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The Greece-Bulgaria pipeline: Who will benefit?

A major European gas project has gained a lot of attention recently: the upcoming Interconector Greece-Bulgaria pipeline. This scheme will allow gas from Azerbaijan to travel through Greece to Bulgaria, creating an incredibly useful link between central Asia and the Balkans.

The reason for the sudden interest in this particular pipeline is that both Greece and Bulgaria have agreed to speed up the Interconector project. The nations are preparing to make a final investment decision by the end of May this year, which would enable the pipeline to be completed and in operation by 2018.

A major pipeline project such as this is sure to bring a range of positives to a large number of people. However, investors will need to look carefully at the situation if they want to fully understand the region's oil and gas business. So, who is set to benefit from Interconector Greece-Bulgaria, and in what way?

 

Bulgaria

The nation that will see the biggest positive effect from this deal is Bulgaria. While the 180 km Interconector pipeline will be good for Greece as well, it will go a long way towards solving some of Bulgaria's main oil and gas woes as well as helping the nation get one step closer to its goal of becoming a European energy hub.

This is something the country has wanted for a while. Originally, it wanted to transport gas directly from Russia, bypassing Ukraine and other European nations by way of a pipeline travelling under the Black Sea. This 'South Stream' pipeline would have transported around 63 billion cubic metres of gas to Europe, but the project was unfortunately scrapped.

The pipeline from Greece will also give Bulgaria a non-Russian source for its natural gas. The nation currently gets a staggering 90 per cent of its gas from a single supplier - Russia's Gazprom - all of which comes through just one pipeline.

This led to a catastrophe for Bulgaria in 2009, when tension between Russia and Ukraine caused that pipeline to shut down. The country was left without the vast majority of its natural gas supply, and has since expressed its intent to look elsewhere for more diverse sources. Interconector Greece-Bulgaria will be a huge step towards achieving this goal.

 

Greece

Of course, Greece will also benefit from the construction of this pipeline. However, it has less of a stake in it than Bulgaria. Some 50 per cent of the project is in the hands of Bulgarian Energy Holding, a state-owned company, while the remaining half is split between Greece's Dimosia Epichirisi Paroxis Aeriou and the Italian firm Edison.

However, Greece will benefit from the increased gas revenue the Interconector project will bring. In addition to gas from Azerbaijan, the pipeline will allow Bulgaria to import from Greece's liquified natural gas terminals. This will prove to be very financially beneficial for the nation in the future.

 

The EU

It might be a long way off yet, but should Bulgaria become the energy hub it is aiming for then it will be beneficial to the entire EU. "This pipeline is strategic for the EU and is of common interest," said Bulgarian energy minister Temenuzhka Petkova in a statement. This can be seen in the amount of investment the EU has contributed.

The European Commission has already invested €45 million in Interconector Greece-Bulgaria, but it is considering increasing this amount to support the project further. This is a clear sign that the EU in general will benefit strongly from the pipeline, making it worthy of receiving even more European money.


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