"Eastring" Project: Increasing Connectivity with New Markets

Let's forget all those costly, high-falutin' natural gas pipelines for a minute and consider the very practical and cost effective proposal being made by Slovak TSO Eustream. Dubbed "Eastring," the project would connect Western European natural gas pipeline networks with eastern and southeast Europe.

Mr. Miroslav Bodnár, Member of the Board of Directors and Director of Strategy, Eustream, answered questions submitted by Natural Gas Europe about the Slovak TSO's proposal.

Natural Gas Europe (NGE): Could you talk a bit about your objectives by proposing this project?

Miroslav Bodnár (MB): The project's mission is based on finding a solution which shall:

• Lift the current non-existence of physical gas supply alternative for the Romania, Moldova and Balkan countries (primarily Bulgaria). Moreover, it offers not only the provision of an alternative gas route but also alternative gas sources, cross border liquidity which shall increase the competition on these gas markets;
  
  
• Replace security of supply role of South-Stream from the perspective of Balkan countries, Romania and Moldova and wider region;
  
  
• Not be linked to any particular gas supplier and open to all gas sources without limitation;
  
  
• Be compliant with the EU law and its spirit, increase the cross-border interconnectivity and liquidity and represent an important step towards the single EU gas market;
  
  
• Facilitate future access to new gas sources (gas source diversification) from the Caspian or other regions;
  
  
• Represent the most economic and time efficient solution by utilization the robust existing infrastructure.

Additionally, in light of the recent development and proclamations of the Gazprom management to deliver gas also via Turkey, the relevance of Eastring is only increased as the project is naturally open to transit also Russian gas. 

NGE: How would you differentiate it, say, from a project like Nabucco, which was deemed a "commercial project"? What can be learned from its failure in how to push forward a project like the one you are proposing?

MB: The advantage of the Eastring project is based on its ability to bring  very high value added while having a very reasonable capacity in comparison to  projects like Nabucco and/or South Stream, which involved a full construction of a new route and extensive capacity. This results in significantly lower required capex (just a fraction of Nabucco or South Stream price) thanks to maximum usage of already existing robust transmission infrastructure (such as the Velke Kapusany compressor station). This naturally strongly increases the chances of the project to attract support of promoters, EU and be ultimately implemented. 

NGE: If Eastring provides access to Western alternative sources of gas, how competitive do you think they can be when competing against gas from Gazprom from a price perspective?

MB: We believe that in the current price environment, gas transited across eastring could be attractive for SEE countries. Moreover, accessibility  to gas traded on liquid markets from the perspective of these countries has its great security of supply value.

NGE: Will it be multi-directional flow? Considering OMV's (possible?) participation, might we expect Black Sea gas to flow in the pipeline? 

MB: Yes, the project is expected to be bi-directional in its final stage of implementation and its possibility of delivery of Black Sea gas to the European markets is one of the considered scenarios. 

NGE: What other sources might it transport in the future? 

MB: Besides the mentioned Romanian Black Sea gas production, the Eastring project could offer a corridor ready for future gas imports to Europe from another alternative sources like AGRI, TANAP, Caspian, Iran, Iraq, Egypt, Israel and/or Cyprus and of course also for any Russian gas available on the Turkish border. 

NGE: What is your assessment of existing pipeline infrastructure in the countries supplied by Eastring?

MB: The project is currenty being considered in more variants, deviating in routing options and level of usage of existing infrastructure. We are currently meeting with the potential project partners and such an assessment is currently under preparation, together with analysis of the proposed routing variants. 

NGE: How would you gauge support for this project in the countries it would connect? 

MB: As mentioned in the previous answer, we are currently meeting potential project partners, mainly from the coutries along the proposed project routing and until now we have received only possitive signals and feedback.

NGE: Would you eventually link up to other countries in Central Europe like Czech Republic, Hungary, Poland, etc. or is it assumed that they will be linked well enough by interconnectors? 

MB: Eastring connects the UA-RO-BG transit pipeline with the existing Slovak transmission system at the existing interconnection point of Velke Kapusany, having enough transmission capacity towards Czech republic and Hungary. Direct interconnection of the Slovak transmission system (from Velke Kapusany) to the Polish transmission system is also under development. So all-in-all the Eastring project would become a very important element in increasing interconnectivity of already well-connected networks around Eustream with new markets. 

NGE: Could you name the three most important key elements for implementing Eastream?

MB: By establishing Eastring, this project would (i) safeguard supply in case of flow disruption and therefore it will  increase gas supply security in the broader Central-South-East European region, (ii) allow access to alternative natural gas sources for Central, Western and Southern Europe and also (iii) create a platform for a competitive and liquid internal gas market, while enabling the entry of new market players.

NGE: Finally, how does being a Slovak TSO facilitate Eastring? What do you bring to the table to make this work? 

MB: Eustream actively support the Eastring project towards its implementation by providing all our technical know-how and contributing to the project design, searching for the potential project partners and sources of financing. Since the project is planned to be connected to the Slovak transmission system and the largest compressor station in Velke Kapusany, Eustream is willing to play the key/liaison role in the entire project implementation.

At the European Gas Conference in Vienna, Austria, former Czech Prime Minister Mirek Topolánek, who is head of Development and Public Relations at Eustream, said the company would be taking its proposal to Brussels.

He offered, "We will try to persuade the big guys, big players in Europe to take part, because this project can be realized very soon, so we are able to react or accept Russia's decision, to have a solution for all these countries threatened by this cancellation of South Stream. My prediction is that it will be very important to discuss this with the big guys, welcome them on board and then maybe the project will be deemed sustainable and bankable."

-Drew Leifheit