Southern gas corridor to be extended to Balkan countries, Balkan countries demand

Continuation of the Southern Gas Corridor to the countries of the Balkan Peninsula, increase of Azeri gas supplies to Europe and optimism. This is the shortest way to assess the signals broadcast from the eighth consultative meeting on the Southern Gas Corridor in Baku.

The southern gas corridor, which transports Caspian gas to Europe through Turkey, will be extended to the Balkan countries. This was promised by the Minister of Energy of Azerbaijan Parviz Shahbazov.

"Two meetings were held today during the meeting. At one of them, representatives of the Balkan countries demanded the expansion (of the gas supply pipeline) of Azerbaijani gas to the region, expressed a similar desire, he said and promised to work in this direction period, we will work in this direction, "said the Minister.

At the same time, the implementation of such a project to expand the Southern Gas Corridor (SGC) to the Balkans will have to take into account environmental impacts, EU Energy Commissioner Kadri Simson and Azerbaijani Energy Minister Parviz Shahbazov said in a joint statement.

"It is important that the next step is accompanied by an assessment of all trade, environmental, technical, regulatory and climate-related issues that may arise during any enlargement of the Southern Gas Corridor," the European Commission said in a statement.

From the beginning of 2021 to the end of January this year, more than 18.5 billion cubic meters of natural gas were delivered through the Southern Gas Corridor to Georgia, Turkey and European countries. During this period, approximately 8.9 billion cubic meters of Azerbaijani natural gas were exported to European countries, both under long-term contracts and short-term spot deals, the Azerbaijani minister said.

There are no talks about funds yet. Given the difficult Balkan terrain on the one hand and Europe's decisions on natural gas, including the vision of long-term contracts, funds and European legislation in general, this intention seems more optimistic. So at this stage the transportation through the Southern Gas Corridor should be seen more through the implementation of the two connections on the border of Bulgaria with Greece and Serbia - the interconnector Greece-Bulgaria and Bulgaria-Serbia.

Moreover, engagement with Serbia is already on the agenda. Serbian Energy Minister Zorana Mihalovic and Azerbaijani Minister Shabhazov have expressed expectations that Serbia will receive Azerbaijani gas transported through the Southern Gas Corridor as early as 2023, in just a few months. As for Bulgaria, it faces real competition from neighboring Greece.

Meanwhile, in an interview with the Azerbaijani newspaper Trend, Energy Minister Alexander Nikolov made a request for the country's energy policy in this direction.

 "The IGB project will provide access to Bulgaria and other countries from Southeast and Central Europe to the Southern Gas Corridor. This will allow Bulgaria to import the agreed volume of 1 billion cubic meters of natural gas per year from the Shah Deniz-2 gas field in Azerbaijan. The interconnector will also allow gas supplies through the liquefied natural gas terminal in Alexandroupolis from producers such as the United States, Qatar, Algeria, Nigeria, and in the future from Israel and Egypt. In this regard, we expect the role of natural gas to be adequately taken into account in the process of developing new initiatives at EU level. Natural gas, especially for carbon-intensive regions, has no alternative during the energy transition. It stands out as a transitional fuel due to its economic viability compared to new renewable energy technologies and lower environmental impact compared to other fossil fuels. It is also often cited as an engine of the energy transition because of its central role in expanding the use of hydrogen, which, among other things, the European Union predicts will play a key role in a future climate-neutral economy, the minister said.

Nikolov notes that one of Bulgaria's main goals in terms of energy diversification is to increase the sources of natural gas supplies from the Caspian region.

"This goal is set out in our Comprehensive Climate and Energy Plan 2021-2030. We assess the possibility of natural gas supply through the Southern Gas Corridor, as this leads to a real diversification of natural gas supply sources for Bulgaria, "he added.

Regarding the launch of the IGB, Minister Nikolov noted that Bulgaria expects the commercial operation of the gas interconnector with Greece (IGB) to begin in the second half of 2022 with the partnership of Azerbaijan.

"The basis of this partnership is the contract signed in 2013 between the Bulgarian company Bulgargaz and the Azerbaijani AGSC (Azerbaijani Gas Supply Company) for the supply of 1 billion cubic meters of natural gas per year from the Shah Deniz-2 field." We value our good long-term relations with our Azerbaijani partners," he said, adding that diversification was important.

"I think we have a common understanding in this direction. Despite the delay in the construction of the Greece-Bulgaria interconnector, we are making serious efforts and expect the commercial operation of the interconnector to begin in the second half of this year, as provided in the latest updated schedules. This will give a real opportunity for diversification of supplies, as IGB is the connection between Bulgaria and the entire region of Southeast Europe with the Southern Gas Corridor, "said the Minister.

Nikolov notes that thanks to the possibility of receiving the full agreed volumes of gas from Azerbaijan, the partnership between the two countries in the energy sector is entering a qualitatively new stage.

"Deepening cooperation between our countries is a key factor in meeting the Bulgarian government's priorities related to diversification and gas supplies, and enables Bulgaria to develop and strengthen its role as a gas hub in the region of Southeast Europe," said also the Minister. He drew attention to regular meetings with both the contractor and suppliers to speed up work on the construction of the gas interconnector with Greece.

The IGB project is of great importance for Bulgaria and the European Union as a whole, Nikolov continues.

"It will connect the networks of the Greek gas transmission system operator DESFA and the Trans-Adriatic Pipeline (TAP) in Komotini (Greece) and the transport system of the Bulgarian gas operator Bulgartransgaz in Stara Zagora. The interconnector between Greece and Bulgaria is included in the list of projects of common interest of the European Union in accordance with Regulation (EU) № 347/2013 on guidelines for trans-European energy infrastructure. This is one of the seven priority gas projects that are being implemented as part of the Central and Southeast Europe Energy Connectivity (CESEC) initiative, Nikolov said, noting the direct effects of the IGB project. According to him, this will lead to the real diversification of natural gas supply sources for Bulgaria, the creation of opportunities for natural gas supply through the Southern Gas Corridor and LNG sources, as well as connecting the Bulgarian gas transmission system to the main part of the gas supply infrastructure from alternative sources for the whole region of Central and South-Eastern Europe.

The Minister of Energy also commented on SOCAR's participation in the Bulgarian market.

"For us, on the one hand, this is an assessment of the potential of the gas market in the country, and on the other - a step towards deepening cooperation with such a strategic partner as Azerbaijan. We have provided SOCAR with all the necessary information and we are waiting for a notification from it ", says Nikolov. According to him, our country has made 5 percent progress in expanding the gasification of end customers, and this is among the priorities in the Energy Strategy.

 "We consider replacing electricity with natural gas for heating and other household purposes as an opportunity to improve energy efficiency. In addition, we will be happy to study Azerbaijan's experience in the field of gas storage. We are currently working to increase electricity storage capacity and natural gas through the development of existing and the construction of new storage facilities, "said the Minister.

"One of the four main areas of cooperation within the priorities of the EU-Azerbaijan partnership is connectivity, energy efficiency, environmental protection and climate action. Building on successful energy co-operation and the significant progress made within the Southern Gas Corridor, this includes support for Azerbaijan as a trade, logistics and transport hub, as well as assistance for sustainable resource management. Much progress has been made in negotiating a new framework agreement, which envisions enhanced and mutually beneficial co-operation between the EU and Azerbaijan in a wide range of areas, strengthening political dialogue in key sectors and boosting trade, the minister added.