Bulgaria, Greece sign natural gas pipeline investment agreement

Bulgaria and Greece signed an agreement to start building a pipeline linking the two countries’ natural-gas grids, which will help Bulgaria diversify its gas supply and connect Greece to the rest of the European network.

State-owned Bulgarian Energy Holding and IGI Poseidon, a joint venture between Greek state-owned gas supplier DEPA SA and Italy’s Edison SpA, signed a final investment agreement Thursday, Bulgarian Energy Minister Temenuzhka Petkova said in Sofia. The pipeline, scheduled to become operational in 2018, is estimated to cost 220 million euros ($241 million), of which the European Union will provide 45 million euros.

“The project is strategic for Bulgaria, Greece and all of southeastern Europe,” Petkova told reporters. “It will ensure real diversification of supplies and will be the basis of our concept to set up a gas distribution hub, which will boost the development of the energy market in the region.”

The 182-kilometer (112-mile) link will have annual capacity of 3 billion to 5 billion cubic meters and will run between the Greek city of Komotini and the Bulgarian city of Stara Zagora. The EU’s poorest country in terms of per capita output, depends almost entirely on flows of Russian gas shipped through Ukraine, while the 28-nation bloc seeks to diversify energy sources by improving cross-border gas and power links.

Bulgarian Energy Holding holds 50 percent in the venture and IGI Poseidon has the remaining 50 percent. Bulgaria’s government has approved state guarantees for future loans of as much as 215 million lev ($121 million) in 2016 for the project. The EU and Bulgaria will work to develop a Balkan natural-gas hub to diversify supplies in southeastern Europe, the government said in an e-mailed statement Thursday.

[Bloomberg]