Eustream Expects Commercial-level Pacts on Balkan Pipeline Project Within Weeks

Slovakian gas pipeline operator Eustream expects to sign within weeks commercial agreements with potential partners on the development of Eastring, a new bidirectional pipeline that would carry gas from Western Europe to the Balkans, a senior company official said.

In May, Bulgaria, Romania, Hungary and Slovakia signed a declaration in support of plans to interlink their gas grids and increase bi-directional capacity while joining their efforts to seek new sources and routes for gas supply diversification.

"Despite the fact we perceive the conclusion of this declaration in a very positive way, it has no concrete implications for the further steps for the project’s implementation or its timeline. This is an issue that should be solved on commercial basis,” Mirek Topolanek, Eustream’s international development and public affairs director, told SeeNews in an emailed interview.

"We expect to be able to conclude such company-level declarations during the upcoming weeks in order to achieve our main target, which is to allow this project to be fully operational by the end of 2019.”

Eastring, conceived as an alternative to the now defunct South Stream, should secure natural gas supply to fully meet the consumption needs of all Balkan countries.

"After the cancellation of the South Stream gas pipeline project, Eastring is a very important element in the process of diversifying natural gas sources and transmission routes, namely for the countries of the Balkan region which can be connected to Western gas hubs,” Topolanek said.

Eastring, with ultimate capacity seen at 40 billion cu m per year, could provide Western gas shippers with a possibility to supply Balkan countries and even Turkey from European hubs such as NetConnect Germany, Gaspool, Baumgarten, and the Dutch-based Title Transfer Facility, official project data indicated.

Another very important aspect of the Eastring project is its ability to connect countries in Central and Eastern Europe to the gas from liquefied natural gas terminals in Greece and Turkey, which would be made possible through interconnectors that Bulgaria plans with both countries.

"The planned link between Bulgaria and Turkey allows also considering the Eastring pipeline from another perspective – as a project able to connect Europe to alternative gas sources from the Caspian region, Azerbaijan, Turkmenistan and Iran, and last but not least also to gas of Russian origin, delivered through the planned Turk Stream pipeline. From the perspective of all mentioned aspects, the Eastring project fits perfectly into the strategy for the development of Bulgaria’s gas infrastructure,” Topolanek said.

In December, Russia's Gazprom and Turkey’s Botas signed a memorandum of understanding for the construction of an offshore gas pipeline that will have a capacity of 63 billion cu m.

The move followed the announcement that Russia was abandoning plans to build the South Stream, a gas pipeline project that would have opened up a supply route to Southeast Europe that bypasses Ukraine and is less at risk of disruption.

Eastring will start at an existing compressor station in Velke Kapusany in Slovakia, where it should connect with Eustream’s existing gas transit assets serving to supply mainly Western Europe as well as Ukraine in reverse flow, official project data indicated. From there, Eastring will aim to the south border with Hungary, crossing the north-east territory of Hungary in a U-shape towards the Romanian borders.

In this initial phase there are two routing options suggested in Romania and Bulgaria.

The first route option passes through storage and production facilities in Transylvania and continues to the existing interconnection point Isaccea where it connects to the existing transit infrastructure which runs through the Romanian-Bulgarian border at Negru Voda and then onwards from north-east to south-east along the existing Bulgarian gas transit assets to tie into the Turkish gas transit network at Malkoclar.

The second route option passes through both storage areas and production facilities, Bucharest and continues to the Romanian-Bulgarian border and then onwards straight to the Turkish border at Malkoclar.

According the first simulations, Eastring will be approximately 832–1,015 km in length, depending on the chosen route. However, the pipeline routing is still not final and it will be further refined in all countries.

Topolanek said discussions with Eustream’s potential partners on the Eastring project, mainly from Hungary, Romania and Bulgaria, continue and have so far resulted into the successful submission of the project to the reopened Ten Year Network Development Plan of the European Network of Transmission System Operators for Gas and to the pool of candidates for the list of the EU’s Projects of Common Interest (PCI), which would make it eligible for financial support from the bloc’s Connecting Europe Facility (CEF) fund.

After successful submission of the project to the PCI list, Eastring’s backers will be able to proceed with further steps, covering also conducting a market test.

"On the technical level, we are, inter alia, working on the precise project routing, which will enable calculation of the detailed project specifications, including the costs for its implementation and operation,” the official said.

Eustream continues to hold meetings with big gas companies from Western Europe on possible involvement in Eastring but at this point of time, Topolanek said it would be premature to disclose concrete names.

Asked when an official selection of partners could be made, Topolanek said this decision depends on many factors, including but not limited to an agreement with Eustream’s current partners on the future project structure as well as project financing issues.

"In order to have more visibility on a project funding structure, we have entered into discussions with all relevant institutions, including the European Investment Bank. However, agreement on the financing structure of the project could be achieved only after the EC reaches a decision on a possible CEF grant,” Topolanek said.

Source: SeeNews