Minister: SGC to transform Bulgaria into major part of infrastructure for gas supply from alternative sources

Report's exclusive interview with Bulgarian Minister of Energy Alexander Nikolov.

- How do you assess the contribution of SGC to the development of European energy systems and how can this meeting promote this?

- SGC has positive impact on the development of European energy systems as it leads to increasing diversification of the sources of natural gas supply from the Caspian Region. The direct effect of the Southern Gas Corridor project implementation will transform Bulgaria and its gas transmission system into a major part of the infrastructure for gas supply from alternative sources for the entire region of Central and Southeast Europe.

Regarding the second part of the question, I would like to note that the Southern Gas Corridor Advisory Council was established in 2014 on the initiative of the Azerbaijani President Ilham Aliyev and it made an important contribution to the implementation of the Southern Gas Corridor project. This format of effective and multilateral cooperation became tradition and this year will be its 8th meeting.

I believe that this meeting of the Southern Gas Corridor Advisory Council will raise awareness of SGC’s role in the energy transition and Europe’s energy security. It represents an excellent venue to address current energy security challenges and exchange views on common efforts to progress in achieving sustainable development while maintaining energy security.

- How will the council improve the possibilities of SGC?

- As I have already mentioned, the role of the Council is to provide place for discussion of the opportunities for SGC’s extension in order to bring the gas to new consumer destinations, including to the Western Balkan region. Natural gas from the Caspian Sea will contribute to the green transition and will ensure climate resilient pathways from the cleaner fuel in regions in transition.

The current times are especially challenging to policy-makers and energy companies as we attempt to find the way to meet the needs of our citizens who require affordable and reliable energy, but strive for low environmental and low climate impact. They rely on us for the supplies to keep the lights on, homes warm and businesses thriving. This forthcoming SGC Advisory Council will reflect on the role of natural gas in the energy transition, as well as on paths and challenges towards low carbon economy.

- What is the current situation concerning construction of the Gas Interconnector Greece - Bulgaria (IGB), which will transfer Azerbaijani gas to Bulgaria?

- The IGB project is of great importance not only to Bulgaria but to the region of Southeast Europe as a whole. Despite the delay in the construction of the interconnector, we are making serious efforts and believe that the interconnector will enter into commercial operation from the beginning of the second half of this year ‒ as provided in the latest updated schedules. This will provide a real opportunity for diversification of supplies, as IGB is the connection of Bulgaria and the whole region of Southeast Europe with the Southern Gas Corridor.

With the opportunity to receive in full the agreed quantities of gas from Azerbaijan, the partnership between our two countries in the energy sphere is entering a qualitatively new stage. Deepening cooperation between us is a key factor in meeting the priorities of the Bulgarian government related to diversification and gas supplies ‒ namely our country to develop and strengthen its role as a gas hub in the region of Southeast Europe.

Part of our efforts to become a gas hub is also the construction of the gas interconnector between Bulgaria and Serbia. We started the construction of the Serbian section with the Prime Minister of the Republic of Serbia Ana Brnabić and my colleague Zorana Mihajlović just a few days ago.

- When will the pipeline be launched and start to supply natural gas to the Bulgarian customers?

- As I have said, we believe that the interconnector will enter into commercial operation from the beginning of the second half of this year. Тhe Bulgarian government will do its best to ensure that IGB will be completed on time. Тhe Ministry of Energy holds regular meetings with both the contractor and the suppliers to speed up the activities for building the interconnector. Meetings are also held on the highest political level – between the Bulgarian Prime Minister Mr. Kiril Petkov and the Greek Prime Minister Mr. Kyriakos Mitsotakis.

The delay in the project creates serious difficulties for the Bulgarian public supplier of natural gas - Bulgargaz EAD. The company is a major user of the pipeline, having concluded a contract for natural gas transmission with the project company ICGB AD, in order to reserve and use long-term capacity of the interconnection to ensure the transmission of natural gas from Phase 2 of Shah Deniz field in Azerbaijan under a contract of 19 September 2013 for the supply of natural gas in the amount of 1 billion cubic meters per year for 25 years, concluded with SOCAR and subsequently with AGSC.

- Are there any plans for further expansion of IGB and increase of natural gas flow to Bulgaria and possibly further to the neighboring countries? To what extent?

- The IGB project will provide Bulgaria and other countries in Southeast and Central Europe with access to the Southern Gas Corridor. It will also ensure that Bulgaria is able to import the contracted quantity of 1 billion m³ of natural gas per year from Shah Deniz 2 gas field in Azerbaijan.

One of the Bulgarian main objectives with regard to the diversification of energy sources is increasing diversification of the sources of natural gas supply from the Caspian Region via the Southern Gas Corridor. This objective is stated in our Integrated Energy and Climate Plan 2021 – 2030. We appreciate the opportunity for natural gas supply via the Southern Gas Corridor as this results in real diversification of the sources of natural gas supply to Bulgaria.

- Bulgaria has started to receive gas from Shah Deniz under an interim scheme from the beginning of 2021. Will it continue after the IGB starts operating at full capacity later this year? How much Azerbaijani gas will Bulgaria receive in this gas year? What part of the country's consumption will it cover?

- The Bulgarian side relies very much on its partnership with Azerbaijan. The backbone of this partnership is the contract signed in 2013 between the Bulgarian natural gas distribution company Bulgargaz and Azerbaijan’s state oil company AGSC for supply of 1 billion cubic meters of natural gas per year from Shah Deniz 2.

We value our good long-term relations with our Azerbaijani partners. Diversification is our economic and political goal. 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 believe that the interconnector will enter into commercial operation from the beginning of the second half of this year ‒ as provided in the latest updated schedules. This will provide a real opportunity for diversification of supplies, as IGB is the connection of Bulgaria and the whole region of Southeast Europe with the Southern Gas Corridor.

With the opportunity to receive in full the agreed quantities of gas from Azerbaijan, the partnership between our two countries in the energy sphere is entering a qualitatively new stage. Deepening cooperation between us is a key factor in meeting the priorities of the Bulgarian government related to diversification and gas supplies - namely our country to develop and strengthen its role as a gas hub for the region of Southeast Europe.

- How can Bulgaria expand energy cooperation with Azerbaijan and does it have such a plan?

- Bulgaria as a Member State of the EU can reinforce its cooperation with Azerbaijan in the framework of the Eastern Partnership and other international organisations (such as BSEC). One of the four main areas of cooperation under the Partnership Priorities between the EU and Azerbaijan is connectivity, energy efficiency, environment and climate action. Building on the successful cooperation on energy connectivity and the significant progress made on the Southern Gas Corridor, this includes support for Azerbaijan's ability to operate as a trade, logistics and transport hub, regulatory assistance, sustainable management of resources.

Negotiations on a new and upgraded framework agreement designed to reflect the enhanced and mutually beneficial EU-Azerbaijan cooperation in a wide range of areas, strengthen policy dialogue in key sectors and boost trade are at an advanced stage.

- Are Bulgarian companies interested in participating in energy projects, particularly renewable energy projects, implemented by Azerbaijan?

- Bulgarian companies are interested in cooperating with Azerbaijan in the area of developing energy from renewable sources and enhancing energy efficiency by developing and implementing new technologies for a modern and sustainable energy sector. They are leaders in PV Projects especially in the construction area. Local companies have successfully expanded in the EU and globally. I believe that we will be able to cooperate with the Azerbaijani side in this direction as well.

The Bulgarian side is open for exchanging experience for projects to exploit the potential of solar energy and water basins; bio-based resource efficiency projects, including bio raw materials and biogas, as well as waste management and recovery and the implementation of the circular economy. In connection with the principle of putting energy efficiency first, we also attach great importance to the development, construction and implementation of new resource materials.