Serbia starts construction of new pipeline to buy gas from Azerbaijan

The EU and Serbia are financing a new natural gas interconnector between Serbia and Bulgaria, whose construction, beginning on Tuesday, is slated for completion in the fourth quarter of 2023, the Belgrade EU Info Centre announced on Monday, Report informs, citing Euractiv.

The Niš-Dimitrovgrad-Bulgaria interconnector construction project will be funded partly through EU grants in aid — to the tune of €49.6 million, with the addition of a favourable €25-million loan from the European Investment Bank, to be repaid by Serbia for the portion of the gas pipeline running through its territory.

Serbia has set aside €7.5 million for the project to date. The interconnector will link Niš with Bulgarian capital Sofia, while the projected capacity of the new pipeline is 1.8 billion cubic metres of natural gas per year.

According to the project, the new gas pipeline will provide an additional 80% increase in capacity compared to Serbia’s current annual needs, which is about 2.4 billion cubic metres of gas per year.

The new pipeline, along with a new pipeline that is being built between Greece and Bulgaria, will diversify energy sources in Serbia and the Western Balkans, and expand supply sources. It will also provide easier access to gas in those places in Serbia that have not had it so far, mainly in the southern and eastern parts of the country.

The EU has prepared non-refundable EU IPA funds for the entire energy sector of Serbia for €100 million for 2022, including €49.6 million for this project.

The IGB envisages the transportation of gas produced in the second phase of the Shah Deniz gas condensate field in the Azerbaijani sector of the Caspian Sea to Bulgaria. Through this pipeline, which will be connected to TAP, Bulgaria will import 1 billion cubic meters of natural gas annually from Azerbaijan. Thus, the state company Bulgargaz EAD has signed a contract with the Shah Deniz consortium to purchase this amount of gas from the Shah Deniz-2 field. At the expense of Azerbaijani natural gas, Bulgaria will be able to meet 25-30% of its gas needs. The construction of the IGB is expected to be completed in the second half of next year.

A total of 150 kilometers of the 182-kilometer pipeline will pass through Bulgaria. The annual capacity of the pipeline is estimated at 3-5 billion cubic meters.

As part of the development of the Southern Gas Corridor, the countries of South-Eastern and Central Europe will have the opportunity to import alternative supplies and liquefied natural gas from the Caspian region through the IGB.