Natural Gas, LNG

September 24, 2024

Greece-Bulgaria gas link operator signs new DESFA interconnection agreement

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HIGHLIGHTS

ICGB already tested the Komotini interconnection point with gas

Agreement comes ahead of startup of Alexandroupolis FSRU

Two pieces of infrastructure in 'great synergy': ICGB chiefs

The operator of the gas interconnector between Greece and Bulgaria has signed an interconnection agreement with Greek grid operator DESFA for gas flows at the Komotini interconnection point, it said Sept. 24.

The interconnector -- which allows gas from Azerbaijan and regasified LNG from terminals in Greece and Turkey to be moved northward to Bulgaria and the wider southeast European region -- began flowing gas in October 2022.

The new interconnection agreement will allow "secure, safe, reliable, and effective interoperability" at the interconnection point once it begins commercial operation, operator ICGB said in a statement.

ICGB is co-owned by Bulgaria's BEH and a venture between Greece's DEPA and Italy's Edison.

The startup will be in tandem with the beginning of commercial operations on Oct. 1 of the new floating Alexandroupolis terminal in northern Greece.

"This is a key step in ensuring the pipeline facilitates the transportation of gas after the commercial launch of the LNG terminal in Alexandroupolis," ICGB's executive officers Teodora Georgieva and George Satlas said.

"The two infrastructures are in great synergy, and we expect that the commissioning of the FSRU could significantly increase market interest in existing and planned capacity," they said.

The connection has already been successfully tested with gas to ensure safe operations from Oct. 1.

The new interconnection agreement will allow interested parties with booked capacity at the FSRU to transport gas via the Greece-Bulgaria pipeline, establishing a new route for gas deliveries to Southeast and Central Europe.

"ICGB intends to put IP Komotini DESFA/ICGB in operation as of Oct. 1 if the respective confirmation is issued by upstream systems operators," it said.

Pipeline expansion

Last month, ICGB said it would continue with plans to expand the pipeline's capacity from the current 3 Bcm/year to 5 Bcm/year despite a lack of market interest in booking additional capacity.

It said the capacity expansion was a "strategic step" toward securing access to gas deliveries from diversified sources.

Following a successful non-binding market test for the expanded capacity in 2023, ICGB held a binding capacity process in July, with "significantly different" results.

"These results will not affect the company's drive to implement the interconnector capacity expansion project from 3 Bcm/year to 5 Bcm/year," an ICGB spokesperson said Aug. 7.

"We believe that this is of great national and international interest and the company remains fully committed to this task."

The pipeline flowed more than 15.5 TWh (1.5 Bcm) of gas in 2023.

Some 1.57 Bcm/year of long-term capacity was booked in the interconnector under 25-year contracts, with spare capacity offered in regular auctions.

Alexandroupolis delay

The reasons for the reduced interest are being analyzed but the ICGB spokesperson said the delay in the commercial operation of the LNG terminal in Alexandroupolis was seen as the leading factor.

Greece's Gastrade -- the operator of the Alexandroupolis terminal -- expects the FSRU to begin operations at the start of October.

The 5.5 Bcm/year FSRU -- Greece's second LNG import facility -- received its commissioning cargo in mid-February and had been expected to begin commercial operations at the end of April.

However, the commercial operation date was pushed back a number of times due to unexpected technical issues faced during the commissioning process.

It comes as spot LNG prices for delivery to the East Mediterranean market remain relatively high.

Platts, part of S&P Global Commodity Insights, assessed the DES East Mediterranean LNG marker at $11.86/MMBtu on Aug. 6.

The planned expansion of the Greece-Bulgaria interconnector is also part of a wider push to increase pipeline capacity in southeastern Europe under the Vertical Gas Corridor initiative.

The corridor is designed to expand transportation capacity in southeast, east and central Europe to allow for greater volumes of gas from Azerbaijan and regasified LNG to flow into the region via terminals in Greece and Turkey.


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