Construction of Bulgaria-Serbia gas interconnector to start in May: Bulgartransgaz

London — Construction of a new gas interconnector between Bulgaria and Serbia is set to begin in May, state-owned grid operator Bulgartransgaz said Feb. 26, which once completed would enable Serbia to source gas from Azerbaijan and via Greece's LNG import infrastructure.

The Bulgaria-Serbia interconnector -- which would run from the Bulgarian capital Sofia via Dimitrovgrad in Serbia to Nis -- is backed by the EU as a Project of Common Interest (PCI).

The pipeline -- which will have a capacity of 1.8 Bcm/year in the direction Bulgaria-Serbia with the possibility also of reverse flow -- is expected to be completed in May 2022, Bulgartransgaz said in a statement.

"The construction of the interconnector with Serbia is a priority in the government's management program in the energy sector," Bulgaria's energy minister Temenuzhka Petkova was quoted as saying in the Bulgartransgaz statement.

Bulgaria and Serbia already linked their gas networks at the end of 2020 to allow Russian gas imported via the TurkStream pipeline to reach Serbia via an expanded grid. Flows began at the start of 2021.

The Bulgaria-Serbia interconnector is a separate project, giving Serbia a non-Russian supply option.

It will enable Serbia to import gas via Bulgaria from the Southern Gas Corridor -- bringing gas from Azerbaijan to southern Europe -- and as regasified LNG from the existing and planned LNG terminals in Greece.

Construction tender

Bulgartransgaz executive director Vladimir Malinov said the procedure for the selection of a contractor for the construction of the pipeline was currently underway.

Bids from applicants were opened on Feb. 22.

"Eleven candidates have submitted documents for participation in the competition, among them international companies," Malinov said.

"We expect the construction activities to start in May," he said.

At a meeting Feb. 26, Petkova and her Serbian counterpart Zorana Mihajlovic agreed also to establish a joint working group to accelerate the establishment of the gas interconnection between the two countries.

Mihajlovic said a tender procedure for the selection of the main contractor for the gas pipeline construction in Serbia would be announced in early March.

The pipeline will run for around 62 km in Bulgaria and 108 km in Serbia.

In January, Bulgartransgaz closed the acquisition of a 20% stake in Gastrade -- the developer of the planned floating LNG import facility at Alexandroupolis in northern Greece -- and this project will play a part in ensuring the new interconnector can be fully utilized.

Malinov said the implementation of the Serbia interconnector project would "provide an opportunity for Serbia to receive gas from the terminal near Alexandroupolis, where our western neighbors have also requested capacity."

Greece already has one operating LNG import terminal at Revithoussa, which started operations in 2000 and expanded its capacity in 2018, but the government is supporting a second plant as part of efforts to make the country into a regional gas hub.

Startup of the 5.5 Bcm/year floating storage and regasification unit, which secured 2.6 Bcm/year in capacity bookings following a binding market test in March last year, is expected in 2023.

Other projects

Bulgaria is also building a new interconnector with Greece -- the Interconnector Greece-Bulgaria (IGB) -- which will allow Azeri gas to flow northward to Bulgaria and for regasified Greek LNG to reach Bulgaria and then Serbia.

At the meeting Feb. 26, it was agreed that the three projects -- the Bulgaria-Serbia interconnector, the IGB and the Alexandroupolis LNG terminal -- were being built "in harmony" and were "beneficial for the entire region."

Bulgaria -- historically dependent on Russian gas imports -- began importing gas from Azerbaijan via the Southern Gas Corridor at the start of 2021, giving it increased supply diversification.

It also already imported gas via Greece's Revithoussa LNG terminal with the regasified LNG flowing in a south-north direction into Bulgaria.

The IGB will act as the main source of Azeri gas supply for Bulgaria as offtake from the TAP pipeline in Greece, once it is completed at the end of 2021.

Bulgartransgaz, meanwhile, is seeking a loan of up to Eur155 million to finance its current infrastructure projects. These include the three main projects, as well as the expansion of the Chiren gas storage site in Bulgaria.

The deadline for bids for providing the loan is March 5.

The aim of the Chiren expansion project -- which is also backed by the EU as a PCI -- is to bring its design capacity to 1 Bcm and and increase its injection and withdrawal rates up to 8-10 million cu m/d.

Chiren -- Bulgaria's only gas storage facility -- currently has a capacity of around 0.6 Bcm and an injection/withdrawal rate of up to 4 million cu m/d.

According to Bulgartransgaz, Chiren is a "key instrument" for the functioning of the gas market in Bulgaria.