EnergyValue – New Addition: The EnVal Desk

So far, you have enjoyed our EnVal Analysis – our take on energy geopolitics in Europe, focusing on Central and Eastern Europe and the Balkans. We thought you would appreciate to see some relevant news that guide our analytical thought – they may be valuable to you, too. So, here’s our addition: EnVal Desk.

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EnVal Analysis

The natural gas inter-connector Greece – Bulgaria (ICGB) to bring real diversification of gas supply for SEE Europe

In the second half of September, news from Sofia announced that the ICGB project tenders for the design, procurement and construction of the pipeline received 11 requests for participation. The 182 km of pipeline linking Greece and Bulgaria is estimated to cost 220 million EUR to build. The ICGB consortium seemed to have secured sovereign guarantees of 110 million euro under the annual state budget act of Bulgaria, which could ensure preferential access to financing.

When built, the inter-connector will transport up to 3 billion cubic meters of natural gas per year, initially only from Greece to Bulgaria. Increased capacity, up to a total of 5 billion cubic meters per year, could be available if market conditions warrant it, with the possibility of implementing also a reverse flow capability through  the construction of an additional compressor station.

ICGB is important for a number of reasons. First, it will bring a real diversification of gas import sources in the SEE region, allowing Bulgaria (and subsequently Western Balkans, Hungary and Romania) to access LNG from the Greek terminals, Azeri gas from the TAP-TANAP pipeline (once completed), and possibly Iranian or Turkmen gas, at a certain point. By the same token, the pipeline could also reversely ensure a diversification of import sources for Greece by potentially bringing Black Sea gas from Romania’s offshore fields.

ICGB has been long clogged in the geopolitical frictions that marked the recent history of this part of Europe. Initially announced as part of the BRUA (Bulgaria-Romania_Hungary-Austria) corridor, ICGB never really took off, supposedly due to the Bulgarian hesitations. In reality, Greece has also had an interest to postpone the advancement of ICGB. Both Bulgaria and Greece are envisioning themselves as regional hubs. Both hope that the new transit routes that Gazprom will use to by-pass Ukraine transit, post 2019 will cross on their territory. They see that as better opportunity than the ICGB. But the Russian option is not easy either, since it will give Turkey significantly greater role to play in regional energy security in the future, something that neither Greece nor Bulgaria are ready to accept.

EnVal Desk

Talks between the European Commission, Russia and Ukraine at “expert” levels in Brussels this week resulted in the parties revealing their expectations for the arrangements for Russian gas transit via Ukraine post-2019. Source: Platts.

Republic of Moldova National Regulatory Agency for Energy (ANRE) announced that it would shortly adopt a new Gas Network Code. The reason for which a new code is needed is the fact that in its absence, the Republic of Moldova risks to be sanctioned, as the Energy Community Treaty may start an infringement procedure against Moldova. Moldovatransgaz SRL, an enterprise owned by Moldovagaz and Russian gas giant Gazprom is responsible for the elaboration and presentation of the first draft of the new Natural Gas Network Code. Source: Mold-Street (RO).

Davide Crippa, Italy’s Undersecretary for Economic Development, has announced the country’s withdrawal from a seven-country alliance led by Poland, which argued for preserving national sovereignty over decisions to finance emergency power plants. Source: Euractiv

Energy groups including Royal Dutch Shell, Mercuria and Gunvor, and financial institutions such as ING, Société Générale, Citigroup and ABN Amro are backing two new blockchain platforms. By digitising the large amount of contracts, letters of credit, invoices and other paperwork currently sent around the world by email, fax or post, and putting them on the Ethereum blockchain platform, they are hoping that the new platforms will lead to faster, cheaper and more secure ways of completing a trade as well as settling the transaction. Source: FT.

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