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    Eastring: The Most Logical Solution for South-Eastern Europe

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Summary

The Eastring pipeline project makes sense in a multitude of ways that coalesce with the aims of the Energy Union, said Eustream Board Chair Tomáš Mareček

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Top Stories, , Security of Supply, Eastring, News By Country, Bulgaria, Turkey, Ukraine, , Romania, Slovakia, Balkans/SEE Focus

Eastring: The Most Logical Solution for South-Eastern Europe

The Eastring pipeline project makes sense in a multitude of ways that coalesce with the aims of the Energy Union, Chairman of Eustream’s Board of Directors Tomáš Mareček has said.

Speaking at the Gas Infrastructure Europe conference in recent weeks, Mr. Mareček described the precarious state of affairs south-eastern Europe was in to make his point.

“If your region is physically dependent only on one route, you are too dependent [on that route],” he said. “That’s the situation in south-eastern Europe. Many countries there rely on only a single pipeline, so the risk of interruption is huge for them. They don’t have any alternative if there is a disruption upstream.”

The issue the region faces isn’t just with having one transit route for gas either, he said, a fact that further emphasised the usefulness of the Energy Union for the area.

“South-eastern Europe is not only dependent on only one single pipeline, they are also dependent on only one single source of gas. That’s why, I believe, if there is a place in Europe where it should work, it is right here [in south-eastern Europe].”

In fact, the vulnerabilities that led to the formation of the Energy Union were keenly felt in south-eastern Europe, Mr. Mareček said: Those two factors were the troubles in Ukraine, which brought with them the risk of transit disruption, and the announcement by Gazprom of the cancellation of the South Stream pipeline project.

“That [cancellation] meant south-eastern Europe was in a bad situation,” he said.

Given that Ukraine plays an important transit role for many south-eastern countries, any additional issues in the country could spell trouble for many.

Right now, a number of those countries are served by Ukraine through two corridors—one the Northern Ukrainian Corridor and the second the Southern Ukrainian Corridor.

“The Northern one, which then continues to Slovakia, Czech Republic and Austria, and then westwards to Germany and down to Italy, has a capacity of 90 billion cubic metres (bcm) in the direction from east to west,” Mr. Mareček explained.

The second corridor sends gas to northern Romania, Bulgaria and down to Turkey.

But the security of those two corridors is now being threatened because of the tensions between Ukraine and Russia.

“Russia is desperately trying to bypass Ukraine. First it proposed South Stream—cancelled. Now they are proposing Turkish Stream and I’m convinced that for Turkish Stream, definitely one pipeline will be built—maybe two of them. First a stream of capacity of 60 bcm will be built and most probably a second stream will be built as well.”

If (or when, as Mr. Mareček asserts) Gazprom achieves that aim, it will be able to bypass Ukraine—at least by 60bcm—a move that makes commercial sense for the Russian gas giant but which will put great strain on south-eastern Europe.

“It poses an additional threat for the Balkans countries because they will lose their gas transit,” the Eustream official said. “They will end up with empty pipelines in Romania and Bulgaria.”

This is why the Eastring project is so important, he believes, especially when it comes to security of supply for the region.

“Because it will have an initial stage capacity of 20bcm—it will be connected to the Slovak system and then westwards—it will provide the whole of south-eastern Europe with the additional capacity of 20bcm. In terms of security of supply, since the whole of south-eastern Europe needs to import 12bcm, then one criteria will be fulfilled with a huge reserve margin.

“This pipeline will provide all Balkan countries together with their interconnectors with an alternative route. They will not be dependent on a single pipeline. They will have the option to access the Western market. They will have the opportunity to link with western hubs.”

But that was only the beginning of what the project could hope to achieve, he said. Though often, infrastructure projects that would benefit a large number of countries often struggled to make commercial sense, the Eastring pipeline could be extremely commercially viable, especially when it came to Turkey.

“If you look at Turkish gas prices, they are €2, €3, €4 above Austrian prices,” he said. “The majority of Turkish gas consumption is situated around Istanbul. Turkey has almost no winter flexibility; they have no underground storages. So, ironically, the Eastring pipeline could serve both the big western shippers, maybe even Norway, and also Turkish consumers and send the gas from Western Europe to Turkey for some time.”

And it wasn’t just existing suppliers and producers who could avail of the pipeline: in the future, and after the Iran sanctions are lifted, that could represent a whole new arena for gas from not just Iran but Azerbaijan, Turkmenistan, Iraq, and Kazakhstan, too.

“Once this pipeline is in place, it will represent the highway for the Caspian gas to Europe because it will be built bi-directional.”

Though an exact route has not been decided on for the Eastring pipeline project, there are a couple of routes that are currently being considered.

Option A, which passes the storage areas and production facilities of Transylvania and continues to the existing interconnection point of Isaccea, would then connect to the existing Western pipeline, which runs through the Romanian-Bulgarian border at Negru Voda and then onwards from north-east to south-east along the existing Bulgarian gas transit assets to tie into Turkish gas transit network at Malkoclar.

Alternatively, option B would pass storage areas and production facilities in Bucharest and then continue on to the Romanian-Bulgarian border, then head straight to the Turkish border at Malkoclar.

Neither option is certain at present, nor is funding or partnership from all relevant parties, but Tomáš Mareček is sure that the Eastring makes perfect sense as a project.

“When you combine it with providing security of supply to the Balkan countries with an alternative source for gas to the Balkan countries, theoretically routing and supplying to Turkey, and at the same having the possibility of a highway in the future sending gas from the Caspian to western Europe, we believe this is the most logical solution,” he said.