IGB: Over 80pct of work complete to start construction
More than 80 percent of the work has been completed for starting the construction of the Interconnector Greece-Bulgaria (IGB) that envisages transportation of Azerbaijani gas to Bulgaria, Teodora Georgieva, executive officer at ICGB AD joint venture company, the project’s operator, told Trend.
“For the IGB project most of the significant preparatory job is already completed. There is a Final Investment Decision for the project taken in December 2015. The environmental impact assessment (EIA) is completed for the entire route. The Technical Design for the Bulgarian part of the route as well as the FEED for the Greek section have been finalized. There is a Construction Permit issued for Bulgaria and Installation act for Greece. Installation permit is expected immediately after the Exemption Decision,” she said.
Georgieva went on to add that the financial model and the business plan were finally agreed between the shareholders and aligned with the European Commission as part of the exemption procedure and the approval of additional grant of 39 million euros.
“The financial structure is entirely settled and there negotiations which are ongoing for preparation of intergovernmental agreement between Bulgaria and Greece for stabilization of the taxation of the project for a period of 25 years. There is a sovereign guarantee secured by the Bulgarian state and on that basis a Memorandum of understanding is signed between Bulgarian Energy Holding and EIB for providing of loan for the realization of the project,” she noted.
A pre-notification procedure for compatible state aid has been finalized with Directorate General for Competition, according to Georgieva.
“All main tenders are launched for selection of owner's engineer; for manufacturing and supply of line pipes; for engineering, procurement and construction and for archaeological research. Based on the above, we have to summarize that more than 80 percent of the work for start of construction is already done,” she concluded.
IGB is a gas pipeline, which will allow Bulgaria to receive Azerbaijani gas, in particular, the gas produced from Azerbaijan's Shah Deniz 2 gas and condensate field. IGB is expected to be connected to TAP via which gas from the Shah Deniz field will be delivered to the European markets.
The initial capacity of IGB will be 3 billion cubic meters of gas.
IGB talks on agreements to be signed in next few months
The priority in the implementation of the project for construction of IGB now is the finalization of the tenders for the main contracts – line pipe supply and the engineering, procurement and construction (EPC), Georgieva said.
“Also what is expected and shall be fulfilled in the next few months is approval, signing and ratification of the intergovernmental agreement focused on taxation issues for Greece and Bulgaria. On the basis of the exemption decision we have to move towards signing of gas transportation agreements with the shippers with reserved capacity. The interconnection agreements with the neighboring operators shall be completed,” she said.
The official notification procedure for compatible state aid is under preparation and will be undergone in the next few months, she added.
Georgieva pointed out that the most important work is the selection of the main contractors which is the practical condition for the start of construction and our efforts are focused mainly on this process.
“We believe that all conditions for the realization of the project are already on place and what is left is the formalization of some elements which are already agreed/approved/aligned among stakeholders,” she said.
Possible time of holding next market test for remaining capacity
ICGB is expecting the official exemption decision by the national regulators of Greece and Bulgaria to hold the next market test, Georgieva said.
She noted that as the consultations on the preliminary decision between the national regulatory authorities and the European Commission have been completed, the official decision shall be issued by the end of August 2018.
“The decision is kept confidential until it is officially adopted by both countries, however if ICGB exemption application request is respected, the third party access exemptions shall be applicable for the current quantity of capacity booked during the latest market test in 2016,” said Georgieva.
She pointed out that the remaining capacity shall be offered following the rules set in the capacity allocation mechanisms (CAM) network code.
“The CAM network code envisages short term and long term products, with a maximum period of booking of up to 15 years. Before offering the remaining capacity ICGB shall wait for the official exemption decision as the exact mechanism for the management of the non-exempted capacity should be set there,” said the executive officer.
Further at the current stage the priorities of the project company are the successful completion of the tender process and the start of the construction phase, she added.