New MoU on the Vertical Corridor between Gas TSOs from Greece, Bulgaria, Hungary, and Romania

On December 1st, 2022, in Athens, a Memorandum of Understanding (MoU) was signed between DESFA (Greece), Bulgartransgaz (Bulgaria), FGSZ (Hungary), Transgaz (Romania), ICGB (Bulgaria) and Gastrade (Greece) with the purpose of their cooperation for the realisation of the Vertical Corridor, which will enable bi-directional flows of natural gas from North to South and from South to North.

The signing of the MoU took place in the context of the 22nd World LNG Summit organised in Athens hosted by DESFA, under the auspices of the Ministry of Environment and Energy from 29 November to 2 December 2022.

The new MoU on the Vertical Corridor was signed on behalf of SNTGN Transgaz SA by Ion Sterian, Director General, on behalf of Bulgartransgaz by Vladimir Malinov, Executive Director, on behalf of FGSZ by János Fehér, Member of the Board, on behalf of DESFA by Maria Rita Galli, Chief Executive Officer, on behalf of ICGB by Georgios Satlas, Executive Officer and Teodora Georgieva, Executive Officer. On behalf of Gastrade of Greece, the MoU was signed by Konstantions Sifnaios, Vice President and Managing Director.

The Memorandum of Understanding on the Vertical Corridor was initially signed in 2019 between the system operators of Romania – SNTGN Transgaz, Bulgaria – Bulgartransgaz, Hungary – FGSZ, Greece – DESFA, as well as ICGB – the company operating the Greece-Bulgaria Interconnector – IGB, after the relevant ministries of Greece, Bulgaria, Romania, Hungary have signed a Joint Statement by the Ministers of Energy for the natural gas ‘Vertical Corridor’ during the CESEC meeting held in Budapest in September 2016.

The signatories agreed to cooperate to realize the South-North natural gas corridor, called the Vertical Corridor, interconnecting the networks of Greece, Bulgaria, Romania, and Hungary, enabling bi-directional flows of natural gas. To achieve this objective, the companies agreed to investigate the technical requirements in the form of new connections, pipelines, interconnectors, or enhancements of the national networks, to harmonize the planned developments in the region taking into consideration the relevant CESEC expectations, and to invest reasonable efforts into achieving a nonexclusive long­term partnership and that they are willing to mutually cooperate during the preparation of developments of GR-BG-RO-HU pipeline systems.

Another very important element of the Memorandum is the provision that this MoU as a basis for intensified future cooperation in terms of analysis of the possibility of constructing the necessary gas infrastructure for the purpose of transmission of natural gas to the transiting countries and beyond to the EU market from Greece via Bulgaria, Romania to Hungary and vice versa.

In the new Vertical Corridor MoU signed in Athens, the Parties might consider the involvement of non-EU countries if such case is relevant for the implementation of the targeted Vertical Corridor, and express commitment in promoting PCI and other necessary projects jointly or individually, which highly strengthen the realization of the Vertical Corridor, including, but not limited to: GR projects, BG projects, RO projects and HU projects. The updated document states that the signatories intend to harmonize the planned developments in the region taking into consideration the relevant CESEC expectations, EU energy strategies and policies and regional aspects.

The Memorandum of Understanding on the Vertical gas Corridor will be valid for 3 years since the day of its signature, with the possibility to be automatically extended for one more year.

“The MoU signed today is an important step towards the implementation of the Vertical Corridor, a project that will significantly contribute to the supply security of the wider region and will further strengthen the role of Greece and the region of SE Europe in the energy map. Reflecting on the current energy landscape, the geographical positions of the four countries and specifically Greece strategic role as a gas entry for LNG imports, we fully share the commitment to coordinate the actions of the infrastructure operators of the region for the establishment of flexible regional gas systems and interconnections, towards the target of a single European market,” DESFA CEO, Maria Rita Galli, stated.

“Our common actions are important not only to the EU member states, but also to the Contracting Parties to the Energy Community. Bulgartransgaz EAD’s projects, currently underway – the expansion of the underground gas storage facility Chiren and the Interconnection Bulgaria – Serbia, are of paramount importance to achieve the objectives of the Memorandum. Together with the planned projects for the increase of gas transmission capacities from Greece to Bulgaria and from Bulgaria to Romania and North Macedonia, they will ensure additional diversification of the natural gas supplies for the country and the region, will guarantee the energy supply, and will boost the competition,” Bulgartransgaz Executive Director, Vladimir Malinov, commented.

In his turn, Ion Sterian, Director General of SNTGN TRANSGAZ SA stated: “Transgaz has been a constant, vocal, and solid supporter of the Vertical Corridor. We have proven this by honouring our commitments and cultivating the spirit of dialogue. At the same time, Transgaz has always believed in the synergy of the Technical System Operators of Greece, Bulgaria, Romania, Hungary, which can jointly create a significant impact in enhancing the energy security of not only the countries of origin of each of the TSOs, but also of the region and even of the European Union. A coordinated development of these countries’ systems, as well as a coordinated development of the interconnection capacities, can transform the region and Europe in terms of gas supply security and enable us to become a pole of economic development for Europe.”

“The ministerial decision and commitment on the realization of the Vertical Corridor back in 2016 in Budapest has reached a new level with the signature of the Memorandum of Understanding today. FGSZ has been working on the Hungarian elements of the project since then, the already realized capacity increase at the Romania-Hungary interconnection point is also part of it. FGSZ continues to work further on the planned elements of the Vertical Corridor that will increase the possibilities to reaching alternative sources and enhancing security of supply in our region, at a time when Europe needs it even more than ever,” János Fehér, member of the Board of Directors of FGSZ, noted.

ICGB Executive Officers Teodora Georgieva and George Satlas emphasized the need for close cooperation between the countries of the region to improve energy connectivity and secure more sources of gas supplies. “In the context of the changed energy and security environment in the region, cooperation on the development and construction of new energy projects to guarantee diversified sources of gas becomes a top priority. We recognize the serious efforts that are being made at the national and European level in terms of improving energy connectivity and achieving energy independence through diversification,” said Georgieva and Satlas during the event. They highlighted the opportunities for development of the Vertical Gas Corridor after the successful commissioning of the gas interconnector, contributing to energy security and sustainability within the region. According to them, the role of IGB in this aspect will be even more significant when the total capacity of the pipeline increases. “Currently, the interconnector Greece – Bulgaria has a maximum total capacity of 3 billion cubic meters per year. In coordination with DESFA, we have the opportunity to increase this capacity up to 5 billion cubic meters per year, which should happen in sync with the commissioning of the LNG terminal at the Greek city of Alexandroupolis, expected in 2024,” added the two ICGB Executive Officers.

“Gastrade is happy to be part of this important initiative. We look forward to working together with our partners in accelerating the integration of our markets and enabling our system users to enjoy a seamless gas transportation corridor. The development and enhancement of the Vertical Corridor will ensure more optionality, greater liquidity and will strengthen the security of affordable energy supply,” the Managing Director of Gastrade Kostis Sifnaios stated.

Bulgartransgaz is the owner and system operator of the natural gas transmission network in Bulgaria and is as such responsible for the control and management of the network, its maintenance, development, construction, and connection to other natural gas transmission networks.

DESFA is the owner and system operator of the natural gas transmission network and the Revithousa LNG terminal (hereinafter the National Natural Gas System – NNGS) in Greece and is as such responsible for the control and management of the NNGS, its maintenance, development, construction and connection to other natural gas transmission networks and LNG facilities.

FGSZ is the owner and system operator of the natural gas transmission network in Hungary and is as such responsible for the control and management of the network, its maintenance, development, construction, and connection to other natural gas transmission networks.

Transgaz is the system operator of the natural gas transmission network in Romania and is as such responsible for the control and management of the network, its maintenance, development, construction, and connection to other natural gas transmission networks.

ICGB is the owner and the independent transmission system operator of the Gas Pipeline Interconnector Greece – Bulgaria (IGB), which connects the Trans Adriatic Pipeline (TAP) as well as the natural gas transmission network of Greece near the town of Komotini with the Bulgarian transmission network near the town of Stara Zagora and as such is responsible for the management, operation, and maintenance of the IGB gas pipeline.

Gastrade is the owner, developer, and future operator of the offshore LNG Terminal in Northern Greece, Alexandroupolis, an Independent Natural Gas System in the Hellenic Republic which will be connected to the National Natural Gas Transmission System of Greece operated by DESFA and is as such responsible for the construction and commissioning s, its development, operation, management, and maintenance.

The project is to become a new energy gateway and play a key role in the energy security and independence of Greece and South-Eastern Europe. Gastrade will contribute decisively to the smooth energy transition of this region. The floating storage and regasification unit at Alexandroupolis is expected to start operations by the end of 2023. Its contracted regasification capacity has already reached up to 60% of its technical capacity of 5.5 bcm per year.

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