Serbia, Hungary push for the second line of TurkStream

By Vladimir Spasić

Russia is currently considering two options for the second leg of the TurkStream gas pipeline project, the first starting from Turkey through Bulgaria, Serbia, Hungary and Austria, and the second through Greece and Italy. The first option, according to Russian officials, currently has more chances and is backed by statements of Serbian and Hungarian representatives.

CEO of Serbian gas company , said that, unlike South Stream, to which the new project is very similar, this project will comply with all European Union rules, while Hungarian Minister of Foreign Affairs and Trade, Peter Szijjarto, has asked that the European Union does not obstruct implementation of the TurkStream gas pipeline project.

Srbijagas to invest EUR 3 billion in two pipelines

Bajatovic told Serbian newspaper Večernje Novosti that Srbijagas plans to invest EUR 3 billion in the next 5 years in the Serbia-Bulgaria gas interconnector, which will connect Serbia and Bulgaria, as well as the section of the TurkStream’s second leg for connecting Bulgaria, Serbia, Hungary, and Austria.

Bajatovic said that bilateral talks between Serbian President, Aleksandar Vučić and Bulgarian and Hungarian Prime Ministers, Boyko Borisov and Viktor Orban, were held so far.

The pipeline will have a 500 km route through Bulgaria, and it will enter Serbia from the east, near the city of Zaječar, and further on to Belgrade and Horgoš to Hungary. Its capacity will be 13 bln cubic meters per year, Bajatović said.

The pipeline is very similar to the South Stream project, which faced bad faith. In December 2014, Russia canceled South Stream, projected to supply southern Europe, avoiding Ukraine’s territory. The pipeline was supposed to run from Russia under the Black Sea via Bulgaria, Serbia and Hungary to Austria. Gazprom immediately launched TurkStream with the goal to bring gas to Turkey and to establish a gas hub at the Greek-Turkish border.

At the time, Gazprom left the EU to decide how natural gas would be delivered to them from this gas hub. The company only said that TurkStream will have two lines, one line for Turkish consumers and one line for the supply of southern and south-eastern EU, each with a capacity of 15.75 bln cubic meters of gas per year.

Bulgaria-Serbia-Hungary – Austria route is priority – Novak

However, after a few years things started to heat up. Gazprom quietly signed roadmaps with Bulgaria, Serbia, Hungary and Austria on the development of their gas transport infrastructure. According to Russian Energy Minister Alexander Novak, all the deadlines (related to these roadmaps) are aligned with the construction of Turkish Stream.

This year Gazprom completed the first line of TurkStream and started laying pipes for the second. Novak said that the project is on schedule and may start to deliver gas as of January 2020.

Russia is considering two options, one route is through Greece to Italy and the second is through Bulgaria, Serbia, Hungary and Austria, Novak said for Russian TV station Rossiya 24, adding that the priority is the second option.

The route through Greece and Italy is a revival of the ITGI pipeline – Interconnector Turkey-Greece-Italy, also known as Poseidon. Similar to South Stream, this project was suspended after the rival Trans Adriatic Pipeline (TAP) was selected to transport natural gas from Azerbaijan as part of the Southern Gas Corridor.

But Srbijagas CEO, Dušan Bajatović, says that the gas pipeline, which would be the continuation of TurkStream second leg, should not be compared with some earlier projects such as South Stream.

This is a brand new project and should not be connected to South Stream, he said, adding that it will be built according to EU regulation. The project represents the national interest of the Republic of Serbia and the Republic of Bulgaria because during the 2009 gas crisis those two countries faced the biggest problems.

Serbia granted pipeline exemption from Third Energy Package

Bajatović said the gas pipeline through Serbia would be built by the company Gastrans, which is owned 51% by Gazprom and 49% by Srbijagas. At the beginning of October, Gastrans received an exemption from the Third Energy Package from the Serbian Energy Agency of the Republic of Serbia (AERS). Gastrans was granted an exemption from the obligation to allow third party access for the future gas pipeline that will go through Serbia and connect to the Bulgarian and Hungarian national gas transport systems.

After obtaining the opinion of the Ministry of Mining and Energy, AERS also approved the exemption from the obligation to apply regulated prices and the exemption from the obligation of ownership unbundling as envisaged by the Law on Energy, the Agency said on its website.

Gastrans contacted AERS on the basis of the Law on Energy, which transposed the so-called Third Energy Package into the national legislation. The Third Energy Package imposes rules for the internal gas and electricity market in the EU. In accordance with the Law on Energy, AERS has submitted this decision to the Energy Community Secretariat for further action. Serbia is not a member of the EU, but it is the member of the Energy Community, established to extend EU energy market rules to Southeast Europe.

Bajatović said that the Secretariat has two months to submit its remarks in order for the final decision to be announced, which is expected in late November. If the answer is positive, the pipeline will be completed in Serbia no later than December 15, 2019.

“It is important that we work in accordance with EU rules. This was not the case with South Stream, which was supposed to be built under intergovernmental agreements. This new project is a part of the internal gas transportation system of Serbia,” Bajatović noted.

The length of the pipeline through Serbia would be 403 kilometers, and the investment is worth EUR 1.08 billion.

According to Srbijagas CEO, Bulgartransgaz and Srbijagas meet on a regular basis to discuss this project.

Do not put a spoke in the wheel – Peter Szijjarto

Because of Hungary and Bulgaria, the European Commission is also involved, but this subject is addressed by Hungarian Minister of Foreign Affairs and Trade, Peter Szijjarto.

“Hungary demands that the European Union does not obstruct the implementation of the TurkStream gas pipeline project, so that Central Europe has the opportunity to receive Russian gas through it,” he said following talks with his Russian counterpart, Sergey Lavrov, at the beginning of October.

“We need Western Europe and Brussels not to put a spoke in the wheel, so that we have the opportunity to receive gas from the south, via TurkStream”, the minister said, as TASS agency reported.

He said that Hungary agreed with Serbia and Bulgaria that all three countries will develop their networks in a way that when the second line of TurkStream is built, the three countries will buy gas from it.

Serbia-Bulgaria interconnector is not economically feasible

In addition to the gas pipeline that would be part of TurkStream’s second leg, Srbijagas also works on the Serbia-Bulgaria interconnector, a 109 km long pipeline with a capacity of 2 billion cubic meters per year. Serbia would be connected with the Bulgarian gas system, and through it with Greece and the LNG terminal of Alexandroupolis. Bajatović says that the construction of this terminal has not yet been decided, adding that this route could deliver US LNG.

Bajatović estimates that gas from this direction could flow in seven years. He added that the Serbia-Bulgaria interconnector is not economically feasible, so it is financed from EU funds and is on the European list of projects of common interest. Currently, expropriation and project design are underway. Europe will provide EUR 49 million, and the rest EUR 85.5 million, according to Bajatović, will be provided by Srbijagas.

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