first phase, planned to begin on July 1st, 2021, its initial capacity will be 3,0 bcma, of which 2.7 bcma will be offered for long term products and 0.3 bcma for short term.
In a second phase and depending on commercial interest, the pipeline’s capacity will be increased to the total 5 bcma through the addition of a compressor, of which 4.5 bcma will be offered for long term products and 0.5 bcma for short term. A long term product is considered to be over five years, while short term commitments are under one year.