REPORT No. 1 REVIEW OF TRANS-EUROPEAN AND …

USAID Energy Investment Activity Project (EIA) Report No. 1

Review of Trans-European and Regional Natural Gas Pipeline Projects relevant for BiH Security of

Supply

UNITED STATES AGENCY FOR INTERNATIONAL

DEVELOPMENT

Energy Investment Activity (USAID EIA)

Contract Number

AID-168-C-14-00002

REPORT No. 1

REVIEW OF TRANS-EUROPEAN AND REGIONAL

NATURAL GAS PIPELINE PROJECTS RELEVANT FOR

BIH SECURITY OF SUPPLY

- FINAL VERSION -

Author: EIA Project Team

February, 2019

Implemented by:

Advanced Engineering Associates International, Inc. (AEAI) USAID COR: Ankica Gavrilovic

This Report is made possible by support from the American People sponsored by United States Agency for

International Development (USAID). The contents of this Report were prepared by and are the sole responsibility

of Advanced Engineering Associates International, Inc., and do not necessarily reflect the views of USAID or the

United States Government.

TABLE OF CONTENTS

INTRODUCTION ..................................................................................................................... 4

ACRONYMS ............................................................................................................................. 5

1. NATURAL GAS IN THE EU ............................................................................................ 7

1.1 Development of Gas Consumption ............................................................................. 9

2 UMBRELLA EU ENERGY POLICY DOCUMENTS ................................................... 12

2.1 EU Energy Roadmap 2050 ........................................................................................ 12

2.2 Ten-Year Network Development Plan ...................................................................... 14

2.3 EU Regulation No. 347/2013 on Trans-European Energy Infrastructure ................. 15

2.3.1 Projects of Common Interest .................................................................... 15

2.3.2 PCI project selection methodology ........................................................... 16

2.4 EU Security of Gas Supply ....................................................................................... 17

2.4.1 Infrastructure Standard for Security of Supply (N-1 standard) ................ 18

2.5 EU Third Energy Package ......................................................................................... 18

2.6 Energy Community ................................................................................................... 19

2.6.1 Projects of Energy Community Interest .................................................... 20

3 OVERVIEW OF STUDIES RELEVANT TO BIH GAS NETWORK DEVELOPMENT

22

4 SECURITY OF SUPPLY IN EUROPE ........................................................................... 32

4.1 Gas Supply Disruptions Simulations ........................................................................ 32

4.1.1 Disruptions of Supply From Each of European Gas Sources ................... 34

4.1.2 Case of Ukraine Route Disruption ............................................................ 34

4.1.3 Unavailability of Largest National Infrastructure (N-1 case) ................... 36

5 PROJECTS OF INTEREST TO BIH ............................................................................... 39

5.1 Status and development plans of Croatian natural gas transmission system ............ 43

5.2 Status and development plans of Serbian natural gas transmission system .............. 49

6 CONCLUSIONS AND RECOMMENDATIONS ........................................................... 54

REFERENCES ........................................................................................................................ 55

APPENDIX .............................................................................................................................. 56

FIGURES

Figure 1.1 TPES and of Natural Gas Share in TPES in EU28 .................................................. 8

Figure 1.2 Gas Demand between 2000 and 2015 in EU28 ........................................................ 8

Figure 1.3 Origin of Gas Supply in 2015 for the Area of EU28 ................................................ 9

Figure 1.4 Possible sources for supplying the European gas import demand ......................... 10

Figure 1.5 Overview of Gas Reserves in Regions of Interest to the EU (in thousand bcm) ... 11

Figure 1.6 Natural Gas Consumption (2000-2015) and Forecasted (up to 2050) in EU28 ..... 11

Figure 2.1 EU Scenarios for Decarbonization in 2050 compared to 1990 .............................. 13

Figure 2.2 EU Primary Energy Mix in 2015............................................................................ 13

Figure 3.1 The Natural Gas Network in Croatia and Possible Connections with BiH ............ 22

Figure 3.2 EnC Gas Transmission Ring Concept .................................................................... 24

Figure 3.3 Block diagram of IAP ............................................................................................. 29

Figure 3.4 Major International Gas Supply Project Proposals ................................................ 30

Figure 3.5 Proposed south gas interconnection of BiH and Croatia ........................................ 31

Figure 4.1 Main European energy policy objectives [2].......................................................... 32

Figure 4.2 TYNDP-2017 Gas Demand Scenarios [1] ............................................................. 33

Figure 4.3 TYNDP-2017 Infrastructure Levels [1] ................................................................. 34

Figure 4.4 TYNDP-2017 Simulations of resilience to Ukrainian route disruption [2] .......... 36

Figure 4.5 TYNDP-2017 Simulations of N-1 Indicator for ESW-CBA Assessment [2] ........ 37

Figure 5.1 Main gas pipeline projects of interest to BiH [2] ................................................... 40

Figure 5.2 Integration of Croatian gas transmission system into new supply project [3] ....... 44

Figure 5.3 Serbian gas transmission system ............................................................................ 53

TABLES

Table 1.1 Fuel Type Emission Factors ...................................................................................... 7

Table 3.1 Gas PECI/PMI Projects in 2016 .............................................................................. 27

Table 5.1 Trans-European and regional projects of interest to BiH ........................................ 41

Table 5.2 Regional interconnection projects of interest to BiH ............................................... 42

Table 5.3 Croatian Gas Transmission System Characteristics ................................................ 44

Table 5.4 Serbian Gas Transmission System Characteristics .................................................. 52

INTRODUCTION

Bosnia and Herzegovina (BiH) receives natural gas from only one direction - Serbia, and from

only one source - Russia, via Ukraine and Hungary and Serbia. To ensure security of supply it

is necessary for BiH to diversify its supply sources and directions. BiH borders on the south,

west and north with Croatia and on the eastern side with Serbia. Whereas there is also a border

with Montenegro in the Southeast, Montenegro does not have a gas network so is not of interest

to BiH in this area. Therefore, BiH can only connect to the European network via Croatia and

Serbia; thus trans-European and regional projects of interest to BiH are those that connect

directly or pass through countries bordering Croatia and Serbia and can impact the gas

networks in Croatia and Serbia. Those projects will be identified and discussed in this paper,

with special attention to the likelihood of project implementation and its significance for BiH

gas supply.

The main source of such projects is the 2017 Ten-Year Network Development Plans (TYNDP)

developed by the European Network of Transmission System Operators for Gas (ENTSO-G).

This report includes different types of projects that are in different stages of implementation,

such as:

• Projects of Common Interest (PCI) are key infrastructure projects that link the

energy systems of EU countries (as defined in EU Regulation 347/2013). The PCI

projects are considered priority projects and are eligible for EU funding and grants.

PCI projects are grouped into clusters if they impact each other.

• Projects of Mutual Interest (PMI) are projects between an Energy Community

Contracting Party and an EU Member State (defined in EU Regulation 347/2013,

as adapted by the Energy Community).

• Projects of Energy Community Interest (PECI) are projects between two Energy

Community Contracting Parties (defined in EU Regulation 347/2013, as adapted

by the Energy Community).

• FID Projects – Projects with Final Investment Decision (FID) regardless of the

PCI status.

• Advanced projects – projects that have started the front-end engineering design or

permitting phase, and are planned to be commissioned by 31 December 2022.

The advanced projects may be non-FID projects.

If a project is not included in the TYNDP but is significant for the Southeast Europe and BiH,

it is discussed in this report. One such project is the Turkish stream project, which directly

connects Russia and Turkey and will supply Southeast Europe and beyond.

The current resilience and results of simulations of future resiliance of Southeast European

countries to supply disruptions from the TYNDP 2017 also will be presented.

Since BiH is committed to become a member of the EU and harmonization with the EU Acquis

is a pre-requisite for EU membership, the EU energy policy and key EU regulations regarding

security of supply of gas are presented in this report.

ACRONYMS

bcm billion cubic meters

BEMIP Gas Baltic Energy Market

Interconnection Plan in Gas

BRUA Bulgaria-Hungary-Romania-Austria

CBA Cost-Benefit Analysis

CEF Connecting Europe Facility

CESEC Central and Southeast Europe Gas

Connectivity

CHP Combined Heat and Power

CS Compressor Stations

DC National Design Case Peak Day

EBRD European Bank for Reconstruction

and Development

ECA Economic Consulting Associates

EIB European Investment Bank

EnC Energy Community

ENTSO-G European Network of Transmission

System Operators for Gas

EOI Expression of Interest

ERGEG European Regulators’ Group for

Electricity and Gas

ESW-CBA Energy System Wide Cost Benefit

Analysis

EWRC Energy and Water Regulatory

Commission of Bulgaria

FS Feasibility Study

FSRU Floating Storage and Regasification

Unit

IAP Ionian Adriatic Pipeline

IBS Interconnections Bulgaria – Serbia

IEA International Energy Agency

IGB Interconnection Greece – Bulgaria

INEA Innovation and Networks Executive

Agency

IP Interconnection Point

IRR Internal Rate of Return

LHV Lower Heating Value

LNG Liquified Natural Gas

LPG Liquefied Petroleum Gas

MCA Multi-Criteria Assessment

mcm Million Cubic Meters

MoU Memorandum of Understanding

Mtoe Million tons of oil equivalent

NPV Net Present Value

NSI Zapad

gas

North-South Gas Interconnections

in Western Europe

NSIE gas North-South Gas Interconnections

in Central-East and Southeast

Europe

PCI Projects of Common Interest

PECI Projects of Energy Community

Interest

PMI Projects of Mutual Interest

PMU Project Management Unit

RAE Regulatory Authority for Energy of

Greece

ROHUAT Romania-Hungary-Austria

SCPFX South Caucasus Pipeline Future

Expansion

SGC Southern Gas Corridor

SOCAR State Oil Company of the

Azerbaijan Republic

TANAP Trans-Anatolian Natural Gas

Pipeline

TAP Trans-Adriatic Pipeline

TCP Trans Caspian Gas Pipeline

TEN-E Trans-European Networks for

Energy

TPES Total Primary Energy Supply

OTS Transmission System Operator

TYNDP Ten-Year Network Development

Plan

UGS Underground Gas Storage

WBIF Western Balkans Investment

Framework

WGV Working Gas Volume

1. NATURAL GAS IN THE EU

Natural gas is the earth’s cleanest fossil fuel, resulting in far less emissions than other fossil

fuels. Comprising more than 95% pure methane, natural gas emits significantly less carbon

dioxide than other fuels and also produces negligible levels of nitric oxide and sulfur oxide

compared to oil or coal. Natural gas has:

- 40% less CO2 emissions than coal

- 22% less CO2 emissions than oil

- 11% less CO2 emissions than Liquefied Petroleum Gas (LPG)

Emission factors of some important fuels are given in Table 1.1.

Table 1.1 Fuel Type Emission Factors

t CO2/GJ

(Lower

Heating Value)

t CO2/MWh

Coal 0.0946 0.3406

Gasoline/Diesel Oil 0.0733 0.2639

LPG 0.0637 0.2293

Natural Gas 0.0569 0.2048

In Total Primary Energy Supply (TPES), the share of natural gas has been and will be important

in the future. Figure 1.1 shows TPES (in million tons of oil equivalent – mtoe) in EU28 in the

period from 2000 to 2015. The TPES trend indicates substantial decrease in the period 2006 to

2015 which is the consequence of EU28 Energy Policy of promoting increase in energy

efficiency, new technologies and changed structure of the economy. There is also a significant

decrease in 2009 resulting from the economic crisis, but the energy consumption recovered in

2010.

The percentage of the natural gas share is about 26% with a falling trend in recent years (Figure

1.1).

Figure 1.1 TPES and of Natural Gas Share in TPES in EU281

The natural gas demand, net import and domestic production in the EU28 in the period 2000

to 2015 is shown in Figure 1.2. The EU 28 production decreased significantly, while the natural

gas imports increased.

Figure 1.2 Gas Demand between 2000 and 2015 in EU282

1 Gvozdenac, Dusan presentation, based on IEA data. 2 Ibid.

The share of gas imports in the EU28 is about 71%. The demand is supplied by domestic

production (29%) and imports from Russia (28%) and Norway (25%). Russia remains in 2017

the largest supplier of natural gas and petroleum oils to the EU ahead of Norway. The main

directions of EU supply are shown in Figure 1.3.3

Russia and Norway together provide about 75% of the imports. During the analyzed period

(2000-2015), gas was also supplied from North Africa (about 8%) and from the liquified natural

gas (LNG) world market (about 7%). The difference to 100 % is due to the withdrawal of gas

from storage reservoirs and to statistical differences in 2015.

Figure 1.3 Origin of Gas Supply in 2015 for the Area of EU28

1.1 Development of Gas Consumption

There are many studies and reports that deal with the forecast of energy consumption in the

EU. However, the official Energy Policy is stated in the EU Energy Roadmap 2050,4 which

defines all national policies and creates energy development plans. According to the EU

Roadmap 2050, the share of gas in the energy mix in 2050 will be 18-24%.

In a study by a one of Europe’s oldest economic research facilities, Prognos,5 not only the

future consumption of natural gas but also gas transport corridors have been analyzed. Figure

1.4 shows current and future sources of gas imports. In principle, all LNG-exporting countries

qualify as LNG suppliers including distant countries such as Australia. However, as transport

costs for gas are substantial, the Australian exports are likely to be absorbed by the Asian

market.

3 Current Status and Perspectives of the European Gas Balance (Analysis of EU 28 and Switzerland) (Final Report), Berlin, 2017. 4 The Energy Roadmap 2050 of the European Commission from 2012,

https://ec.europa.eu/energy/sites/ener/files/documents/2012_energy_roadmap_2050_en_0.pdf. 5 Current Status and Perspectives of the European Gas Balance (Analysis of EU 28 and Switzerland) (final report), Prognos AG, Berlin, 2017.

https://ec.europa.eu/energy/sites/ener/files/documents/2012_energy_roadmap_2050_en_0.pdf

Global LNG

market

- Qatar

- Nigeria

- USA

- Russia

etc

Southern corridor

pipeline

Figure 1.4 Possible sources for supplying the European gas import demand

Large quantities of natural gas reserves exist in the Middle East countries: Saudi Arabia, Iran,

and in particular, there are vast reserves in Qatar. Furthermore, there are Caspian countries that

also have significant reserves of natural gas and which will become natural gas suppliers of the

EU in the future. The Southern Corridor is being developed with the construction of the Trans-

Adriatic Pipeline (TAP) and the Trans-Anatolian Pipeline (TANAP). These pipelines will

enable gas imports from the Caspian region to the EU and other countries on the route.

The question which countries can be potential long-term natural gas suppliers is closely

connected to the available resources. In one of the studies,6 reserves are defined as “verified

energy resources that can be economically exploited at current price levels using current

technology.” Reserves are therefore the important indicator of the medium-term availability of

energy resources. Russia, Iran and Qatar have the largest gas reserves in the world.

Figure 1.5 shows the gas reserves in thousands of billion cubic meters (bcm) outside the EU

that, due to their geographical position in relation to the EU, have the potential to supply the

EU. This mainly refers to the gas reserves of the “Atlantic Market,” Russia and the Middle

East. Other distant gas reserves are less relevant for the supply of the European gas demand as

they will primarily supply other regions, such as Asia and the Pacific region, although LNG is

taking on a significant role in the gas supply.

6 Reserves, Resources and Availability of Energy Resources (Energy Study 2013), (BGR, Federal Institute for Geosciences and Natural Resources), Hannover, December 2013.

Figure 1.5 Overview of Gas Reserves in Regions of Interest to the EU (in thousand bcm)

The information above provides a short overview of the current situation of natural gas

consumption in the EU, and a forecast of the future share of natural gas in the EU energy mix

and the new directions of supply. In regard to future gas consumption, it is anticipated that

there will be a reduction of natural gas consumption in households due to the increase in energy

efficiency and an increase of consumption in energy facilities due to the replacements of other

fosil fuels; however, there will be a slight decline in total consumption. Import of gas by the

EU will grow, and EU production will fall. The EU's dependence on gas imports will gradually

increase, so it can be expected that by 2050 imports will be around 85% compared to the current

71%. Figure 1.5 shows gas consumption in the EU28 in the period from 2000 to 2015 and the

forecast of the consumption up to 2050. The forecasted consumption fluctuates, but there is an

overall trend of reduction, which is in line with the EU Energy Roadmap 2050.

Figure 1.6 Natural Gas Consumption (2000-2015) and Forecasted (up to 2050) in EU287

7 Gvozdenac, Dusan, Own calculation based on IEA data and Prognos AG 2018).

2 UMBRELLA EU ENERGY POLICY DOCUMENTS

The goals of the EU energy policy is to ensure secure, affordable and sustainable energy supply

to its citizens. To achieve this, the EU developed strategies that focus on different areas and

complement each other, such as the Energy Union Strategy, Energy Security Strategy and

Clean Energy for All Europeans.8 The EU has set targets for 2020 and 2030 related to

greenhouse gas emissions reduction, improved energy efficiency, and an increased share of

renewables. The goal for 2020 is known as 20-20-20 (20% reduction of greenhouse gas

emissions, achieve 20% share of renewable energy, and achieve energy savings of 20%). The

long term goals are much more ambitious and are defined in the EU Energy Roadmap 2050.

An overview of other key policy documents related to the EU gas infrastructure development

are also listed and discussed in this chapter.

2.1 EU Energy Roadmap 2050

The EU document in the energy sector that looks furthest into the future is the Energy Roadmap

2050. This European Commission document from 20129 promotes economically profitable

scenarios that will lead the economy of the European Union to reduced energy consumption

and environmental protection. By 2050, the European Union will have significantly reduced

greenhouse gas emissions. The basis of such a plan is primarily the improvement of energy

efficiency, increased use of renewable energy sources and decreased use of solid and liquid

fossil fuels.

The EU Roadmap 2050 is a set of specific planning policies that are aimed at enabling

sustainable use of resources at the level of the European Union. Clean technologies are the key

element of the European economy in the future. It is expected that the implementation of of

these policies in the EU will lead to the reduction of CO2 emissions by 80% and even up to

95%, compared to the level in 1990, and it is expected that this will be achieved in economic

and cost-effective way. Intermediate targets are the reduction of 40% by 2030 and the reduction

of 60% by 2040.

One of important objectives of the EU Roadmap 2050 is the expansion and optimization of gas

pipeline networks, since natural gas remains the important element of the primary energy mix

in the EU. Figure 2.1 shows the scenario for decarbonization and the fuel shares in 2050 in the

Total Primary Energy Supply (TPES) in comparison to 1990. The significant reduction of the

share of solid and liquid fossil fuels in 2050 compared to 1990 is evident, as well as increase

in the share of natural gas.

Figure 2.2 shows the EU28 energy mix in 2015. In comparison to EU countries, the use of

natural gas in BiH is very low.

8 https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union. 9 https://ec.europa.eu/energy/sites/ener/files/documents/2012_energy_roadmap_2050_en_0.pdf.

Figure 2.1 EU Scenarios for Decarbonization in 2050 compared to 1990

(based on EU Roadmap 205010)

Figure 2.2 EU Primary Energy Mix in 2015

10 Ibid.

2.2 Ten-Year Network Development Plan

One of the goals of the Energy Union Strategy is to create a fully integrated internal energy

market. To achieve this goal the European Network of Transmission System Operators for Gas

(ENTSO-G) was established with its role of enhancing cooperation between national gas

transmission system operators (TSOs) across Europe to ensure the development of a pan-

European transmission system. ENTSOG was created on December 1, 2009, by 31 TSOs from

21 European countries. In February 2011, TSOs from Third Party countries (candidates for EU

accession, members of the Energy Community or the European Free Trade Association)

interested in following development of the network codes were also admitted to the association

as observers.

The ENTSOG’s specific objectives are:

- To promote the completion of the internal market for gas and to stimulate cross-border

trade

- To ensure the efficient management and coordinated operation of the European gas

network

- To facilitate the European network's sound technical evolution.

The key ENTSOG tasks are defined in the European Regulation 715/2009 (EC):

• Development of network codes to set rules for gas market integration and system

operation and development;

• Preparation of Ten-Year Network Development Plans (TYNDP) on a biennial basis;

• Creation of Annual Summer and Winter Supply Outlook reviews for gas supply,

demand and capacity; and

• Development of common network operation tools to ensure the transparency and

coordination of network operations under normal and emergency conditions.

The TYNDP requirements according to Regulation 715/2009 are:

• Inclusion of gas transmission networks and regional connecting pipelines, relevant

from a commercial or security of supply point of view;

• Basis from national investment plans, considering regional investment plans and, as

appropriate, aspects of EU network planning, including guidelines for trans-European

energy networks from Regulation 347/2013; and

• Identification of investment gaps, especially in terms of cross-border capacity.

A TYNDP contains the latest data on current and planned gas pipeline projects and identifies

investment needs, thereby enabling adequate long-term supply. Thus, TYNDPs are the main

source of projects that have been analyzed for this Study, as they are recorded in the ENTSOG

register and indicate the current and future EU and other gas pipeline networks in the region.

2.3 EU Regulation No. 347/2013 on Trans-European Energy Infrastructure

To achieve the goals set out in the EU’s energy strategy documents, the energy infrastructure

needs to be modernized, expanded and better interconnected. To facilitate the development and

interoperability of trans-European energy networks, the Regulation on Guidelines for Trans-

European Energy Infrastructure (Regulation (EU) 347/2013) was adopted on 21 March 2013.

Regulation 347/2013 addresses the implementation of priority projects (Projects of Common

Interest), for which certain benefits are planned, such as for financial assistance from the EU

and streamlined permitting and environmental assessment procedures.

2.3.1 Projects of Common Interest

Projects of Common Interest for the European Union (PCI) are key infrastructure projects that

link the energy systems of EU countries. These energy infrastructure projects are necessary for

the development of the three priority areas (smart grid deployment, electricity highways, and a

cross-border carbon dioxide network)11 and nine priority corridors (for electricity, gas and oil)

as defined in the Trans-European Networks for Energy (TEN-E) strategy from Regulation

347/2013.

The nine priority corridors include four GAS priority corridors:

1. North-South Gas Interconnections in Western Europe (NSI West Gas): Gas

infrastructure for north-south gas flows in western Europe to further diversify routes of

supply and for increasing short-term gas deliverability.

2. North-South Gas Interconnections in Central-East and Southeast Europe (NSIE Gas):

Gas infrastructure for regional connections between and within the Baltic Sea region,

Adriatic and Aegean Seas, eastern Mediterranean Sea and Black Sea, and for enhancing

diversification and security of gas supply.

3. Southern Gas Corridor (SGC): Infrastructure for the transmission of gas from the

Caspian Basin, Central Asia, Middle East and eastern Mediterranean Basin to the EU

to enhance diversification of gas supply.

4. Baltic Energy Market Interconnection Plan in gas (BEMIP Gas): Gas infrastructure to

end the isolation of the three Baltic States and Finland and their dependency on a single

supplier, to reinforce internal grid infrastructures, and to increase diversification and

security of supplies in the Baltic Sea region.

The PCI projects are effective for building well-connected energy networks in Europe and are

based on various European strategies, such as the European Energy Security Strategy, the 2020

Energy Strategy, and the EU Strategy for Liquefied Natural Gas and Gas Storage. PCI projects

in the gas sector aim to eliminate the energy isolation of member states, ensure the

diversification of sources, suppliers and natural gas routes in regions that have historically been

dependent on a single natural gas supplier, which will ultimately lead to the improvement and

strengthening of security of supply of all EU Member States.

11 Projects enabling transport of CO2 between countries, https://www.eera-set.eu/adoption-of-four-projects-of-common-interest-on-cross-border-co2-infrastructure/.

PCI projects are grouped in clusters of PCIs if they are interdependent, potentially competing

or competing.

• A cluster of interdependent PCIs are PCIs that all need to be implemented to address

the same bottleneck across country borders;

• A cluster of potentially competing PCIs are PCIs of which one, several or all PCIs need

to be implemented to address the same bottleneck across country borders. It is left to

the market to determine which PCIs are to be implemented.

• A cluster of competing PCIs are PCIs that address the same bottleneck when only one

PCI must be implemented. It is left to the market to determine which PCI is to be

implemented.

2.3.2 PCI project selection methodology

According to Regulation 347/2013, each PCI candidate must meet each of the three

criteria:

1. the project is necessary for at least one of the energy infrastructure priority corridors

and areas;

2. the potential overall benefits of the project, assessed according to the respective specific

criteria outweigh its costs, including in the longer term; and

3. the project meets any of the following criteria:

a. involves at least two Member States by directly crossing the border of two or

more Member States;

b. is located on the territory of one Member State and has a significant cross-border

impact as set out in Annex IV.1 of the Regulation;

c. crosses the border of at least one Member State and a European Economic Area

country.

To become a PCI, a project must also have a significant impact on energy markets and market

integration, boost competition on energy markets and help the EU's energy security by

diversifying sources and contribute to the EU's climate and energy goals. A PCI project can

benefit from accelerated licensing, a single national licensing authority, improved regulatory

conditions, lower administrative costs due to simplified environmental assessment processes,

all of which make them more attractive to potential investors. Transport system operators

whose projects are included on the PCI list can apply for funding from the Connecting Europe

Facility (CEF).

ENTSOG plays a role in selection of PCI projects in the gas sector. As provided in Regulation

(EC) 347/2013, ENTSOG developed an Energy System-Wide Cost Benefit Analysis (ESW-

CBA) methodology used in the selection of PCI projects.

“The concept of the CBA methodology developed by ENTSOG is driven by the following

considerations:

• A scenario-based approach accompanied by sensitivity analysis to reflect the

uncertainty on a time horizon, longer than twenty years

• A system wide assessment to capture the direct and indirect benefits of a project in a

meshed network on the European social welfare

• A pragmatic approach considering the timeframe of the PCI process and the

availability of input data.“12

This methodology is structured in two steps: the TYNDP Step and the Project Specific-Step:

1. The TYNDP Step is conducted by ENTSOG in the TYNDP report through a system-

wide analysis including all PCI project candidates.

2. The Project Specific Step is conducted by project promoters to assess the individual

impact of their project, based on the output of the TYNDP Step.

The methodology was not developed to provide a direct ranking of projects, but rather to

provide decision-makers with a comparable analysis of the net benefits of each project.

2.4 EU Security of Gas Supply

The share of natural gas in the EU energy mix is currently around 20-25% and is predicted to

be the same in the future, according to the Energy Roadmap 2050. The decrease in domestic

production has resulted in the increased import of gas; and, with the growing dependence on

imports, there is a need to resolve the problem of the security of gas supply. In addition, some

Member States have found themselves isolated on a “gas island” due to the lack of

infrastructure connections to gas networks in neighboring countries.

Because of the growing importance of gas in the primary energy mix, EU Regulation 994/2010

on Security of Supply was adopted, repealing Directive 2004/67/EC. Regulation 994/2010 was

passed to ensure that all necessary measures to provide the continuous supply of gas are taken,

especially in the event of severe climate conditions and disruptions of supply. This should be

achieved by cost-effective measures in order to avoid any violation of the relative

competitiveness of this fuel in relation to other fuels.

The need for a further increase of security of supply has required continuous amendment and

improvement of regulations. The latest step forward towards strengthening the EU's security

of gas supply is the Regulation (EU) 2017/1938, which repealed Regulation 994/2010. The

new regulation paves the way to better coordinated crisis prevention and handling of potential

gas crises by combining standards set at the EU level with regional cooperation and solidarity.

The main changes are:

1) Introduction of the solidarity principle: in the event of a severe gas crisis, neighboring

Member States will help to ensure gas supply to households and essential social

services.

2) Closer regional cooperation: regional groups facilitate joint assessment of the common

security of supply risks and the development of an agreement on joint preventive and

emergency measures.

12 Energy System Wide Cost-Benefit Analysis Methodology - https://entsog.eu/public/uploads/files/publications/CBA/2015/INV0175-150213_Adapted_ESW-CBA_Methodology.pdf

https://entsog.eu/public/uploads/files/publications/CBA/2015/INV0175-150213_Adapted_ESW-CBA_Methodology.pdf

https://entsog.eu/public/uploads/files/publications/CBA/2015/INV0175-150213_Adapted_ESW-CBA_Methodology.pdf

3) Greater transparency: Natural gas companies will have to notify national authorities

about long-term contracts that are relevant for security of supply.

4) Bidirectional capacity at cross-border interconnectors: to facilitate reverse gas flows.

(Individual exemptions are possible but must be justified by national competent

authorities after a cost-benefit analysis).

5) ENTSOG is to perform EU-wide gas supply and infrastructure disruption simulation in

order to provide a high level overview of major supply risks for the EU.

2.4.1 Infrastructure Standard for Security of Supply (N-1 standard)

Regulation 994/2010 established an infrastructure standard, now included in Regulation (EU)

2017/1938, whereby Member States must guarantee they can satisfy peak gas demand in the

event of a disruption of the single largest infrastructure (known as the N-1 standard). The N-

1 indicator is expressed as the percentage of the peak gas demand that the remaining

infrastructure can cover. The N-1 standard is satisfied if the N-1 indicator exceeds 100%. The

formula for the N-1 indicator takes into consideration existing and planned maximal technical

capacities of entry points, production capability, storage deliverability and LNG facility

capacities.

The infrastructure standard can be assessed on either a national or a regional basis, and must

take into account national hydraulic calculations (gas flows) and EU-wide simulations (e.g.,

stress tests) conducted by ENTSO-G. Regulation (EU) 2017/1938 makes it more difficult for

Member States to obtain exemptions on permanent bidirectional capacity on cross-border

interconnections. Member States on both sides of an interconnection would need to make joint

decisions on any exemption, which would be submitted to the Agency for the Cooperation of

Energy Regulators for an opinion and ultimately to the Commission for a final decision. If

granted, the exemption would be temporary for a maximum of four years. Any further

exemption would need to go through this process of approval once again.

2.5 EU Third Energy Package

The third package of EU energy directives and regulations was adopted to create a single EU

gas and electricity market and enable effective competition, which would keep prices as low

as possible and increase standards of service and security of supply.

The third package consists of two directives and three regulations:

• Directive 2009/73/EC concerning common rules for the internal market in natural gas;

• Directive 2009/72/EC oncerning common rules for the internal market in electricity;

• Regulation (EC) 715/2009 on conditions for access to the natural gas transmission

networks;

• Regulation (EC) 714/2009 on conditions for access to the network for cross-border

exchange of electricity; and

• Regulation (EC) 713/2009 on the establishment of the Agency for the Cooperation of

Energy Regulators

Because transmission networks are natural monopolies, they must be regulated. The third

energy package enabled more effective regulatory oversight by national regulators, increased

transparency of retail markets and strengthened consumer protection rules.

To have effective competition, the operators of transmission networks must allow all suppliers

non-discriminatory access to the transmission network (third party access principle). Some

companies are involved in both transmission and production/supply of energy (vertically

integrated companies). To prevent these companies from using their position as operators of a

transmission network to prevent access of supply competitors to their transmission network,

the third energy package requires the effective separation of energy transmission from

production/supply (unbundling).

To have a well-functioning single EU market, it is necessary to have an EU institution to

facilitate the cooperation between national regulatory authorities - the Agency for the

Cooperation of Energy Regulators.

2.6 Energy Community

The Energy Community Treaty was signed in Athens on 25 October 2005, and entered into

force on July 2006. The signatories and the European Union established the Energy

Community with the goal of extending the EU internal energy market rules and principles to

the signatory countries on the basis of a legally binding framework. The result was meant to be

the establishment of an integrated pan-European energy market.

The Energy Community comprises: (1) The European Union, represented by the European

Commission, and (2) The following Signatory Parties: The Republic of Albania, Bosnia and

Herzegovina, Georgia, Kosovo (in line with UNSCR 1244 and the ICJ Opinion on the Kosovo

declaration of independence), the former Yugoslav Republic of Macedonia, Moldova, the

Republic of Montenegro, the Republic of Serbia, and Ukraine (Contracting Parties).13

Bulgaria, Croatia and Romania were original contracting parties; but as they became members

of the EU, they left the Energy Community. Georgia, Moldova, and Ukraine became

Contracting Parties to the Energy Community after its original signing.

The main tasks of the Energy Community (EnC) are as follows:

• Creating a stable regulatory and market framework capable of attracting

investments into electricity and gas sectors to enable stable energy supply, which is

essential for economic development and social stability;

• Creating a single legal framework for trade in electricity and gas;

• Enhancing security of supply by providing a stable investment climate and

consolidating connection to other regions of Europe, Africa and Asia;

• Improving the environment, energy efficiency and use of renewable energy sources

in the region;

• Developing a competitive energy market and exploiting economies of scale.

13 https://ec.europa.eu/energy/en/topics/international-cooperation/energy-community.

The Energy Community Treaty also establishes regional institutions required for functioning

of the pan-European energy market – the Ministerial Council, Energy Community Secretariat,

Permanent High-Level Group, Energy Community Regulatory Board, and the Electricity, Gas,

Social and Oil Fora. Such structure replicates the institutions of the European Union

(Ministerial Council, European Commission, European Regulator’s Group for Electricity and

Gas (ERGEG) and the Florence and Madrid Fora) conferring on them some state administration

functions while respecting the principles of subsidiarity and proportionality.

The Energy Community Ministerial Council adopts decisions with which it makes EU

directives or regulations obligatory for the Energy Community, thereby adding them to the

Energy Community acquis. The deadline for implementation is changed and, in some cases,

only certain part(s) of the EU directives or regulations are obligatory.

The third energy package and Regulation 347/2013 are part of the Energy Community acquis.

The newer regulations on security of gas supply (2017/1938 or 994/2010) are not yet obligatory

for the Energy Community, while the old Directive 2004/67/EC is.

2.6.1 Projects of Energy Community Interest

Regulation 347/2013 was adopted by the EnC Ministerial Council in October 2015 to establish

a regulatory framework for Projects of Energy Community Interest (PECI), which is similar to

PCI projects in the EU. Contracting Parties need substantial investments in the energy sector

to satisfy forecast energy demand, and even more to manage the transition into a low-carbon

economy. It is difficult for the Contracting Parties to secure funding, and it is more cost

effective for them to cooperate and jointly plan infrastructure developments than to pursue

energy independence and security of supply on their own. Contracting Parties agreed to

cooperate by jointly selecting projects which have the most positive impact in the largest

number of Contracting Parties - PECI projects.

The Energy Community Secretariat invites promotors to submit candidate projects to be

assessed with the following conditions:

• the project is located in at least one Contracting Party, and,

• it will impact at least two Contracting Parties, or a Contracting Party and an EU

Member State.

Projects between two Contracting Parties are considered PECI projects and projects between a

Contracting Party and an EU Member State is considered to be a Project of Mutual Interest

(PMI).

The Energy Community Secretariat selects and funds a consulting company that assists the

electricity and gas-oil Groups, consisting of representatives of energy ministries, project

promoters, the regulators, the European Commission, the ENTSO-E/ENTSO-G, and the

Secretariat, to collect, validate and assess submitted PECI/PMI candidate projects. The two

Groups propose preliminary lists of priority infrastructure projects to the Ministerial Council,

which issues the final decision.

The selected PECI/PMI projects may benefit from streamlined permitting, regulatory

incentives, cross-border cost allocation procedures and funding under the EU’s Instrument for

Pre-Accession Assistance, the Neighbourhood Investment Facility and The Western Balkans

Investment Framework

3 OVERVIEW OF STUDIES RELEVANT TO BIH GAS NETWORK

DEVELOPMENT

This Section provides an overview of studies that deal with the supply, transmission,

distribution and consumption of natural gas in BiH. Studies have been prepared by international

companies for one or more foreign ordering parties. The list of studies that will significantly

affect the development of the natural gas transmission network in BiH is as follows (the list is

given in an alphabetical order):

1. B&H Natural Gas Sector Development Study, RAMBOLL, Teknikerbyen 31, Dk-

2830 Virum, November 2000

The Study from 2000 presented the basic scenarios for the future gasification of BiH

and indicated the possible directions for gas supply.

2. Study of the Energy Sector in B&H, ESSBIH, Module 10 – Natural Gas, Energy

Institute, Hrvoje Pozar et al., 2008

The 2008 Hrvoje Pozar Study of the Energy Sector covered the whole energy sector of BiH;

natural gas is addressed in Module 10. The Study envisages an increase of gas consumption by

2020 to 863 mcm in the FBiH, 519 mcm in the Republika Srpska and 25.2 in the Brčko District.

The total gas consumption in B&H is estimated at 1407.3 mcm by 2020.

The geographical position of BiH requires connection with Serbia or Croatia. Possible

connections according to the then-available information on the configuration of both networks,

are given in Figure 3.1. In addition to the existing connection to the Serbian network, the only

city that is at the border with BiH and that connects the transmission network is Slavonski Brod

whose importance as a potential distribution center grew after the commissioning of the gas

pipeline in 2006.

Figure 3.1 The Natural Gas Network in Croatia and Possible Connections with BiH

When stating the low consumption in BiH, it is necessary to point out that the gas network is

underdeveloped and offers access only to the cities of Zvornik, Sarajevo and Zenica. Clearly,

the first step is to increase the consumption to the maximum capacity of the existing gas

pipeline.

It is pointed out that the cities with the largest number of citizens are the biggest potential

markets and that the construction of gas-fired power CHP plants is not likely in the near future.

The cities of Tuzla, Banja Luka and Sarajevo are listed as priorities for gas market expansion.

The authors of this Study support private initiatives as a driver of large-scale investments in

the gas sector, but it is necessary to create favorable conditions for private initiatives to be

profitable.

3. SEE Regional Gasification Study, Final Report [Regional Study of Gasification in

SE Europe, Final Report], January 2009, Supported by the World Bank, KfW and

the Energy Community, prepared by the Economic Consulting Associates (ECA),

Penspen, EIHP and Underground Gas Storage (UGS)

Although this Study is mostly focused on the energy sector in Croatia, it is of also of importance

for BiH, as well. It confirms previous analyses and indicates the need of:

- Gradual opening of the energy market and its integration into the EU and the regional

market

- Increasing power generation capacity, especially fueled by natural gas

- Harmonizing the energy policy with the European Union Directives and the Regional

Energy Market

In addition, BiH’s becoming part of the EU and the regional market market must be considered.

4. The Future of the Natural Gas Market in Southeast Europe [The Future of

Natural Gas in SE Europe], The World Bank, PPIAF, 2010

The Enegy Community (EnC) Gas Transmission Ring Concept is one of the topics examined

in this Study. The EnC Ring is a gas transmission pipeline that will link seven gas markets:

Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro, and Serbia.

The ring concept has emerged from the consideration of the synergy between national and

regional transmission pipelines and was first proposed by Economic Consulting Associates

(ECA) at the Mini Gas Forum held in Vienna, Austria, in May 2007.

Figure 3.2 shows the proposed route of the EnC Ring (which is still a preliminary concept) in

the context of the regional gas transmission pipeline infrastructure. The supply of gas to the

ring can be from existing pipelines, from one or more of possible new major transmission

import pipelines, or from LNG imports.

Figure 3.2 EnC Gas Transmission Ring Concept

5. Study on Funding Energy Community Gas Ring Investments [Study on Financing

the Investments in the EnC Gas Transmission Ring], December 2011, Financed by

the Energy Community, prepared by Energy Market Insights

The 2011 Gas Ring Investment Study examines the necessary framework to attract investments

needed to complete two sections of the Gas Ring. The “Northern Route” involves Croatia,

Serbia and Bosnia and Herzegovina. The “Southern Route” involves Albania, FYR of

Macedonia and UNMIK. In addition, feed-in lines to the North and South Routes include:

Bulgaria, Hungary, Italy, Greece and Romania.

Detailed market analysis and risk analysis on this Study did not result in a clear conclusion but

have opened new questions for which it is necessary to find answers. Nevertheless, the Study

suggests further harmonization of regulations with the existing EU regulations, which is also

an accepted obligation of countries in the Western Balkans. Although this Study is not in the

direct focus of this Technical Report, it is important because of its very detailed analysis of all

potential risks that can jeopardize the feasibility of a project.

6. COWI-IPF Consortium, FS and ESIA for the Ionian – Adriatic Pipeline [FS and

ESIA for Ionian-Adriatic pipeline], December 2012.

The aim of the project “South Interconnection of BiH and Croatia” was to analyze all possible

variants of the proposed route with techno-economic, environmental and social aspects, and to

determine the optimum solution. Based on the analysis of different alternatives, two potential

pipeline routes were rated as feasible from the technical aspect:

- Variant A: Zagvozd (Croatia) via Posušje (BiH) to Novi Travnik with a branch

to Mostar

- Variant B: Ploce (Croatia) – Mostar – Sarajevo (BiH).

Variant A was selected as more acceptable and recommended for further development.

7. Energy Community Strategy and Projects of Energy Community Interest,

November 2013

This Study specifies the main directions of development of the Energy Community as a

dynamic organization, both in terms of geographical scope and its legal framework. When the

Treaty Establishing the Energy Community entered into force in 2006, it explicitly referred to

11 legal acts that were to be transposed and implemented in the Contracting Parties. Following

the development of EU law, the Energy Community legal framework was expanded by the

adoption of new adapted EU directives and regulations. Today the Energy Community body

of law consists of 61 Decisions and 38 Procedural Acts adopted by the Ministerial Council and

the Permanent High Level Group.

8. Final Report on Assessment of the Candidate Projects of Energy Community

Interest (PECI) and Projects for Mutual Interest (PMI), REKK, DNV GL, Aug

2016

The Consortium of REKK and DNV GL developed the assessment methodology and evaluated

the PECI and PMI candidate projects submitted by project promoters.

This is one of the most complete documents that is still very much up to date, regardless of the

fact that it was prepared in 2016. It is particularly important to emphasize the methodology

according to which it was prepared because all later documents use similar methodologies. It

is also important to point out the introduction of the Cost-Benefit Analysis (CBA) with social

elements, the sensitivity analysis and the multi-criteria analysis. Introduced social elements had

significant influence and many analyzed projects became eligible. The use of this CBA

methodology revealed that 10 out of 18 projects had positive social Net Present Value (NPV)

for the EnC.

An integrated approach consisting of the economic CBA and the multi-criteria assessment

(MCA) was used. The economic CBA systematically compares the benefits to the costs arising

over the life span of an investment project for all relevant groups of stakeholders within the

region of the EnC. As a result of the economic CBA, the change in socio-economic welfare

resulting from the implementation of each investment project is calculated. In the economic

CBA, the costs are determined by the capital and operating expenditures of the project, while

the socio-economic benefits are estimated and monetized through the project impact on market

integration, the improvement of the security of supply and the reduction of CO2 emissions.

This Report presents the project assessment methodology that has been applied for all

submitted projects. In so doing, the Report provides an overview of all submitted investment

projects, as well as the modelling assumptions that were made and agreed with the Groups,

presenting detailed results and a ranking of projects. Based on the best ranking and the

additional information provided by the sensitivity analysis, the Groups were able to make an

informed decision on the preliminary list. In the natural gas sector, there are 18 projects. An

eligibility check for submitted natural gas projects concerning BiH is listed below in Table 3.1:

Table 3.1 shows only those gas infrastructure projects that pertain to BiH and directly affect

the supply of natural gas in BiH.

All projects important for BiH have already gone through numerous verifications required by

the EnC (Table 3.1, lines GAS_01, GAS_02 and GAS_03). Total capacity of the three

interconnectors is several times larger than the current consumption of gas in BiH and could

support economic development that potentially increased that consumption.


Review of Trans-European and Regional Natural Gas Pipeline Projects relevant for BiH Security of Supply

Table 3.1 Gas PECI/PMI Projects in 2016

Project

Code Project name

From

Country

to

Country

(From A

to B)

Infrastructure

Type

Crossing

Border of

2 CPs/

CP+ MS *

Reverse

Flow or

Capacity

Increase

over 10%

Candidate

for (PECI/

PMI/not

eligible)

Commissioning

Date

Letter of

Consent Cost Bidirectional

Capacity

from A to B

GWh/day

(mcm/day)

Capacity

from B to A

GWh/day

(mcm/day)

GAS_01

Interconnection

pipeline BiH-

HR (Slobodnica-

Brod- Zenica)

BA-HR PMI 2023 Yes 35

(3.43)

44

(4.28)

GAS_02

Interconnection

Pipeline BiH

HR (Licka

Jesenica- Trzac-

Bosanska

Krupa)

BA-HR PMI 2023 No - 73

(7.10)

GAS_03

Interconnector

BiH HR

(Zagvozd-

Posusje-Novi

Travnik with a

main branch to

Mostar)

BA-HR PMI 2021 Yes 38

(3.70)

73

7.10)

GAS_08 Interconnector

Serbia-Romania RS-RO PMI 2020 Yes

35

(3.43)

35

(3.43)

GAS_09

Gas

Interconnector

Serbia-Bulgaria

Section on the

Serbian territory

BG-RS PECI 2019 Yes 39.44

(3.84)

39.44

(3.84)

GAS_16 Ionian Adriatic

Pipeline

AL-ME

ME-HR PMI 2021

Above

range Yes

150 (14.59)

150 (14.59)

150 (14.59)

150 (14.59) CP – Contracting Party; MS - Member State; BA – Bosnia and Herzegovina; HR – Croatia; BG – Bulgaria; RO – Romania; RS – Serbia; AL – Albania; ME - Montenegro

1 Nm3 of natural gas is approximately 10.28 kWh



9. First Meeting of PECI/PMI Selection Group: Gas Group, Energy Community,

Ljubljana, 21 Sept. 2017.

At the Meeting of Projects of Energy Community Interest (PECI)/Projects of Mutual Interest (PMI)

Selection Group: GAS GROUP, while many projects were presented, it should be noted that the BH

HR PMI project verifies the studies [6 and 7] and opens a new connection from the west direction

(Tržaca – Cazin – Sanski Most). At the same meeting, the connection of BiH to the Ionian Adriatic

Pipeline (IAP) with the capacity of 1 bcm/y was also presented.

10. Final Report Task 2 – IAP Feasibility, February 2018, South East Europe Gas Power

Consortium, Submitted to the World Bank, the Energy Community Secretariat, the

European Western Balkans Joint Fund under the Western Balkans Investment

Framework by Economic Consulting Associates

The objective of the IAP Feasibility Report of February 2018, was to review and update the

commercial and financial analysis of the Feasibility Study of the Ionian Adriatic Pipeline (IAP),

which was completed in April 2014 by COWI IPF. Its focus is on the review and updating of the

parameters identified in the Feasibiity Study as critical for the financial viability of the proposed

project, such as IAP throughput assumptions, business models and tariff calculations, economic

feasibility analysis, and CAPEX and OPEX estimations.

The gas market in Bosnia Herzegovina (BiH) is small and fragmented. Gas demand only exists in

Zvornik, Sarajevo and Zenica. All gas is imported via Serbia and is purchased from Gazprom or its

subsidiaries. Gas demand has been declining over recent years due to gas being uncompetitive as a

heating fuel and displaced by low priced electricity and fuel oil. As of 2017, gas demand was around

0.3 bcm. There is no storage infrastructure and no LNG opportunities. Currently, no gas is used in

power generation.

There are two potential gas to power developments in BiH (a conversion of one thermal power unit

to gas - 120 MW in Kakanj and a proposed new 375 MW gas-fired power plant in Zenica). Both are

located north of Sarajevo and would be connected to the existing transmission grid and a potential

extension of the grid with the IAP feeder line. These could, together with the development of gas

distribution, contribute to significant gas demand growth in BiH.

One issue in expanding the BiH transmission system has been Republika Srpska’s disagreement with

the development of the Slavonski Brod - Zenica transmission line. Additionally, with South Stream

not a credible gas supply option anymore and with the development of a large gas-fired Combined

Heat and Power (CHP) plants, BiH will have to look for more diversified supply routes to minimize

the impact of gas interruptions and to meet the EU requirements for security of supply.

The IAP is a bi-directional international gas pipeline concept connecting the Croatian gas

transmission system with the Trans Adriatic Pipeline (TAP) offtake point in Albania at Fier. Passing

through Albania and Montenegro and potentially providing supply lines to Bosnia and Herzegovina

and Kosovo, the project stretches 520 km along the Ionian and Adriatic coast mainly onshore. Its

main objective is to enable gas supply from the Caspian and Middle East regions to the Croatian and

EU gas markets and help gasify Albania and Montenegro. Additionally, it can help diversify supply

sources in Bosnia and Herzegovina and other West Balkan markets. The main findings are that the

29

IAP is not commercially viable as tariffs for the pipeline will be too high to provide competitive

supplies to off-takers in Croatia, Montenegro and Albania. The estimated transmission tariffs yielding

given Internal Rate of Return (IRR) far exceeds the regional benchmark transmission tariff of

€0.025/cm.

The Study was completed in April 2014; however, today (September 2018) some factors have

changed, which have the potential to improve the commercial viability of the project. These include

low gas prices, a recovery in Croatian gas demand after a drop in the wake of the financial crisis, the

development of TAP and its potential for expansion to 20 bcm/y capacity. However, these changes

are not of such an extent that they can jeopardize the use of natural gas globally. As far as BiH is

concerned, it is important to take advantage of the potentially large expansion of the gas network in

neigboring countries. However, it is important to note that Bosnia and Herzegovina lacks a national

gas strategy.

The planned IAP capacity is 5 bcm/y, and the largest target consumer is Croatia with 2.5 bcm/y (Split)

(Figure 3.3). As it is a bi-directional pipeline, the throughput of this pipeline is in the opposite

direction of 2.7 bcm/y.

Figure 3.3 Block diagram of IAP

An IAP connection into Bosnia and Herzegovina would, however, enter through the south, connecting

the Cantons of Western Herzegovina and/or Herzegovina-Neretva.

The full list of projects of relevance for the IAP is shown in Figure 3.4.

30

Figure 3.4 Major International Gas Supply Project Proposals

11. Financial Viability Analysis and Cost Benefit Analysis for the Interconnection Pipeline

BiH – HR (Zagvozd – Posusje – Novi Travnik with a branch to Mostar), Final Report,

May 2018, Technical Assistance to Connectivity in the Western Balkans,

EuropeAid/13785/IH/SER/MULTI

The Financial Viability and Cost Benefit Analysis for the BiH – HR Interconnection is the most recent

Study, containing a very detailed overview of the current situation in the field of natural gas in BiH.

The age of the existing connection Zvornik-Sarajevo (16 inch, 50 bar) with the design capacity of

1.25 bcm/y and expected remaining service life of this gas pipeline of about 10 years is important.

Due to poor maintenance, it is estimated that the capacity of this gas pipeline today is about 650

mcm/y. Gas consumption has been decreasing in recent years: in 2016, it was only about 210 mcm.

The main problem of this and of all previous studies is the lack of sufficiently reliable estimates

regarding future gas demand. The basic data for planning all networks is the location of key

consumers, the annual number of hours of the use of the transmission gas pipeline and the load. This

data determines the route and decisively affects the price of the pipeline and the cost-effectiveness of

the investment. Due to the lack of such data, estimates of gas consumption used to justify the

construction of the proposed connections are unreliable. The total expected gas consumption in this

Study is about 550 mcm in 2039 (residential, commercial and industrial sectors) in the areas of Lasva

and Fojnica, Bugojno and Zenica, and about 100 mcm in the Cantons Herzegovina-Neretva, West

31

Herzegovina and Livno. These estimates do not include the potential use in gas-fired CHP plants in

FBiH, as the authors consider the likelihood of construction of such plants to be very uncertain.

It is particularly important that this Study carefully plans the new connection (Posušje) and the

connection with the existing pipeline. The new connection implies the connection to the Croatian gas

pipeline but the possibility of additional supply sources in the near future for BiH is also indicated,

e.g., LNG Krk and the Shah Deniz II development in Azerbaijan.

The final proposal of the Study [7] is shown in Figure 3.5. The gasified area is indicated, as well as

the connection with the existing gas pipeline.

Figure 3.5 Proposed south gas interconnection of BiH and Croatia

32

4 SECURITY OF SUPPLY IN EUROPE

The Ten-Year Network Development Plan 2017 - TYNDP (see Section 2.2) is the main source of

trans-European and regional gas pipeline projects important for the security of natural gas supply of

Southeast Europe and Bosnia and Herzegovina.

The TYNDP provides an overview of the European gas infrastructure and helps identify potential

gaps in future investments with respect to the main European energy policy objectives shown in the

following figure.

Figure 4.1 Main European energy policy objectives [2]

4.1 Gas Supply Disruptions Simulations

For this report, which is focused on security of supply, simulations of disruptions of gas supply

presented in the TYNDP 2017 are of particular interest. These simulations identify where investments

in infrastructure are needed to reduce the possibility of gas supply disruptions. Three groups of

disruptions have been simulated:

1. Disruptions of supply from each of European gas sources, including LNG;

2. Disruptions of key transit routes; and

3. Disruption of the largest infrastructure or equivalent, e.g., import pipeline or production

facility, known as the N-1 standard - see Section 2.4.1.

The simulations were performed for three demand scenarios (Blue Transition, Green Evolution and

EU Green Revolution) and three infrastructure levels (Low, Advanced and 2nd PCI list).

All three demand scenarios meet the European energy and climate 2030/2050 targets, but differ in

gas demand forecasts. The gas demand forecast depends on estimates of many parameters, including

economic growth, further development of renewable energy and energy efficiency, price of CO2

33

emissions, and share of gas in the transport and power sectors. The resulting gas demand forecasts

for different scenarios are presented in Figure 4.2. The Blue Transition scenario forecasts the highest

gas demand that remains almost constant in the period 2017-2035, while the EU Green Revolution

scenario results in the lowest gas consumption.

Figure 4.2 TYNDP-2017 Gas Demand Scenarios [1]

The three standard14 infrastructure levels are:

• Low Infrastructure Level: existing Infrastructure + projects with FID15 status

• Advanced Infrastructure Level: existing Infrastructure + projects with FID status +

Advanced16 non-FID projects

• 2nd PCI-list Infrastructure Level: existing Infrastructure + projects with FID status + latest

PCI non-FID projects17

The lists of FID projects, Advanced non-FID projects and 2nd PCI-list projects can be found in Annex

A of TYNDP 2017 Main Report [1]. The difference in infrastructure levels is illustrated in Figure

4.3.

14 Simulations are typically conducted for three standard infrastructure levels; but in some cases, different infrastructure levels are considered as well. 15 FID status – Projects with Final Investment Decision regardless of the PCI status. 16 Advanced projects – projects that have started the front-end engineering design or permitting phase which are planned to be commissioned by 31 December 2022. 17 The first selection of PCI projects was published in 2013, the second in 2015 and the third in November 2017. At the time of development of the TYNDP 2017, the second PCI-list from 2013 was the latest list.

34

Figure 4.3 TYNDP-2017 Infrastructure Levels [1]

4.1.1 Disruptions of Supply From Each of European Gas Sources

The simulations showed that the existing gas infrastructure in most European countries is resilient to

disruptions of Algerian, Libyan and Norwegian supply sources. However, it is not resilient to the

disruptions of gas supply from Russia because of its large share in Europan natural gas supply.

As pointed out earlier, BiH is currently completely dependent on Russian gas supply.

4.1.2 Case of Ukraine Route Disruption

The key transit route for the Southeast Europe and BiH is the transit route through Ukraine; and when

the disruption of this route occurred in January 2009, BiH gas supply was completely cut-off as BiH

had no gas storage, alternative supply routes or sources. After the disruption of gas supply lasting

three days, January 6-9, 2009, BiH (and Serbia) received gas from gas storage facilities in Europe.

As mentioned in Section 2.4.1, this Ukrainian gas crisis prompted the EU to strengthen its security of

supply. The situation in BiH has not changed since 2009; however, European gas networks were

developed to be less vulnerable to Ukraine transit disruption.

Russian gas company Gazprom signed a 10-year contract for transit of gas over Ukraine that expires

on December 31, 2019. In the past, Gazprom indicated that it would completely stop supply of gas to

Europe through Ukraine, but lately Gazprom has softened its position and indicates that the transit of

gas over Ukraine will not necessarily be stopped, but only reduced pending an agreement. Thus, the

disruption of the gas route through Ukraine is still of great importance to Southeast Europe, and BiH

was included as part of the TYNDP.

35

Figure 4.4 displays results of simulations of a disruption of transit through Ukraine for the Blue

Transition demand scenario, for three different cases:

• For year 2017 with Low Infrastructure Level,

• For year 2020 with Advanced Infrastructure Level,

• For year 2030 with 2nd PCI-list Infrastructure Level

The two parameters used to evaluate the effect of disruptions are Remaining Flexibility and Disrupted

Demand.18 These parameters are calculated for high demand situations: national design case peak day

(DC) and the 2-week high demand case corresponding to the highest 2-week demand that would occur

over a 20-year period. The high demand situations show the necessary capacity of a transmission

system, which can be much higher than the average capacity if there is a significant seasonal

variations in gas demand.

The Ukrainian route disruption in 2017 with Low Infrastructure Level strongly impacted Southeast

Europe, in particular Macedonia and Bulgaria. The situation in 2020 improves due to implementation

of new projects that include new interconnections, an LNG terminal and a supply line from the

Caspian region. By 2030 PCI 2nd list projects eliminate demand disruptions in all countries except

Romania. In Romania, the demand disruption rate would decrease from around 25% for the low

infrastructure level to less than 10% for the 2nd PCI-list Infrastructure Level.

18 ”The Remaining Flexibility indicator measures resilience at a country level. The indicator is calculated for high demand situations as the additional share of demand each country is able to cover before an infrastructure or supply limitation is reached. This calculation is made independently for each country, meaning that they do not share the European supply flexibility. The higher the indicator value is, the better the resilience. In cases where countries experience disrupted demand, the Remaining Flexibility is equal to zero. The Disrupted Demand represents the share of the gas demand that cannot be satisfied.” (TYNDP 2017)

36

Figure 4.4 TYNDP-2017 Simulations of resilience to Ukrainian route disruption [2]

4.1.3 Unavailability of Largest National Infrastructure (N-1 case)

As explained in the Section 2.4.1, the N-1 indicator measures the ability of a country to cover its peak

demand where its the single largest gas infrastructure becomes unavailable. The indicator is expressed

as the percentage of the peak demand that the remaining infrastructure can cover.

As in the simulations of the transit disruption through Ukraine, three cases of disruption of the largest

infrastructure were simulated and results presented in Figure 4.5:

• For year 2017 with Low Infrastructure Level,

• For year 2020 with Advanced Infrastructure Level,

• For year 2030 with the 2nd PCI-list Infrastructure Level

Year 2017 with Low Infrastructure Level

“Nevertheless the assessment of security of supply-related needs, under the low infrastructure level,

shows that some additional capacity could be needed in the following areas:

• Croatia in the long run, if its demand outlook materializes

• Countries in Southeast Europe that would need additional import and potentially

interconnection capacity (Bosnia and Herzegovina, Bulgaria, Croatia, FYROM, Hungary,

Romania and Serbia) to cover the risk of a Ukraine route disruption.

• Bosnia and Herzegovina, Croatia, Estonia, Finland, FYROM, Greece, Ireland, Luxemburg,

Portugal, Romania, Slovenia and Sweden, and potentially in the longer run, Estonia and

Lithuania, to cover an N-1 for ESW-CBA situation.”19

19 Ten-Year Network Development Plan 2017 (TYNDP 2017), Main Report, ENTSOG, 2017, p. 193.

37

Figure 4.5 TYNDP-2017 Simulations of N-1 Indicator for ESW-CBA Assessment [2]

Year 2020 with Advanced Infrastructure Level

“Even with the materialization of advanced projects, some needs would still not be covered:

• In Bosnia and Herzegovina, Finland, FYROM, Lithuania, Ireland, Portugal, Romania,

Serbia and Sweden the N-1 for ESW-CBA remains below 100 % in the long run; and in

Denmark the N-1 for ESW-CBA remains below 120 %.20

• In Romania the interconnections with neighboring countries are still not sufficient for the

country to share its indigenous production.

• In the long run, a diversification decrease for Bulgaria, FYROM and Greece end up with

their having significant access to only two supply sources.”21

Year 2030 with 2nd PCI-list Infrastructure Level

“In terms of security of supply, the second PCI list projects provide the following further benefits

compared to advanced projects:

• Southeast countries are protected from demand disruption in case of a short-term Ukrainian

route disruption, including in the long-run and in the Blue Transition scenario. In 2030,

while the situation for Romania is significantly improved compared to the advanced

20 N-1 standard is satisfied if it exceeds 100%, meaning if the single largest infrastructure is not operational, the peak demand can still be satisfied (see Section 2.4.1). 21 Ten-Year Network Development Plan 2017 (TYNDP 2017), Main Report, ENTSOG, 2017, p. 233.

38

infrastructure level, the country could still face a limited demand disruption (around 10 %)

in case of Ukrainian route disruption.

• The N-1 for ESW-CBA is improved for Croatia, Estonia, Greece, Lithuania, Portugal and

Slovenia.

• The access to supply sources is improved to the point where all European countries have

access to a minimum of 3 different supply sources.

Yet, even with the materialisation of the 2nd-PCI list projects, the N-1 for ESW-CBA would

remain below 100 % in the long run for Bosnia and Herzegovina, Finland, FYROM, Ireland,

Serbia and Sweden.

The 2nd-PCI list projects additionally deliver in terms of improving competition, by increasing

route and supply diversification and consequently lifting local high dependence to specific supply

sources.

• The access to supply sources is improved to the point where all European countries have

access to a minimum of three different supply sources of shortly after 2020.

• High dependence on Russian gas is eradicated all over Europe.”22

22 Ten-Year Network Development Plan 2017 (TYNDP 2017), Main Report, ENTSOG, 2017, p. 239.

39

5 PROJECTS OF INTEREST TO BIH

BiH borders on the south, west and north side with Croatia and on the eastern side with Serbia. There

is also a border with Montenegro in the Southeast, but Montenegro does not have a gas network.

Therefore, BiH can only connect to the European network via Croatia and Serbia and trans-European

and regional projects of interest to BiH are those that connect directly or pass through countries

bordering Croatia and Serbia and can significantly influence the gas networks in Croatia and Serbia.

The main gas pipeline projects of interest to BiH are depicted in Figure 5.1 and listed in Table 5.1.

Projects categorized as FID, Advanced Non-FID and Less-advanced Non-FID projects and if

applicable, as PCI, PMI or PECI projects. More information on projects listed in Table 5.1 is given

in the Appendix.

The new pipelines shown in Figure 5.1, except for the Turkish Stream, increase the security of supply

by providing new sources of natural gas to Southeast Europe: Caspian Region, Black Sea and LNG

Terminal in Croatia.

The construction of the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans-Adriatic

Pipeline (TAP) has already started and will enable supply from the Caspian Region to Italy and further

to Western Europe. The Ionic-Adriatic Pipeline (IAP) is a planned branch of TAP that would connect

to the Croatian gas network via Albania and Montenegro and potentially supply BiH and Kosovo.

These pipelines belong to the South Gas Corridor (SGC), which offers a new source of competitively

priced gas for the EU. This is particularly important to South East Europe, which is strongly

dependent on a single supply of gas.

The Bulgaria-Hungary-Romania-Austria (BRUA) and the Romania-Hungary-Austria (ROHUAT)

projects will enable supply of gas from the Black Sea to Eastern Europe.

The LNG Terminal on the island of Krk in Croatia enables the supply of gas from several LNG

sources. The first round of open season procedure, a call for submission of requests for allocation of

infrastructure capacity, was not satisfactory, and the second round has been initiated with the deadline

for submission on September 28, 2018 after which the deadline was extended to December 20, 2018.

The EASTRING project connects existing gas transmission infrastructure in Slovakia, Hungary,

Romania and Bulgaria and allows a new supply route from Turkey and a new source of gas – the

Caspian Region.

The Turkish Stream, which will be completed in 2020, will directly connect Russian gas sources to

the Turkish gas transmission network and provide energy supply for Turkey, Southeast Europe and

beyond.

40

Figure 5.1 Main gas pipeline projects of interest to BiH [2]

Interconnectors between gas networks of neighboring countries must have sufficient capacity to

enable a flow of gas from these pipelines to the neighboring countries through which the pipelines do

not run. For that reason, construction of interconnectors between Serbia and Croatia and their

neighboring countries, and between their neighboring countries and countries through which the

pipelines run are of great importance to the security of supply for Serbia and Croatia, and, therefore,

for BiH. Those interconnectors are listed in Table 5.2. All of these interconnectors are bi-directional,

which is a requirement introduced by EU Regulation 994/2010. Conversion of unidirectional

pipelines and interconnectors to bi-directional has been a priority in achieving better integrated

European markets.


Review of Trans-European and Regional Natural Gas Pipeline Projects relevant for BiH Security of Supply Table 5.1 Trans-European and regional projects of interest to BiH

Project Name Project description Gas

source

Technical

capacity

bcm/year

Status Commissioning PCI Corridor

PCI

PMI

PECI

designation

TANAP Gas pipeline from

Caspian region to

Turkey

Caspian

Region

18-31 Under construction 2018 SGC PCI 7.1.1

TAP Continuation of

TANAP from Greece

to Italy via Albania and

Adriatic Sea

Caspian

Region

10-20 Under construction 2020 SGC PCI 7.1.3

IAP Branch of TAP to

Croatia via Albania and

Montenegro

Caspian

Region

5 Advanced Non-FID 2023 SGC PMI (Gas_16)

LNG Croatia1 Croatian Krk LNG

terminal with

connecting and

evacuation pipelines

towards Hungary

LNG 1-4 FSRU2

3.5 – 8.75

On Shore

Advanced Non-FID 2018-2023 NSIE PCI 6.5

ROHUAT/BRUA Phased capacity

increase on Bulgaria-

Romania-Hungary-

Austria bidirectional

transmission corridor.

Addition of new

sources from the Black

Sea in the 2nd/ 3rd

phase.

Black Sea;

Caspian

Region

1.75 – 4.4 Less Advanced Non-

FID

2019-2023 NSIE PCI 6.24

EASTRING Diversification of

supply to Central and

Southeast European.

Transmission of gas

from Bulgaria to

Slovakia via Romania

and Hungary.

Caspian

Region;

Middle East

20-40 Less Advanced Non-

FID

2021-2025 NSIE PCI 6.25

TURKISH

STREAM

Russia 31.5 Under construction 2020 N/A N/A

42

Project Name Project description Gas

source

Technical

capacity

bcm/year

Status Commissioning PCI Corridor

PCI

PMI

PECI

designation

TESLA3 Russia,

Caspian

Region

36

24

23

21

Greece

Advanced Non FID

FYROM

Advanced Non FID

Serbia - N/A

Hungary

Less Advanced Non-

FID

2020 N/A N/A

1) Second round of Open Season procedure – deadline Sept 28, 2018

2) FSRU - Floating Storage Regasification Unit

3) Data related to the TESLA Project is unreliable, especially the capacity and year of commissioning.

Table 5.2 Regional interconnection projects of interest to BiH

Project Name Gas

source

Technical

capacity

bcm/year

PCI Number

Status Commissioning New IP

Bi-

directional

pipeline

Croatia/Slovenia/Austria

(Lučko-Zabok-Rogatec)

LNG Croatia

Caspian Region

(IAP)

5-6 6.26 Croatia FID

Slovenia LA Non

FID

Austria LA Non FID

2020-2021 No Yes

Gas Interconnection

Hungary - Slovenia

LNG Croatia 1.5 6.23 Less Advanced

Non-FID

2020 Yes Yes

Interconnector Greece-

Bulgaria (IGB Project)

LNG

Caspian Region

3-5 6.8.1 FID Advanced 2021 Yes Yes

Interconnection Bulgaria

- Serbia

LNG

Caspian Region

1.8 PCI (6.10.)/

PECI

(Gas_09)

FID Advanced 2020 Yes Yes

Interconnection

Turkey-Bulgaria

LNG

Caspian Region

3 N/A Advanced Non-FID 2021 Yes Yes

Gas Interconnector

Serbia-Croatia

LNG Croatia

Caspian Region

5.8 PMI (Gas_10) Advanced Non-FID 2023 Yes Yes



For BiH, the current status and integration of the Croatian and Serbian natural gas transmission

systems into the new supply projects is of key importance and will be discussed in the following

chapters.

5.1 Status and development plans of Croatian natural gas transmission system

The existing and planned infrastructure of the Croatian natural gas transmission system from the

non-binding Ten-Year Development Plan of the Croatian Gas Trasmission Network 2018-2027 is

shown in Figure 5.2 [3]. The red lines represent planned infrastructure and green lines existing

infrastructure. In 2016, the gas transmission system had reached a high level of development with a

total of 2693 km (952 km – 75 bar and 1741 km – 50 bar) of gas pipelines and 157 metering -

regulating stations.

Croatia has two interconnections: one with Slovenia and one with Hungary. Croatia also has a UGS

in Okoli. The UGS Okoli in Croatia was built in 1987 and has a maximum design capacity of 553

million cubic meters (mcm), a maximum injection capacity of 4.32 mcm/day and a maximum

withdrawal capacity of 5.76 mcm/day. The storage process takes place in two cycles: an injection

cycle from April to October and a withdrawal cycle from October to April. The total technical

capacity of entry into the transmission system, including the withdrawal capacity from UGS Okoli,

is about 27 mcm day. Average utilisation of the technical capacity at all entries in 2016 was about

28%, while the maximum reached utilization of the technical capacity at all entries was about 50%

or 135 GWh/day [3]. As can be seen in Table 5.3, the capacity of the interconnection with Hungary

is greatly underused. The consumption in Croatia is not expected to increase significantly, so the

excess capacity of the Croatian natural gas transmission system can be used to supply BiH (the current

BiH peak daily consumption of about 2 mcm/day).

The planned infrastructure projects of interest to BiH include the following:

• Increasing the capacity of existing interconnections

• Construction of Split- Zagvozd pipeline in the south

• Construction of three interconnections with BiH

• Construction of UGS facilities

• IAP project

• LNG Krk and evacuation pipelines

Increasing the capacity of existing interconnections

It is planned to signicanlty increase the capacities of both interconnections. Plinacro (Croatian TSO)

has reached an FID for the Croatia-Slovenia interconnection. This project received a grant from the

EU CEF, and in April 2016, a contract was signed with the Innovation and Networks Executive

Agency (INEA) to finance the the preparatory phase of the project and development of project

documentation.

44

Figure 5.2 Integration of Croatian gas transmission system into new supply project [3]

Existing IP Technical

capacity

GWh/day

(bcm/year)

Expansion

GWh/day

(bcm/year)

Average

System

utilization

%

Territory

coverage of

gas

transmission

system

%

Age of

System

Distance of

transmission

system from

BiH border

Rogatec at

Slovenian

border

48.4

(1.8)

200

(7.3)

77 95 2002 -

2011

max.

15

years

and

min. 6

years

South- Max 70

km (without

IAP) and 20 km

(with IAP)

North max 5 km

West max 30 km

Dravszerdahely

at Hungarian

border

69.1

(2.5)

200

(7.3)

2

Table 5.3 Croatian Gas Transmission System Characteristics

45

Gas Pipelines Split - Zagvozd and Southern Interconnection with BiH

The construction of these gas pipelines allows a South interconnection with BiH and the gasification

of southern BiH. Plinacro is in the permitting stage for the gas pipeline Split - Zagvozd which should

be a part of the future IAP project. The interconnection between Bosnia and Herzegovina and Croatia

does not have to depend on the IAP time schedule, if the project is feasible on its own. The main

difference is the length of the branch pipeline to BiH: without IAP the length is 70 km (Split-Zagvozd-

Posusje), and with IAP is 20 km (Zagvozd-Posusje).

Northern Interconnection with BiH

An interconnection at Brod is connected with the planned Brod - Zenica gas pipeline, which has been

of interest to BiH for many years. The starting point of the Brod ‐ Zenica gas pipeline is close to the

vicinity of Brod, where it should be connected to the high-pressure Croatian gas pipeline Slobodnica

‐ Brod in Croatia. The gas pipeline is planned to be bi‐directional, and together with the South

Interconnection BiH/CRO creates a part of EC Gas Ring.

Western Interconnection with BiH

The western interconnection of BiH and Croatia enable gasification of Canton Una-Sana in the north-

west of BiH. The route begins in Licka Jesenica and through Rakovica to the border, continuing to

Bosanska Krupa with branches to Bihac and Velika Kladusa.

In the period from April 7 to June 2, 2017, Plinacro published a call for indicative (non-binding)

interest in transmission system capacity of the existing interconnection and planned new

interconnection points. The results of this call are significant for BiH, as it showed that there is

significant excess capacity a supply route for consumers in BiH.

Construction of UGS facilities

The UGS Grubisno Polje is planned to be a gas storage facility with a small working volume

(approximately 60 mcm) but relatively large injection/withdrawal capacity (planned to be

approximately 100,000 cubic meter/h in withdrawal and about 70,000 cubic meter /h in injection).

The primary purpose of the UGS Grubisno Polje is to cover peak demand in the Croatian gas

transmission system, but it will also enable optimum utilization of the PSP Okoli underground storage

facility and increase the flexibility of the entire gas transmission system as well as the gas supply

security of the Republic of Croatia.

Development plans to increase the security of supply, N-1 factor, is development of new storage

capacities. This includes a new UGS in Benicanc with a working volume of 2 bcm and withdrawal

rate of 8.2 mcm/day. Since Benicanci is a producing oil field, the development of an underground gas

storage system will be a difficult and time consuming process. The location of potential underground

gas storage is near the new constructed transmission gas pipeline Donji Miholjac – Slobodnica, i.e.,

the new gas interconnection Croatia and Hungary.

Construction of interconnection projects with Croatia enables BiH access to Croatian UGS, which

will increase the security of supply N-1 factor for BiH.

46

To achieve supply source diversification, it is necessary to implement the LNG terminal Krk project

(2018-2023) and the IAP project (planned for 2023).

The IAP and LNG regional projects are of great importance to Bosnia and Herzegovina, in view of

its geographic position vis-à-vis Croatia.

IAP project

The IAP feasibility study was completed in February 2018 by Economic Consulting Associates

(ECA), supported by the World Bank, Energy Community and the Western Balkans Investment

Framework (WBIF).

Assessment is that the IAP project is commercially marginally viable. Even if the highest

estimated throughput volumes of 2 bcm/yr in 2025 increasing to 5 bcm/yr in 2040 are achieved, the

project’s Internal Rate of Return (IRR) would be less than 5% to reach a competitive transmission

tariff of 0.02 EUR/cm (this throughput volume includes transit volume of 0.8-1 bcm/y continuously

in the period 2025-2040). ECA analysis shows however that IAP project developers can pursue a

number of strategies that would significantly improve the project variability. Most importantly,

measures should be taken to maximize throughput volumes in the short to medium term.

Further strategies that will help in improving the commercial viability of IAP presented in the ECA

analysis are (the following text is taken from the ECA Report [4]):

1. “Ensure grant funding of more than 50% of the IAP project.

Albania and Montenegro sections:

As a Project of Mutual Interest (PMI), IAP is eligible for grant funding through the Western

Balkans Investment Framework (WBIF). WBIF finances investments that contribute to

socioeconomic development in line with the EU accession process. It pools funds into a joint

grant facility, drawing on funds allocated by the EC’s Instrument for Pre-Accession, as well

as grant contributions from the Council of Europe Development Bank, the European Bank for

Reconstruction and Development (EBRD), the European Investment Bank (EIB), KfW, and

the World Bank. The WBIF therefore plays a key coordinating role for grant funding support

from a variety of donors in the energy sector in the region. Although not a funding agency in

its own right, it is a vehicle of disbursing pools of grant funding, which means that the WBIF

could play a crucial role for funding IAP.

For the period 2015 to 2020, €1 billion are available for investment grants in the energy sector.

Only PECI and PMI projects are eligible for these funds, and the beneficiary countries are

Albania, Bosnia Herzegovina, FYROM, Kosovo, Montenegro and Serbia. For IAP, this

means that only the Albanian and Montenegrin section would be eligible for Investment

grants from WBIF.

Croatian section:

As a member of the European Union, the Croatian section of IAP could be eligible for grant

funding through the CEF, which involves all 28 member states, plus certain non-EU countries

including Montenegro. The Facility provides funding for Projects of Common Interest (PCIs).

47

For the 2014-20 period, energy-related PCIs have access to a total of €4.7 billion of support.

Eligible gas projects include: transmission pipelines (excluding high-pressure upstream

pipelines or local distribution), underground gas storage facilities, LNG terminals, and any

equipment or installation essential for the system to operate safely, securely and efficiently or

to enable bidirectional capacity. The Croatian section of IAP is not considered a PCI, but

could qualify as a PCI.

The key features of CEF that are of direct relevance for IAP are:

• Non-EU member countries can be included in funding applications as long as they

have the agreement of the member state connected to the proposal and supporting

documentation.

• Projects are eligible for financial assistance if they demonstrate significant positive

externalities, such as security of supply, and the project is not commercially viable

according to the business plan and other assessments carried out, notably by possible

investors or creditors or the national regulatory authorities.

• Priority gas corridors are a target of PCIs, which include the North-South and Southern

Gas Corridor gas interconnections.

The Croatian section of IAP is not a PCI. However, the PCI list is reviewed every two

years; the next list is to be issued in late 2019. This could be an opportunity to apply for

PCI status for IAP and secure grant funding. The CEF will typically provide 50% of

grant funding for energy projects and this can include ‘Studies’ as well as ‘Works.’

2. Involving Caspian and Middle Eastern gas suppliers in the project, who may be able to sell

gas at a more competitive price in return for ownership of a midstream gas operation in the

region, would help to raise the critical threshold level for the transmission tariff.

3. Attract investors that do not require a high return on this project alone. Investors could be

identified that would see IAP as forming part of their overall project portfolio. Hence, they

would not rely exclusively on IAP as a major profit center. Instead they may consider it a

vehicle to access markets where higher returns can be made. The State Oil Company of the

Azerbaijan Republic (SOCAR) or other Caspian and Middle Eastern gas producers would be

obvious candidates, but potentially also other European midstream operators. Additionally the

project would form part of an upstream and midstream portfolio and therefore does not need

to be commercially viable on its own accord.

The role of SOCAR in the IAP Project has been of great importance and particularly intensified since

2015. It is expected that some steps and decisions will be taken based on the results of ECA update

of the IAP FS, which will make the future of the project clearer. BiH also endorsed this project and

should continue its participation through the competent state and entity ministries as well as

companies from the gas sector. Azerbaijan has continually supported inclusion of BiH in the IAP

Project and the South Gas Corridor.

48

LNG Krk and evacuation pipelines

The FID on the project has not been reached, although it has crucial strategic importance to Croatia

and has received support from the EU.

In the first quarter of 2016, a non-binding Open Season process was carried out. This procedure was

conducted with the aim of providing a more accurate estimate of the demand for the use of capacities

from the LNG terminal. Based on the interest shown in the non-binding bids for capacity booking

from the LNG terminal in the direction of Hungary, Plinacro made scenarios for the expansion of the

transmission system in order to increase the technical capacity at the Dravaszerdahely interconnection

point in the direction from Croatia to Hungary.

Following the expressed interest of the bidders for capacity booking in the non-binding phase of the

Open Season process, Plinacro started the preparation of the binding phase of the Open Season

process with the Hungarian TSO FGSZ. The actual needs for gas transport from LNG, i.e., the

decision on which scenario will be realized (capacity, quantities and dynamics) depends on the results

of the binding phase of the Open Season process. However, in April 2018, this procedure was

completed, but did not result in a positive expression of interest as in the non-binding Open Season

phase. According to unofficial information, only one bid was submitted from a Croatian company.23

Potential users of the LNG terminal capacities need to review laws, regulations and other acts

regulating the gas market (Rules of operation, Maritime Study, Environmental Impact Study,

Proposal of the LNG Terminal Act), which are crucial for making long-term business decisions of

this kind. In addition, interested parties asked for extension of the deadline for submission of binding

offers, so LNG Croatia, in cooperation with Plinacro and FGSZ, decided to extend the deadline of

the second round for submission of binding offers in the Open Season procedure to September 28,

2018.24

23 Jutarnji list, April 14, 2018 24 www.plinacro.hr and www.lng.hr

http://www.plinacro.hr/

http://www.lng.hr/

49

5.2 Status and development plans of Serbian natural gas transmission system

The existing and planned infrastructure of the Serbian natural gas transmission system is shown in

Figure 5.3.25 There are two gas transmission companies in Srbija: Srbijagas and Yugorosgaz. In

Figure 5.3 the gas transmission network operated by Srbijagas is shown in red (thicker line), the

network operated by Yugorosgaz is shown in green and future gas pipelines and interconnections are

shown as blue dashed lines. Yugorosgaz operates 124km of transmission network in the south of

Serbia.26 Srbijagas operates 2.632 km of gas pipelines, 252 metering-regulating stations and the UGS

in Banatski Dvor.

Serbia has two interconnections with gas pipeline systems of neighboring countries:

• Hungary (Kiskundorozsma) – Serbia – entry point

and

• Serbia – Bosnia and Herzegovina (Zvornik) – exit point.

Both cross-border interconnections are a part of the transmission system of Srbijagas. Technical

capacity on the entry point is 15 mcm/day, and at the exit point 1.9 mcm/day. In 2015 and 2016, the

latest years for which data could be obtained, there was sufficient free capacity on the interconnectors

even during winter months. In 2016, the average utilisation rate of the entry capacity amounted to

average 42.6% while in 2015 it amounted to 41.4%. However, gas consumption and capacity

utilization is much lower during the summer, while in the winter a higher percentage of the

interconnection capacity is needed to cover the peak demand in Serbia. The highest daily quantity

withdrawn into the transmission system on the Serbian-Hungarian border was 10.43 mcm/day, of

which 8.94 million mcm/day was used by Serbia and 1.49 mcm/day was supplied to BiH. The

available entry interconnector capacity for natural gas is 15 mcm/day and if we assume the

interconnector utilization rate of 90%, the daily capacity is 13.5 mcm/day and the daily annual

capacity is 4.93 bcm/year. If we compare those capacities with the maximum consumption of 10.43

mcm/day in 2016 there is about of 3 mcm/day excess capacity from the entry interconnector.

However, in January 2017, the temperatures were extremely low and full capacity of the supply line

to BiH was used (1.9 mcm/day); while data for Serbia is not available, it can be assumed that also the

consumption in Serbia was at a maximum and using close to full entry interconnector capacity.

However, to cover these extreme peak consumptions, Serbia built a UGS which is described in the

following text. On average, the annual capacity of the entry interconnector capacity of 4.93 bcm/year

is much higher than the current consumption of 2 bcm/year (1.795 bcm consumed in Serbia and 0.232

bcm consumed in BiH in 2016).

25 www.srbijagas.com 26 www.transport.yugorosgaz.rs

http://www.srbijagas.com/

http://www.transport.yugorosgaz.rs/

50

The UGS Banatski Dvor was built in 2011 and is very important for the security of natural gas supply.

It has a capacity of 450 mcm, and the bidirectional gas pipeline Gospodjinci – Banatski Dvor, which

enables a maximum injection capacity of 5.5 mcm/day and a maximum withdrawal capacity of 10

mcm/day. The maximum daily injection quantity in 2016 was 2.6 mcm/day, and the maximum daily

withdrawn quantities recorded was 4.95 mcm/day. In 2016, 254 mcm were injected from the UGS

into the transmission system and the same amount delivered to consumers.

The price for utilization of Underground gas storage Banatski Dvor is not regulated pursuant to the

Agreement between the Russian Federation and Serbia. There is no Storage code.

The planned Serbian infrastructure projects of interest to BiH include the following:

• Construction of a new interconnection with BiH

• Construction of the new interconnection with Bulgaria

• Increasing the capacity of the existing UGS

Construction of a new interconnection with BiH

The BiH gas network is connected to the gas network of Serbia through the gas pipeline Batajnica -

Zvornik (Figure 5.3). The map of Serbian gas network depicts a future short interconnection

branching from the existing Batajnica - Zvornik27. This interconnection would not provide any

additional gas supply capacity as it is connected to the existing Batajnica - Zvornik pipeline.

The new gas pipeline north of the existing route Batajnica-Zvornik and crossing the interstate border

near Novo Selo (Serbia) is a priority project in the strategic documents of Republika Srpska.

This pipeline was planned at the time when the South Stream was supposed to pass through Serbia

and in the period from 2010-2013 the changes in the Spatial Plan of Serbia were made in order to

enable the construction of this gas pipeline. Although the changes to the Spatial Plan of Serbia and

other relevant government decisions are still in force, since the South Stream project has been

canceled, no further steps have been taken for the implementation of the new gas pipeline. In 2013, a

concession contract with Sava International from Laktasi was terminated (for the construction of a

section of the same gas pipeline in Republika Srpska) and no concessions were granted to any other

company.

In Figure 5.3 taken from the Srbijagas website (http://www.srbijagas.com) the New East

interconnection in Serbia is not presented. Also, in the presentation of development plans of Srbijagas,

given at the conference Security of Gas Supply in BiH, July 2-3, 2018, the New East interconnection

was not mentioned as a part of Srbijagas development plans.28 In the second presentation of Srbijagas,

from the meeting of the USAID / USEA Partnership for Natural Gas in Eastern Europe, held in

27 The interconnection was planned for the supply of Bijeljina, and since the Sepak-Bijeljina gas pipeline is under construction, this interconnection is no longer needed. 28 https://www.usaideia.ba/wp-content/uploads/2018/07/Transport-network-in-Serbia-conditions-and-plans-Milan-Zdravkovic-Srbijagas.pdf.

http://www.srbijagas.com/

https://www.usaideia.ba/wp-content/uploads/2018/07/Transport-network-in-Serbia-conditions-and-plans-Milan-Zdravkovic-Srbijagas.pdf

https://www.usaideia.ba/wp-content/uploads/2018/07/Transport-network-in-Serbia-conditions-and-plans-Milan-Zdravkovic-Srbijagas.pdf

51

Sarajevo on March 7, 2018, a possible future gas pipeline from Serbia to BiH was discussed (from

Batajnica to Bijeljina), with 102 km length (Table 5.4)

There is no official development plan of Srbijagas, although there is a legal obligation to

prepare it29, so it is not possible to unequivocally determine the position of Srbijagas in relation

to this project. However, the position of the Ministry of Industry, Energy and Mining of

Republika Srpska is that the project of the new gas pipeline and new interconnection with

Serbia will be implemented and the project will be as treated as such in the remainder of this

report.

Increasing the capacity of the existing UGS

In the second development phase, planned to be completed in 2020, the storage capacity will increase

from 450 mcm to 750-1000 mcm. The injection capacity and withdrawal capacities will remain the

same. The investment is valued at 65 million EUR.

Construction of the new interconnection with Bulgaria

An interconnection between Bulgaria to Serbia (IBS) will provide a new supply source for Serbia, as

Bulgaria will be connected to Greece through a branch from the TAP pipeline (Interconnector Greece

– Bulgaria - IGB). The capacity of this line will be in the range of 2.2 - 3.2 bcm/year (commissioning

date 2021). In the description of the project the possibility of a capacity increase of up to 5 bcm/year

with construction of a new compressor station is given, without further description.

The IBS planned commissioning year is 2022 and the planned capacities are 1 bcm/year from

Bulgaria to Serbia and from Serbia to Bulgaria of 0.15 bcm/year, with capacity increases in the 2nd

and 3rd phase which require additional investment. These project phases are not included in the IBS

PCI Cluster 6.10. The IBS is a link to the existing system in the city of Nis, which is located in the

southern part of Serbia, and offers a possibility of supply from new gas sources, such as Caspian gas

and LNG from Greece.

However, the IBS capacity of 1 bcm year it is not enough for Serbia to satisfy the N-1 standard, which

requires that the maximum daily demand of Serbia, without BiH, is satisfied in the case of supply

interruption of the largest single infrastructure - interconnection with Hungary. Therefore, the

development projects in the region and connections with them are important for security of supply in

Serbia, as well as in BiH. Such project is the Balkan Gas Hub project in Bulgaria, which should

provide additional supply to southeast and eastern Europe, and further central and western Europe.

The technical capacity of the existing Batajnica-Zvornik gas pipeline in Serbia is a limiting factor for

the delivery of additional quantities to BiH from new natural gas sources. IBS partially enables the

diversification of sources of supply and helps to develop the gas market, but in order to improve

the security of supply of BiH from Serbia, a new gas pipeline between Serbia and BiH is needed.

29 According to the Law on Energy of the Republic of Serbia (Article 250), Srbijagas is obliged to submit to the Energy Agency of the Republic of Serbia the ten-year plan for the development of the transmission system, for approval. (https://www.aers.rs/Index.asp?l=1&a=42.09&tp=TEG)

https://www.aers.rs/Index.asp?l=1&a=42.09&tp=TEG

52

Exsisting IP Technical

capacity

GWh/day

(bcm/yr)

Expansio

n

Average

System

utilization

%

Territory

coverage of

gas

transmissio

n system

%

Level of

System

Development

Age of

Syste

m

(year)

Type of

Gas

pipeline

Distance of

transmissio

n system

from BiH

border

Hungary –

Serbia

(Kiskundorozsm

a – entry point)

143

(4.9)30

N/A 42 N/A Medium 3931

One

directio

nal

10232 km or

1233 km

Table 5.4 Serbian Gas Transmission System Characteristics

30 Utilisation rate is 90%. 31 Oldest pipeline Horgos – Batajnica was commissioned in 1979. 32 New gas pipeline (north of existing route Batajnica – Zvornik). 33 New gas pipeline Novo Selo - BiH border; possible connection to existing pipeline Batajnica – Zvornik.

53

Figure 5.3 Serbian gas transmission system

54

6 CONCLUSIONS AND RECOMMENDATIONS

The existing capacity of the Croatian transmission network and one of the proposed

interconnections from the south or north can provide security of supply for BiH, provided that

the existing interconnection with Serbia remains functional until the new interconnection with

Serbia is constructed34. For a country to have a secure supply of gas, it must be able to satisfy peak

gas demand in the event of a disruption of the single largest infrastructure (Section 2.4.1). For that

reason, BiH must have two interconnections, each being able to satisfy the peak gas demand. In order

to increase security of supply and support to the development of the gas supply market, BiH should

be connected with the transport systems of both Croatia and Serbia. The advantage of connecting to

the Croatian transmission system is that the distance from BiH border to the Croatian transmission

pipeline is short.

The planned increase in capacities of the Croatian interconnections with Slovenia and Hungary

further increases the margin of security for gas supply in BiH. The construction of the Krk LNG

terminal would provide BiH with access to the international LNG market, while the

construction of IAP would provide the supply of gas from the Caspian region. Both projects

provide diversifation of gas sources thereby increasing the security of supply. Also, more supply

directions and more supply sources provide a basis for market development in BiH. At this moment,

the implementation of the LNG Krk project is likely due to the strong financial support from

the EU and the Croatian Government, while the construction of the IAP is uncertain.

Thanks to the IBS interconnection the capacity of the Serbian transmission network will be futher

increased, but the capacity of the existing interconnection with BiH is fully used for satisfying the

peak demand during very cold winter days. To maintain the security of supply in BiH, it is necessary

to maintain the existing interconnection until the construction of the two new interconnections, one

with Serbia and one with Croatia. If the consumption in BiH is significantly increased, it will be

necessary to build a third new interconnection or to revitalize the existing interconnection, if it is

technically and economically feasible/profitable.

Since BiH does not have a gas storage, nor does it have definite plans for its construction, it is

necessary to ensure access to the gas storages in Serbia and Croatia. The planned capacity expansion

of UGS Banatski Dvor provides a good opportunity for BiH to contract with Srbijagas to use the UGS

to overcome short-term supply disruptions. BiH can also contract the use of UGS Okoli in Croatia.

It can be concluded that the current capacities of transport gas networks in Serbia and Croatia can

meet the current maximum daily demand in BiH and can support a significant increase in demand for

gas in BiH, provided that the new interconnections are constructed. Building a new interconnection

between Serbia and Bulgaria and increasing the capacity of Croatia's existing interconnections with

Slovenia and Hungary will increase the security of supply of Serbia and Croatia, and therefore of BiH

as well. The most important regional projects for the security of supply of BiH are LNG Krk and IAP,

the use of which requires construction of an interconnection with Croatia.

34 The position of the Ministry of Industry, Energy and Mining of the Republika Srpska is that the new interconnection with Serbia will be implemented, although, due to the lack of an official development plan of Srbijagas, it was not possible to unequivocally establish the position of Srbijagas in relation to this project.

55

REFERENCES

1. Ten-Year Network Development Plan 2017 (TYNDP 2017), Main Report, ENTSOG, 2017.

https://www.entsog.eu/publications/tyndp#ENTSOG-TEN-YEAR-NETWORK-

DEVELOPMENT-PLAN-2017

2. Ten-Year Network Development Plan - TYNDP Presentation, Céline Heidrecheid,

ENTSOG, January 2017.

(https://www.entsog.eu/public/uploads/files/publications/INT%20Network%20Code/2016/T

YNDP%202017%20Presentation%2023%20January.pdf)

3. Ten-Year Development Plan of the Croatian Gas Trasmission Network 2018-2027,

Plinacro, 2017

4. Final Report Task 2 – IAP Feasibility, Economic Consulting Associates, February 2018

https://www.entsog.eu/publications/tyndp#ENTSOG-TEN-YEAR-NETWORK-DEVELOPMENT-PLAN-2017

https://www.entsog.eu/publications/tyndp#ENTSOG-TEN-YEAR-NETWORK-DEVELOPMENT-PLAN-2017

https://www.entsog.eu/public/uploads/files/publications/INT%20Network%20Code/2016/TYNDP%202017%20Presentation%2023%20January.pdf

https://www.entsog.eu/public/uploads/files/publications/INT%20Network%20Code/2016/TYNDP%202017%20Presentation%2023%20January.pdf

56

APPENDIX

1. Transmission infrastructure of new sources of gas from the Caspian Region

1.1 TAP (Cluster 7.1/1)

Project Name Transmission infrastructure of new sources of gas

from the Caspian Region Cluster 7.1/1

Promotor/Partner Trans Adriatic Pipeline AG

Country

Greece TYNDP TRA-F-051 PCI 7.1.3

Albania

Italy

Short Description

of Project

TAP – Trans Adriatic Pipeline will start near Kipoi on the border of Turkey and Greece, where

it will be connected with the Trans Anatolian Pipeline (TANAP).

From Kipoi (Compressor Station)/Evros

Passing through

From Kipoi, TAP will continue onshore, cross the entire territory of Northern Greece, then

onwards to the west through Albania to the Adriatic coast. The offshore section of the pipeline

will begin near the Albanian city Fier and traverse the Adriatic Sea to be connected to the Italy’s

gas transmission network in the Southern Italy.

Connected to Melendugo (Receiving Terminal)

Natural Gas Source Caspian Region

Greece

Technical

Information:

Length: 550 km

Diameter: 1,200 mm (48 inch)

Capacity: 350 GWh/d (approx. 10 bcm/year; expandable to 20 bcm/year)

Albania

Length: 215 km

Diameter: 900 mm (36 inch) – 1,200 mm (48 inch)


Adriatic Sea

Length: 105 km

Diameter: 900 mm (36 inch)


Italy

Length: 8 km

Diameter: 900 mm (36 inch) - 1.200 mm (48 inch)


Investment Cost Estimated EUR 4.5 billion

Construction Start 2015

Completion % as of

today 65

Expected

Commissioning

year

2020

57

Note/Other

information

TAP SHAREHOLDERS: SGC 20%, BP 20%, SNAM 20%, FLUXYS 19%, ENAGAS 16% and

AXPO 5%

1. Transmission infrastructure of new sources of gas from the Caspian Region

1.2 TCP/SCPFX/TANAP (Cluster 7.1/2)

Project Name Transmission infrastructure of new sources of

gas from the Caspian Region Cluster 7.1/2

Promotor/Partner

TCP / W-Stream Caspian Pipeline Company Ltd

SCPFX /SOCAR Midstream Operations LLC

TANAP /SOCAR (The State Oil Company of the Azerbaijan Republic)

Country

TCP /Turkmenistan TYNDP TRA-N-339 PCI 7.1.1

SCPFX /Azerbaijan TYNDP TRA-N-1138 PCI 7.1

TANAP/ Turkey TYNDP TRA-F-221 PCI 7.1.1

Short Description

of Project

Trans Caspian Gas Pipeline - TCP will branch off at the connection with the East-West pipeline

or for the first stage from the collection point of the offshore Caspian production/treatment in

Turkmenistan. It will feed into Sangachal Terminal and SCP-X (SCP-(F)X at a later stage). The

early gas stage associated with one pipeline section is intended to transport natural gas towards

Turkey (TANAP).

South Caucasus Pipeline Future Expansion - SCPFX Project is a further expansion of the

existing South Caucasus Pipeline which runs from Sangachal Terminal through Azerbaijan and

Georgia to the Georgia/Turkey border. The SCPFX project currently envisages the construction

of a new compressor station in Azerbaijan and the installation of additional pipeline looping in

Georgia.

Trans Anatolian Natural Gas Pipeline - TANAP intended for the transportation of natural gas

to be produced in the Shah Deniz-2 field and other fields in Azerbaijan through Turkey to Europe.

The TANAP Project will contribute to the European gas supply security and supply diversification

by opening up the Southern Gas Corridor.

From Shah Deniz-2 field /Azerbaijan and/or Turkmenbasy/Turkmenistan

Passing through

The pipeline runs under the Caspian Sea from Türkmenbaşy in Turkmenistan to the Sangachal

Terminal in Baku (Azerbaijan), then the gas pipeline runs across Azerbaijan towards Tbilisi in

Georgia and continues to the Georgian/Turkey border. TANAP will run from the Turkish village

of Turkgozu on the Turkish-Georgian border, pass through 20 provinces and the Marmara Sea to

the Ipsala District of Edrine along the Turkish-Greek border. From this point, the TANAP will be

linked to the TAP. )

Connected to Edirne Turkey/Kipi Greece

Natural Gas

Source Caspian region

TCP - Trans Caspian Pipeline

Technical

Information:

Length: 300 km

Diameter: (-)

58

Capacity: max 32 bcm/year

SCPFX - South Caucasus Pipeline Future Expansion

Length: 93 km


Capacity: 150 GWh/d (approx. 5 bcm/year)

Note: SCPFX is future expansion of the existing pipeline system between Azerbaijan and Turkey

via Georgia SCP-X with the capacity of 16 bcm/year.

TANAP – Trans Anatolian Natural Gas Pipeline

Length: 1,807 km

Diameter: 1,219 mm (48 inch) - 1,442 mm (56 inch)

Capacity: 490.0 GWh/d (approx. 18 bcm/year)

expandable to 31 bcm/year

Investment Cost TANAP: expected US$ 9.3 billion

Construction

Start Under construction

Completion % as

of today

TANAP - 70 %

Expected

Commissioning

Year

TANAP 2018

SCPFX 2019

Note/Other

Information TANAP’s SHAREHOLDERS: BOTAS 30%, SGC 58% and BP 12%

2. IAP - Ionian Adriatic Pipeline

Project Name IAP – Ionian Adriatic Pipeline

Promotor/Partner Plinacro Ltd Croatia

Country

Croatia TYNDP TRA-N-068 PMI (Gas_16)

Croatia Branch to Bosnia and

Herzegovina TYNDP TRA-N-302

Montenegro TYNDP TRA-N-068 PMI (Gas_16)

Albania TYNDP TRA-N-068 PMI (Gas_16)

Short description

of Project

59

IAP – Ionian Adriatic Pipeline will cross the territory along the Adriatic coast from Fieri in

Albania via Montenegro to Split in Croatia and will be linked to the existing Croatian gas

transmission system. The Ionian-Adriatic Pipeline is considered a part of the Energy Community

Gas Ring, which is the concept of gasification for the entire region. IAP is the most important gas

project in Southeast Europe supported by the Energy Community. The IAP project is based on the

idea of connecting the existing Croatian gas transmission system, via Montenegro and Albania,

with the TAP gas pipeline system and branch to Bosnia and Herzegovina is planned.

From Fier/Albania

Passing through Albania, Montenegro and Croatia (planned branch to Bosnia and Herzegovina from Croatia)

Connected to Split/Croatia

Natural Gas

source Caspian region

Croatia

Technical

information:

Length: 250 km


Branch to Bosnia and Herzegovina (Zagvozd – Posušje)

Length: 22 km

Diameter: 500 (20 inch)

Montenegro

Length: 110 km


Albania

Length: 180 km


60

Total Capacity: 133 GWh/d (approx. 5bcm)

Investment cost EUR 583 million

Construction

started (-)

Completion % as

of today (-)

Expected

Commissioning

year

2023 expected

Note/Other

information

International Agreement signed:

2007: Ministerial Declaration: Croatia, Montenegro and Albania;

2008: BiH signed Ministerial Declaration

2010: Establishment of interstate Committee for IAP under Energy Community umbrella

2011: Memorandum of Understanding (MoU), as a support to the implementation of TAP and

IAP, signed between Plinacro and TAP AG, BH-Gas and TAP AG, the Ministry of Economy of

Montenegro and TAP AG and the Ministry of Economy, Trade and Energy of Albania and TAP

AG; establishing Joint Working Group TAP/IAP; granted EUR 3.5 million by WBIF for the

Comprehensive Feasibility Study and ESIA, finished in April 2014; Joint Working Group

TAP/IAP joined by Plinovodi

2013: MoU for the support and cooperation in the implementation of the TAP and IAP signed by

Albania, Bosnia and Herzegovina, Croatia and Montenegro

2013: MoU between Plinacro and Socar

2014: MoU between Azerbaijan, Albania, Bosnia and Herzegovina, Croatia and Montenegro, on

cooperation for the development of the Southern Gas Corridor in Southeast Europe

2015: Joint Statement on the Ionian-Adriatic Pipeline was signed by the Ministers of Foreign

Affairs of Albania, Bosnia and Herzegovina, Croatia and Montenegro

2016: Joint Statement of the Ministerial Meeting on the Ionian-Adriatic Pipeline

2016: MoU between Albania, Bosnia and Herzegovina, Croatia and Montenegro relating to the

cooperation in implementing the Ionian Adriatic Pipeline

2016: Joint Statement of the Ministerial Meeting on the Ionian Adriatic Pipeline

⧠ MoU: Albania, Croatia, Montenegro, Bosnia and Herzegovina – pending

⧠ Project Management Unit (PMU) – Ministries and TSOs – Albania, Bosnia and Herzegovina,

Croatia, Montenegro and SOCAR

2018: On February 15, an agreement was reached to establish a new company for project design

of the Ionian-Adriatic Pipeline (IAP), which will be connected to the Southern Gas Corridor

(SGC). Letter of intent signed by Plinacro (Croatia), Albgaz (Albania), Montenegro Bonus

(Montenegro) and BH-Gas (BiH)

3. Rohuat/Brua

Project Name Rohuat/Brua Cluster 6.24

Promotor/Partner

SNTGN Transgaz SA - Romania

FGSZ Ltd. - Hungary

GCA Austra

Country

Phase I

Hungary TYNDP TRA-N-286

PCI 6.24.1 Romania TYNDP TRA-N-358

Austria TYNDP TRA-N-423

Phase II

Hungary

TYNDP TRA-N-018

PCI 6.24.4

TYNDP TRA-N-061

TYNDP TRA-N-123

TYNDP TRA-N-377

Romania TYNDP TRA-N-358

61

TYNDP TRA-N-362

TYNDP TRA-N-964

Phase III

Romania TYNDP TRA-N-139 PCI 6.24.10

TYNDP TRA-N-959

Short Description

of Project

The project will ensure the interconnection of the gas transmission systems in Bulgaria and Hungary

with the gas transmission system in Romania. The BRUA pipeline aims to enhance the region’s

energy security by diversifying gas supply routes. The proposed project on the Romanian territory

will allow access to the future major gas infrastructure projects such as TAP, gas sources from

Central European gas hubs and potential gas transportation from Black Sea deposits.

From Black Sea coast

Passing through

From the Black Sea coast to the Podisor technological Node (Giurgiu County), thereafter connected

to Horia and the construction compressor stations (CS) along the route (CS Jupa, CS Bibesti and CS

Podisor). In Hungary, a new CS will be built in Csanadpalota. Upon the completion Phase I, the

following transmission capacity will be ensured: towards Hungary 1.75 bcm/year and over Bulgaria

1.5 bcm/year. Phase II is the construction of gas transmission pipeline Reacas–Horia, including CS

in Romania. In Hungary, between Varosfald, Ercsi and Gyor the new pipeline has to be built in order

to reach Mosonmagyarovar IP between Austria and Hungary.

Connected to Interconnection point Mosonmagyarovar

Natural Gas

Source Black Sea

Technical

Information:

Length: 1,318 km

Diameter: 800 mm (32 inch) – 1,000 mm (40 inch)

Capacity: 43.3 GWh/d – 128.7 GWh/d (approx. 1.75 bcm/year – 4.4

bcm/year)

Investment Cost (-)

Construction

Start

Yes, in Romania – Phase I (479 km from Podisor to Reacas), Consortium Habau PPS Pipeline

System

Completion % as

of today (-)

Expected

Commissioning

Year

TSOs TYNDP – 2019/2023

Note/Other

Information

MOU was signed in September 2017 by all countries involved in the Project. Romanian part of the

Project has been supported by the EBRD and EIB, as well as by the CEF.

62

4. LNG Terminal Krk with Connecting and Evacuation Pipelines towards

Hungary and beyond

Project Name LNG Terminal Krk with Connecting and Evacuation

Pipelines towards Hungary and beyond Cluster 6.5

Promotor/Partner Plinacro Ltd Croatia

Country

Croatia

LNG Terminal TYNDP LNG-N-082 PCI 6.5.1

Omišalj - Zlobin TYNDP TRA- N-90 PCI 6.5.1

Zlobin - Bosiljevo -Sisak –

Kozarac TYNDP TRA-N-075 PCI 6.5.6

Kozarac - Slobodnica TYNDP TRA-N-1058 PCI 6.5.6

Short Description

of Project

LNG Terminal Krk The import terminal for the liquefied natural gas (LNG) will be situated in Omišalj

on the Island of Krk, Republic of Croatia. The project is planned as a staged development with: Stage

1 - Floating Storage and Regasification Unit (FSRU) with annual send-out capacity of 1-4 bcm/y

(according to FSRU ship and pipeline availability); Stage 2 - LNG onshore terminal with annual send-

out capacity of 3.5 bcm/y; Stage 3 - LNG onshore terminal with annual send-out capacity of 5 bcm/y;

and Stage 4 - LNG onshore terminal with annual send-out capacity of 8.75 bcm/y. The construction and

the size of the onshore terminal will depend on market demand. An LNG Terminal will be important

for security of supply for Central and Southeast European countries. The pipeline is the connection of

the LNG plant on the Krk island with the Croatian gas transmission system. The gas pipeline Omišalj-

Zlobin jointly with the gas pipeline system Zlobin - Bosiljevo - Sisak-Kozarac, along with the gas

pipeline Kozarac-Slobodnica, makes up the LNG Main evacuation pipeline that connects LNG on the

island of Krk with the Central and Eastern European counties.

Technical

Information:

LNG Terminal

Stage 1 - 1-4 bcm/y (According to FSRU ship and pipeline availability), Stage 2 – 3.5 bcm/y, Stage 3 -

5bcm/y, Stage 4 - 8.75 bcm/y

Omišalj – Zlobin

Length: 18



Zlobin-Bosiljevo-Sisak-Kozarac

Length: 180 km



Kozarac -Slobodnica

Length: 128 km


63

Capacity: 205 GWh/d (approx. 7,5 bcm/year)

Natural Gas

Source LNG

Investment Cost

EUR 363,180,516: Floating Storage and Regasification Unit, construction of a dedicated jetty and a

connecting pipeline with an approximate send-out capacity of 2 bcm/year). The percentage of EU

support by the CEF is 27.92%.

Construction

Start (-)

Completion % as

of today (-)

Expected

Commissioning

Year

2018 - 2023

Note/Other

Information

The LNG company plans to complete the Open Season Process for capacity allocation, perform

activities related to the construction of a terminal dock and connecting gas pipeline, as well as FSRU

unit purchase.

5. Eastring

Project Name Eastring Cluster 6.25

Promotor/Partner

Eustream - Slovakia

FGSZ Ltd. - Hungary

SNTGN Transgaz SA - Romania

Bulgartransgaz EAD - Bulgaria

Country

Slovakia TYNDP TRA-N-628 PCI 6.25.1

Hungary TYNDP TRA-N-656 Not defined yet

Romania TYNDP TRA-N-655 PCI 6.25.1

Bulgaria TYNDP TRA-N-654 PCI 6.25.1

64

Short Description

of Project

The EASTRING project is a bi-directional gas pipeline interconnector between Slovakia and the

external border of the EU on the territory of Bulgaria, e.g. Turkey or Black Sea coast.

Technically, it will connect the existing gas transmission infrastructure in Slovakia, Hungary,

Romania and Bulgaria. The Project is currently considered in different variations of route options and

level of usage of existing infrastructure.

From Existing compressor station in Veľké Kapušany / Slovakia

Passing through

Northeast Hungary in a u-shape towards Romanian borders. In this initial phase, there are two route

options:

⧠ Route option A passes storage areas and production facilities in Transylvania in Romania and

continues to the existing interconnection point Isaccea, where it connects to the existing transit

infrastructure (Western pipeline), which runs through the Romanian-Bulgarian border at Negru

Voda and then onwards from northeast to southeast along the existing Bulgarian gas transit

facilities for connection with the Turkish gas transit network at Malkoclar.

⧠ Route option B passes both storage areas and production facilities in Bucharest and continues to

the Romanian-Bulgarian border and then onwards straight to the Turkish border at Malkoclar.

Connected to IP Strandja (Bulgaria)/Malkoclar (Turkey)

Natural Gas

Source Natural gas reserves in the Caspian Region and the Middle East

Technical

Information:

Length: 846 – 1,029 km (depending on a chosen routing option)


Capacity: 570 GWh/d (approx. 20 bcm/year) - First Stage

1140 GWh/d (approx. 40 bcm/year) - Second Stage

Investment Cost Estimated EUR 2,000 – 2,400 million in its first stage

Construction

Start No

65

Completion % as

of today (-)

Expected

Commissioning

Year

TSOs TYNDP - 2021/2025

Note/Other

Information

Under the second CEF Energy 2016, the EC approved financial assistance for a Feasibility Study for

the Eastring Project in the amount of EUR 1.0 million.

MOU signed by Eustream and Bulgartransgaz on 9 June 2016.

MOU signed by the Ministry of Slovakia and Bulgaria.

MOU on Eastring was signed by the Ministry of Hungary and Slovakia on 30 October 2017.

MOU on Eastring was signed by Romanian Transgaz and Slovak Eustream on 9 February 2018. It is

expected that the Feasibility Study (FS) will be finished in June 2018.

6. Croatia/Slovenia/Austria at Rogatec Lučko-Zabok-Rogatec

Project Name Croatia/Slovenia/Austria at Rogatec Lučko-Zabok-

Rogatec Cluster 6.26

Promotor/Partner

Plinacro Ltd Croatia and

Plinvodi Ltd Slovenia

GCA – Gas Connect Austria

Country

Croatia

Interconnection Croatia —

Slovenia (Lučko — Zabok -

Rogatec)

TYNDP TRA-F-86

PCI 6.26.1 Compressor stations 2 and 3 of

the Croatian gas transmission

system

TYNDP TRA-N-1057

Slovenia

Upgrade of Murfeld/Ceršak

interconnection (M1/3

Interconnection Ceršak)

TYNDP TRA-N-389

PCI 6.26.1 Upgrade of Rogatec

interconnection (M1A/1

Interconnection Rogatec)

TYNDP TRA-N-390

CS Kidričevo, 2nd phase of

upgrade TYNDP TRA-N-094

Austria

GCA 2015/08: Entry/Exit

Murfeld TYNDP TRA-N-361 PCI 6.26.1

Short Description

of Project

66

New pipeline that will upgrade the existing interconnection Croatia/Slovenia. along with the

existing interconnection Karlovac-Lučko-Zabok-Rogatec. A new gas pipeline system has been

planned in order to significantly increase the capacity of the interconnection of the Croatian and

Slovenian gas transmission systems in this direction. Considering almost all existing and new

supply directions in the surrounding region and the Croatian storage potential, this opens

significant transit potential in both directions. Planned compressor stations will significantly

increase the efficiency of the Croatian gas transmission system.

At the IP Slovenia/Austria - Adjustment to operating parameters of the transmission system of

the Austrian TSO will increase transmission capacity and enable bidirectional operation. The

Project enables incremental capacity at the IP Murfeld in both directions. Moreover, physical

RF capacity at the Entry Point Murfeld is achieved.

This project comprises the construction of three compressor stations, two in Croatia and one in

Slovenia located at Kidričevo (30 MW).

From Lučko/Croatia

Passing through Croatia/Slovenia border (IP Rogatec), existing transmission system in Slovenia to

Slovenia/Austria border (IP Murfeld)

Connected to Murfeld/Austria

Natural Gas

Source

LNG Krk and Caspian region (IAP). This route enables enhanced access to Baumgarten and

Italian gas market.

Croatia

Technical

Information:

Length: 69 km



Slovenia

Length: 4 km



Investment Cost (-)

Construction

Start (-)

Completion % as

of today (-)

Expected

Commissioning

Year

2020/2021

67

Note/Other

Information Croatian TSO has reached FID for gas pipeline project Lučko – Zabok – Rogatec.

7. Gas Interconnection between two EU countries/Hungary – Slovenia

Project Name Gas Interconnection between two EU countries/Hungary -

Slovenia Cluster 6.23

Promotor/Partne

r

FGSZ Hungary

Plinovodi Slovenia

Country

Hungary

Slovenian-Hungarian

Interconnector TYNDP TRA-N-325 PCI 6.23

Slovenia

R15/1 Pince - Lendava -

Kidričevo TYNDP TRA-N-112 PCI 6.23

Short Description

of Project

Interconnector of the Sloveniana and Hungarian transmission systems. Cross-border

transmission, enabling access to underground storage in Hungary for Slovenian gas suppliers,

LNG terminals in the northern Adriatic and other gas sources for Hungarian gas suppliers. HU:

Nagykanizsa-Tornyiszentmiklós; SLO: R15/1 Pince - Lendava - Kidričevo

From Kidričevo

Passing through Lendava and Nagykanizsa

Connected to Tornyiszentmiklós

Natural Gas

Source LNG and other gas sources for Hungarian gas suppliers

Hungary

Technical

Information:

Length: 41 km


Capacity: 38.2 GWh/d (approx. 1.5 bcm/year)

Slovenia

Length: 73 km


Capacity: 38.1 GWh/d (approx. 1.5 bcm/year)

Investment Cost (-)

Construction

Start (-)

Completion % as

of today (-)

68

Expected

Commissioning

Year

2020

Note/Other

Information

8. Interconnection Bulgaria – Serbia (IBS)

Project

Name Interconnection Bulgaria – Serbia (IBS) Cluster 6.10

Promotor/

Partner

Bulgaria - Ministry of Energy

Serbia - Srbijagas

Country

Bulgaria

Novi Iskar - Kalotina TYNDP TRA-F-137 PCI 6.10

Serbia

Dimitrovgrad - Niš PECI Gas_09

Short

Description

of Project

General information:

The IBS aims to connect the national gas transmission networks of Bulgaria and Serbia. It will be

implemented in three stages:

Stage 1: the pipe will be built from Novi Iskar to Kalotina, BG (62.2 km) and from Niš to

Dimitrovgrad, SR (108 km), with the capacity from BG to SRB – 1.0 bcm/year, and from

SRB to BG 0.15 bcm/year; Stage 2: the capacity will be increased from BG to SRB to 2.4 bcm/year,

and from SRB to BG to 0.95 bcm/year, and later to 1.5 bcm/year, the construction of two compressor

stationss (20 MW each) and two new gas pipeline sections (from G Bogrov CS to N Iskar 19 km and

from V. Orašje to Niš 161km); and Stage 3: by the construction of the looping VS Batulsi - G Bogrov

CS (62 km), the capacity from BG to SRB will be increased to 3.2 bcm/year. In the direction from

SRB to BG, the construction of the pipeline Batajnica - V Orašje (116 km) will ensure transmission

of 2 bcm/ year, and the construction of CS Batočina (20 MW) will increase the capacity from 2

bcm/year to up to 2.5 bcm/year.

From Novi Iskar (Bulgaria)

Passing

through Kalotina (Bulgaria); Dimitrovgrad (Serbia)

Connected to Niš (Serbia)

Natural Gas

Source Caspian Region; LNG (Greece)

Bulgaria

Technical

Information:

Length: 62 km


Capacity: 51 GWh/day (approx. 1,8 bcm/year)

69

Serbia

Length: 108 km



Investment

Cost Bulgaria: EUR 40-66 million Serbia: EUR 54-77 million

Construction

Start 2018/2019

Completion

% as of

today

(-)

Expected

Com-

missioning

Year

2022

Note/Other

Information

Bulgarian Energy Minister Temenouzhka Petkova and Serbia's Minister of Energy and Mining

Aleksandar Antic have signed the Memorandum of Understanding for the project of the construction

of the Bulgaria-Serbia Iinterconnector. Thereby the two sides agreed to make maximum efforts to

begin the construction of the interconnector by May 2019 at the latest, so that it could be put into

operation by the end of 2020. (Bulgarian news agency 19th January 2017. )

9. Interconnection Greece –Bulgaria

Project Name Interconnector Greece-Bulgaria IGB Project Cluster 6.8

Promotor/Partner ICGB a.d.

Country Greece

TYNDP TRA-F-378 PCI (6.8.1) Bulgaria

Short Description of

Project

Construction of a bi-directional gas interconnector between the high pressure natural gas

systems of Greece and Bulgaria, with a technical forward capacity of 3 bcm/y, capable to

be increased to 5 bcm/y with the installation of a Compressor Station, issuance of

Regulatory Decisions and similar material conditions. The current market test is being

conducted under the guidelines and notice approved and issued by the National Regulatory

Authorities in accordance to Art. 36 of the 2009/73/EC gas directive: Regulatory

Authority for Energy of Greece (RAE) decision No. 438/23.11.2015, Energy and Water

70

Regulatory Commission of Bulgaria (EWRC) decision No.y-2/27.11.2015 : Updated

Guidelines for management and allocation of capacity on the IGB INTERCONNECTOR

according to paragraph 6 of article 36 of Directive 2009/73/EC PHASE I: Invitation of

interested parties to express their interest in reserving capacity). RAE decision

No.472/1.12.2015, EWRC decision No. y-3/10.12.2015): Expression of Interest (EoI)

Notice (http://www.icgb.eu/downloads/0508-icgb-bidding-phase-guidelines.pdf).

From Greece - Komotini

Passing through Greece/Bulgaria border

Connected to Bulgaria – Stara Zagora

Natural Gas Source Caspian Region, Algeria, LNG (Quatar, USA)

Technical Information:

Greece

Length: 31 km


Capacity: 60,5 – 90 GWh/day (approx. 2,2 – 3,2 bcm/year)

Bulgaria

Length: 151 km


Capacity: 60,5 – 90 GWh/day (approx. 2,2 – 3,2 bcm/year)

Investment Cost (-)


Completion % as of

today (-)

Expected

Commissioning Year 2021

Note/Other

Information

ICGB a.d.: Bulgarian Energy Holding EAD 50%; Greek Investment Company IGI

Poseidon 50% (DEPA S.A., Greece and Edison, Italy)

10. Infrastructure to allow the development of the Bulgarian Gas Hub

Project Name Infrastructure to allow the development of the

Bulgarian Gas Hub Cluster 6.25

Promotor/Partner Bulgaria - Bulgartransgaz

Country

Bulgaria

Looping CS Valchi Dol -

Line valve Novi Iskar TYNDP TRA-N-592

PCI 6.25.4 Varna-Oryahovo gas pipeline TYNDP TRA-N-593

Construction of a Looping CS

Provadia - Rupcha village TYNDP TRA-N-594

http://www.icgb.eu/downloads/0508-icgb-bidding-phase-guidelines.pdf

71


Project

The concept for the construction of a gas distribution center (hub) on the territory of

Bulgaria is based on the idea of significant gas quantities from different sources (conceptual

entry/exit capacity of 45.55 – 61.3 bcm/y) to enter a physical point in the region of Varna

for further transport. Gas trade will at the same time be organized at this point – the hub

where each market participant can trade natural gas based on market principles. The idea of

building the gas hub is supported by the strategic geographical location of Bulgaria, well-

developed existing gas infrastructure for transmission and storage and interconnection

projects with Romania, Turkey, Greece and Serbia.

In the context of European objectives for establishing an interconnected Pan-European Gas

Market, the implementation of the gas hub concept is in line with the South Gas Corridor

development projects, as well as in full compliance with the plans for the development of

the European gas infrastructure, with an aim to improve the security of supply and diversify

natural gas supply sources. The project fulfills needs of the region as identified by the High

Level Group on Central and Southeast Europe Gas Connectivity (CESEC) and by the

European Strategy for the Energy Union.

Building the gas hub is targeted at constructing the necessary gas transmission infrastructure

to connect natural gas markets of the Member States in the region - Bulgaria, Greece,

Romania, Hungary, Croatia, Slovenia, and through them to the Member States in Central

and Western Europe, as well as to the countries of the Energy Community Serbia,

Macedonia, Bosnia and Herzegovina, thus, contributing to the achievement of major

priorities of the European Energy Policy.

Natural gas quantities from various sources can enter the hub: Russian natural gas through

a new offshore gas pipeline and along the existing route, natural gas produced in the Black

Sea – Bulgarian (from blocks Khan Asparuh, Silistar, Teres) and Romanian natural gas from

the Southern Gas Corridor sources (Caspian, Middle East and Eastern Mediterranean) and

LNG from terminals in Greece and Turkey.

Investment Cost (-)

Construction Start (-)

Completion % as of

today (-)

Expected


Note/Other

Information

In December 2015, the Bulgarian government and the European Commission agreed on the

establishment of a joint working group, which would support the development of the trade

concept, business and financial plan of a Balkan Gas Hub. The main tasks of the Working

Group were focused on identifying solutions for common challenges encountered in the

72

development of a stable regulatory framework and a trade environment aimed at facilitating

the connection between Bulgaria and the rest of the Southeast Europe. In addition, within

the framework of the Working Group, a priority was established for the development of a

concept for the business model of the Balkan Gas Hub. Necessary application forms and documents for co-financing the "Feasibility Study of the

Gas Hub 'Balkan' Project under the CEF Program (CEF Call 2016-2) were prepared.

The results from the second call for proposals were announced in February 2017 and Action

No. 6.25.4-0015-BG-S-M-16, "Feasibility Study for the Balkan Gas Project” was also

included in the project list approved by the Coordination Committee.

In May 2017, Bulgartransgaz EAD signed a Grant Agreement

INEA/CEF/ENER/M2016/1290649. The amount of the grant in line with the Grant

Agreement is 50% of the amount of the Action – up to EUR 920,500.

11. Increase Storage Capacity in South Eastern Europe (Bulgaria and

Romania)

Project Name Increase Storage Capacity in South Eastern Europe

(Bulgaria and Romania) Cluster 6.20

Promotor/Partner

Bulgartransgaz

SNTGN Romgaz

Engie Romania

Country

Bulgaria

UGS Chiren Expansion TYNDP UGS-N-138 PCI 6.20.2

Construction of a new gas

storage facility on the

territory of Bulgaria

TYNDP UGS-N-141 (-)

Romania

Sarmasel undeground gas

storage in Romania

TYNDP UGS-N-371 PCI 6.20.6

Depomures company TYNDP UGS-N-233 PVI 6.20.4

New undergound gas storage

in Romania

TYNDP UGS-N-366 (-)

73


Project

UGS Bulgaria: The project will increase the capacity of the only gas storage facility on the

territory of Bulgaria to achieve storage capacity, increased gas reservoir pressures and

higher daily average injection and withdrawal flow rates.

The construction of a new (second) gas storage also is envisaged on the territory of

Bulgaria. It can be constructed in a suitable geological structure: depleted gas fields

(onshore or offshore), salt caverns or aquifer. However, the construction of the new

underground gas storage from the start of the geological and research activities to its

commissioning can take no less than 7-8 years.

UGS Romania: The conceived project will improve the injection capacity of the seasonal

storage facility and installation of compressors at UGS Sarmasel, and may greatly

contribute to increasing the overall UGS capacity in Southeast Europe by connecting

Sarmasel UGS to Bulgaria-Romania-Hungary-Austria Corridor project developed by

SNTGN Transgaz S.A. Medias, consisting of gradual construction of a new gas

transmission line between the Podisor Technological Node and Horia gas metering station.

The project UGDS Depomures consists of the revamping and expansion of an existing gas

storage facility of 300 mcm situated in Targu Mures, Central Romania. Several options for

the construction of the new gas storage facility in a depleted gas field (onshore) are to be

considered. The project is to be located in the Eastern part of Romania (Moldova region),

near Falticeni. The location of the depleted reservoir that will be converted into UGS is

determined according to the following criteria:

- allowance of the construction of a small-medium size UGS of 200 million m3/cycle with

future development possibilities;

- location next to areas with a consumption deficit and very low temperatures during winter

season;

- location near important industrial gas consumers and households;

- use for increasing security of supply in Romania and facilitating possible gas exports to

the Republic of Moldova;

74

- existing projects to develop gas resources in the Black Sea and the possibility to create

interconnections to projects that are the part of the Southern European transmission

corridor; and

- main pipeline close to the area.

Natural Gas Source

Technical

Information:

Bulgaria

UGS Chiren Expansion Working Gas Volume (WGV) 450 - 1000 mcm

Construction of new gas

storage facility on the

territory of Bulgaria

WGV 0 mcm

Romania

Sarmasel undeground gas

storage in Romania WGV 650 - 1550 mcm

Depomures WGV 300 - 600 mcm

New undergound gas storage

in Romania WGV 200 mcm

Investment Cost (-)

Construction Start (-)

Completion % as of

today (-)

Expected

Commissioning Year 2019 - 2023

Note/Other

Information

12. Interconnection Turkey-Bulgaria

Project Name Interconnection Turkey-Bulgaria ITB Cluster

Promotor/Partne

r Bulgaria - Bulgartransgaz

Bulgaria TYNDP TRA-N-140

Turkey (-)

Short Description

of Project

75

The construction of a new onshore gas pipeline in the section between the village of Losenets

and the Bulgarian-Turkish border in the region of the village of Strandja in parallel to the

existing transit gas pipeline, with a length of about 76 km on Bulgarian territory, diameter of the

pipe is 700 mm and the capacity is about 3 bcm/y at operating pressure of 64 bar. A compressor

station Losenets -2 near the existing compressor station in the region of the village Losenets is

also envisaged for construction. The project, as part of the priority Southern Gas Corridor is

important for security and diversification of sources and routes of natural gas supply to/through

Bulgaria and in the region. Its implementation is directly related to the fulfilment of conditions

required for the creation of a competitive gas market, the increase of the system’s flexibility and

market integration.

From Bulgaria - Village Losents

Passing through Bulgarian-Turkish border in the region of the village

of Strandja

Connected to Turkey (Malkoclar)

Natural Gas

Source Caspian Region; LNG and other entering Turkish system

Technical

Information:

Bulgaria

Length: 76 km



Turkey

Length: 130 km

Diameter: (-)

Capacity: 97 GWh/day (approx. 3.0 bcm/year)

Investment Cost (-)

Construction

Start (-)

Completion % as

of today (-)

Expected

Commissioning

Year

2020

Note/Other

Information

2010: Memorandum of Understanding between the Ministry of Economy, Energy and Tourism

of the Republic of Bulgaria and the Ministry of Energy and Natural Resources of the Republic

of Turkey on Comprehensive Cooperation in the Field of Energy;

2012: Joint Declaration of the Minister of Energy and Natural Resources of the Republic of

Turkey and the Minister of Economy, Energy and Tourism of the Republic of Bulgaria on

Energy Cooperation; and

2014: a Memorandum of Understanding between the Ministry of Economy and Energy of the

Republic of Bulgaria and the Ministry of Energy and Natural Resources of the Republic of

Turkey, concerning the ITB project

This Project is no longer considered a PCI.

13. Interconnection Croatia/Serbia

Project Name Interconnection Croatia/Serbia

Cluster

Promotor/

Partner

Plinacro

Srbijagas

Country

Croatia

Slobodnica-Sotin (HR)-Bačko

Novo Selo (RS) TYNDP TRA-N-070

PMI Gas_10

Serbia

76

Bačko Novo Selo - Futog (-)

Short

Description of

Project

Covering Croatia and Serbia, connecting the Croatian gas transmission system to the Serbian gas

transmission system Slobodnica: Sotin (Croatia) – Bačko Novo Selo (Serbia). It will be a new

interconnection, providing a new entry point and transmission route for the needs of Serbia. It will

be a Security of Supply and a diversification of supply route for Serbia. It will enable Serbian

access to Croatian UGS and enable supply of gas from Austria, Slovenia and Italy by the Croatian

gas transmission system.

From Croatia - Slobodnica

Passing

through Croatia/Serbia border (Sotin, Bačko Novo Selo)

Connected to Serbia - Futog

Natural Gas

Source Caspian Region, LNG Croatia, Croatian UGS, Gas from Croatian transmission system

Technical

Information:

Croatia

Length: Slobodnica – Sotin 97 km, Sotin – Bačko Novo Selo 5 km



Serbia

Length: Bačko Novo Selo – Futog 45 km


Capacity: 32,8 GWh/day (1,2 bcm/year)

Investment

Cost

Croatia: Slobodnica-Sotin EUR 77.6 million, Sotin-Bačko Novo Selo EUR 10 million;

Serbia: (-)

Construction

Start (-)

Completion %

as of today (-)

Expected

Commissionin

g Year

2023

Note/Other

Information

14. TESLA (Greek and Macedonian pipeline segment)

Project Name TESLA Cluster

Promotor/

Partner

Greece – DESFA S.A.

FYROM – GA-MA-Skopje

77

Country

Greece

Greek part of Tesla project TYNDP TRA-N-631 PCI - N/A

FYROM

Macedonian part of Tesla project TYNDP TRA-N-582 PCI - N/A

Short

Description of

Project

The project consists of the construction of a pipeline and three compressor stations within the

territory of Greece, from the GR/TK border to the GR/MK border. The project is part of a greater

project (TESLA project), planned to transport natural gas from the planned Turkish Stream (RU-

TR) to Central and Eastern Europe via Greece, Macedonia, Serbia, Hungary and Austria as well

as Italy.

From Greece – Kipi

Passing

through Greece/FYROM border

Connected to Sopot – FYROM/Serbia border

Natural Gas

Source Caspian Region, Russia

Technical

Information:

Greece

Length: 370 km


Capacity: 993 GWh/day (approx. 36 bcm/year)

Macedonia

Length: 180-200 km



Investment

Cost (-)

Construction

Start (-)

Completion %

as of today (-)

Expected

Commissioning

Year

2019

Note/Other

Information

The other interconnection between Greece and FYROM (section Nea Messimvria –

Evzoni/Gevgelija – Stip) was considered on the PMI List 2016 as “Gas_04B/FYR of Macedonia –

Greece Interconnector” with the following technical information: length 160 km, pipe diameter DN

700 (28 inch) and capacity 76,4 GWh/day (approx. 2,8 bcm/year)

15. TESLA (Hungarian part)

Project Name TESLA Cluster

Promotor/ FGSZ ltd

78

Partner

Country

Hungary

Hungarian section of Tesla

project TYNDP TRA-N-585 PCI – N/A

Short

Description of

Project

The main aim of the Tesla project is to transport natural gas from the planned Turkish Stream (RU-

TR) to Central and Eastern Europe via Greece, Macedonia, Serbia, Hungary and Austria. The

Hungarian section is part of the TR-GR-FYROM-SRB-HU-AT corridor. The main flow direction

is from

Turkey to Austria; but, accoridng to EU rules; however, a reverse flow (from Austria to Turkey)

with the same capacity as the main flow direction is planned.

From Hungary/Serbia border

Passing

through Hungary

Connected to Hungary/Austra border

Natural Gas

Source Caspian Region, Russia

Technical

Information:

Hungary

Length: 361 km



Investment

Cost (-)

Construction

Start

(-)

Completion %

as of today

(-)

Expected

Commissionin

g Year

2020

Note/Other

Information

There is any Data for the Serbian part of TESLA project in the TYNDP 2017.

79

However, GASTRANS LTD Novi Sad (Gastrans LTD.), incorporated in accordance with the laws

of the Republic of Serbia for the business activity of a transmission pipeline is contemplating the

construction of a pipeline for the transmission of natural gas in the territory of the Republic of Serbia,

which will, through two interconnector points, be connected with neighboring systems for natural

gas transmission in Bulgaria and Hungary, and in the territory of the Republic of Serbia with the

system of competent transmission system operator in the Republic of Serbia (hereinafter referred to

as: the pipeline). The anticipated commercial operation date is 1 October 2019; however, this date

is subject to change. The current design of the pipeline contains one entry point at the Serbian-

Bulgarian border (location of the territory of the municipality of Zaječar), and four exit points: (i)

the first near the town of Paraćin, Paraćin Municipality, the Republic of Serbia; (ii) the second near

the City of Pančevo, the Republic of Serbia; (iii) the third near Gospođinci, Žabalj Mmunicipality,

the Republic of Serbia, (iv) and the forth exit point at the Serbian –Hungarian border (location near

town of Horgoš, at the territory of the the Municipality of Kanjiža). Considering the construction of

the described pipeline, Gastrans LTD has assessed that the implementation of the project is possible

only under the condition of exemption of the pipeline from the regulatory requirements; on 2

February 2018, Gastrans submitted to the Energy Agency of the Republic of Serbia a request for its

exemption from obligations of: (i) organizing a transmission system operator (the operator’s

unbundling), (ii) regulated third party access, and (iii) applicability of regulated prices.

For the purpose of determining the demand of the natural gas market and the characteristics of the

pipeline more precisely and in line with the Decision no. 40/2018-Д-03/1 of AERS (which is

published on the website http://www.aers.rs/), Gastrans LTD announced a non-binding capacity

reservation market test public invitation on 5 March 2018. Nine companies applied for the

nonbinding capacity reservation of the new gas-transport system that Serbia is developing from the

Bulgarian to the Hungarian border (www.energetika.ba).

16. Turkish stream

Project Name Turkish stream Cluster

Promotor/Partner Gazprom

Country Russia

TYNDP - NO PCI N/A Turkey


Project

The Turkish Stream will directly connect the large gas reserves in Russia to the Turkish gas

transportation network and provide energy supply for Turkey, South and Southeast Europe.

The offshore component of the system will be constructed by PAO Gazprom. The offshore

pipeline will consist of two parallel pipelines running through the Black Sea. The pipelines

will enter the water near Anapa, on the Russian coast, and come ashore on the Turkish coast

some 100 kilometers west of Istanbul, near the village of Kıyıköy. From Kıyıköy, an

underground pipeline will be developed to connect the Turkish Stream to the the existing

80

network at Luleburgaz. The route will continue from there to its end point at the Turkish-

European border.

From Russian compressor station near Anapa, Krasnodar Krai, Russia

Passing through Black Sea

Kıyıköy, Turkey

Connected to Lüleburgaz, Kırklareli Province, Turkey

Natural Gas Source Russia

Technical

Information:

Length: 1090 km (930 km Offshore)

Diameter: 800 mm (32 inch) two parallel pipes

Capacity: 31,5 bcm/year

Investment Cost EUR 11.4 billion


Completion % as of

today 62 % (Offshore section)

Expected


Note/Other

Information

Documents

REPORT No. 1 REVIEW OF TRANS-EUROPEAN AND …