A step away from Russia’s energy grip, Bulgaria-Greece gas interconnector finally launches

Politicians from across the EU and the Balkans attended the opening ceremony in the beginning of the month

A step away from Russia’s energy grip, Bulgaria-Greece gas interconnector finally launches

On the 1 October the long-awaited gas connection started functioning, meaning that Bulgaria has physical access to alternative gas supplies for the first time

Politicians from across the EU and the Balkans attended the opening ceremony in the beginning of the month

© Julia Lazarova


Throughout the era of Soviet hegemony, Bulgaria's energy sector was effectively hijacked by Moscow, working as the Kremlin wanted it to. Russia exerted a strong influence over every aspect of infrastructure, power plants, fuels and prices. It even had the last word on who to appoint and where to appoint them. This was true until about 5 or so years ago, to say the least. In more recent times, however, the topic of diversification of energy sources has become the buzzword for many Bulgarian and European politicians.

All the talk now in Bulgaria is about moving away from its long dependence on Russian gas. Until Putin's invasion of Ukraine this spring, however, very little had been done to make that happen. Bulgaria was getting 90% of its gas from Russia. Unexpectedly for Sofia, it had to urgently find alternative sources after declining the new paying mechanism Gazprom imposed on European gas buyers.

For many years the only viable alternative was the Azeri gas, which was significantly cheaper than Russian fuel pricing and benchmarked to crude oil rather than the highly volatile TTF benchmark. (It's only right to mention that 5 or 6 years ago this was not the case and Russian gas was cheaper.) But for the Azeri gas to reach Bulgaria required the completion of one infrastructure project - a gas pipeline extending from the Greek town of Komotini to the Bulgarian city of Stara Zagora. Alternatively, delivery was possible through a pipe swap with Greece, but at a significantly higher price.

On the 1st October the long-awaited gas connection started functioning, meaning that Azeri gas started flowing into Bulgaria. However, the Bulgaria-Greece interconnector has a 13- year history that raises many questions about politics, power and Russian influence.

The pipe with many fathers

Several countries are tied to the completion of the interconnector. Currently, Bulgarian and private companies have booked 1.57 billion cubic meters per year out of the available 3 billion cubic meters which can flow through the pipe. One billion cubic meters per year are booked by the national gas distributor "Bulgargaz" for the supply of Azeri gas from the Shah-Deniz field near the Caspian Sea. It is among the largest in the world and is operated by Azerbaijan gas supply company (AGSC), whose shareholders are BP and Turkiye petrolleri.

The remaining booked capacities are reserved by the Greek state supplier DEPA, the Italian company Edison and American Linden (partner of the Bulgarian "Overgaz"). In addition, a compressor station will be built at Komotini by the Greek system operator DESFA, through which the capacity of the interconnector can be increased to 5 billion cubic meters per year (by 70%). According to the executive director of the Bulgarian-Greek gas pipe, Teodora Georgieva, such an option has already been discussed and formally approved by the Greek side.

"The expansion to 5 billion cubic meters is now more possible due to the expected larger gas inflows from the new liquefied gas terminal in Alexandroupolis and the interest of the other Balkan countries and Ukraine in the supply. Previously, such a scenario was impossible," she said.

The long road towards the IGB

In 2009, the project was announced by the first government of Boyko Borissov's GERB as one of the priorities for the European development of Bulgaria. However, nothing really happened for years. Only in 2019 was it decided that the Greek company "J&P Avax" (J&P Avax) would construct the gas pipeline itself for nearly 150 million euros. Everything was supposed to be ready in 18 months, or by the end of 2020. But coronavirus, disrupted supply chains, and poor organization on the part of the contractors thwarted the project and it has only just come to fruition.

The most significant delay over the past year has been due to lack of supplies from China, caused by the blockade of sea transport. "The ordered crane units for the pipe were supposed to be delivered last September, but they arrived in February," Georgieva told KInsights.

Other major hurdles hindered the project from the outset. According to initial plans, 40 km of the pipe route passes through the difficult terrain of the Rhodopes mountain, literally under the "Studen Kladenets" dam. The project's 13-year gestation compares unfavorably to the (mere) 18 months it took former prime minister Boyko Borissov to oversee the pro-Gazprom Turkstream. Perhaps this is indicative of different political priorities?

The former cabinet of Kiril Petkov prioritized, unlike Borissov, the IGB and - although some parts were delivered late - the engineering and building of the pipeline was 91% completed by May.

Political blunders or Kremlin's long hand?

Not long after President Rumen Radev's caretaker government stepped in, the finalization of the IGB connection stalled for odd reasons. There was even a risk that it would not start at all, but it is hard to say where the fault lies. What is known is that mandatory changes in the management structure of "ICGB" were not made. (ICGB is the company that operates the interconnector and whose shareholder is the state through the Bulgarian Energy Holding). Also, incoming energy minister Rossen Hristov did not appoint new members to the commercial register. Appointing them is a mandatory condition set by the regulators of Bulgaria and Greece, for the certification of the gas pipeline.

Without the gas connection, Gazprom's return to the Bulgarian market looked more likely. Moreover, this happened just as Greece announced that it has expanded the LNG terminal in Revitusa and the tankers agreed by the Petkov cabinet could be unloaded there in the winter.

The case was soon resolved and on the 15th of August the supervisory and management board of the interconnector were successfully filled in the Commercial Register. Although this seemed a ridiculously bureaucratic obstacle, this small hurdle - if not attended to - could have delayed the completion of this important gas project.

The blunder did not pass unnoticed. After news of this emerged - principally publicized in a Capital weekly article - that the caretaker government was blocking the certification, a series of protests against President Rumen Radev were staged in Sofia.

A different ceremony

The natural gas interconnector to Greece finally received its opening ceremony on October 1. Attending were President Rumen Radev, the President of the European Commission Ursula von der Leyen, the Presidents of Azerbaijan, Serbia and North Macedonia - Ilham Aliyev, Aleksandar Vucic and Stevo Pendarovski, as well the presidents of Greece and Romania - Kyriakos Mitsotakis and Nicolae Chouka.

Ursula von der Leyen hailed the advance. "Today is the beginning of a new era for Bulgaria and Southeast Europe. Bulgaria used to get 80% of its gas from Russia, but that was before Russia started a terrible war against Ukraine, an energy war against Europe. This gas pipeline changes the situation both for Bulgaria and for energy security in Europe. This project means freedom and independence from Russian gas," she said.

Serbian President Aleksandar Vucic also made a key statement. In his words, at the beginning, no one realized how important the interconnector would turn out to be - "we met, we talked, we mentioned it as some kind of luxury that we don't really need, but at the moment we see why Radev, Borissov, Mitsotakis and Petkov saw it differently. It is very important for Serbia, I hope that the gas pipeline between the two countries (Serbia and Bulgaria) will be ready within a year. I understand how important this step turns out to be for prices and for the supply of natural gas quantities."

It is clear that the IGB pipeline has the potential to become a gamechanger - not only for Bulgaria, but for the Balkans as a whole, and even "black sheep" leaders like the Serbian President are understanding this. Even one of Moscow's relatively close allies does not hide the fact that his country cannot rely on reliable supplies from Russia anymore, and is openly looking for alternatives.

Throughout the era of Soviet hegemony, Bulgaria's energy sector was effectively hijacked by Moscow, working as the Kremlin wanted it to. Russia exerted a strong influence over every aspect of infrastructure, power plants, fuels and prices. It even had the last word on who to appoint and where to appoint them. This was true until about 5 or so years ago, to say the least. In more recent times, however, the topic of diversification of energy sources has become the buzzword for many Bulgarian and European politicians.

All the talk now in Bulgaria is about moving away from its long dependence on Russian gas. Until Putin's invasion of Ukraine this spring, however, very little had been done to make that happen. Bulgaria was getting 90% of its gas from Russia. Unexpectedly for Sofia, it had to urgently find alternative sources after declining the new paying mechanism Gazprom imposed on European gas buyers.

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