Wednesday, November 25, 2020
Home Oil & Gas BRUA pipeline to face difficulties due to stalled Black Sea gas project

BRUA pipeline to face difficulties due to stalled Black Sea gas project

Romanian Economy Minister Virgil Popescu, quoted by Hungarian state news agency MTI, said that two Hungarian companies that reserved the total capacity of 4.4 billion cubic metres (bcm) at the Romanian-Hungarian interconnection in 2018 withdrew from the project. The enlargement of the interconnector is part of the EU-backed BRUA pipeline project, which faces uncertainties due to Romania’s delayed offshore gas projects in the Black Sea.

Talking about the construction of the so-called BRUA gas pipeline connecting Bulgaria, Romania, Hungary and Austria, the Minister expressed his conviction that the pipeline will be built as originally planned and emphasised that the infrastructure development will be crucial to transport natural gas from Azerbaijan as well as US and Qatari liquefied natural gas (LNG) from the ports of Greece to Europe.

Regionally, BRUA forms part of the Southern Gas Corridor, intended to bring greater energy security across Europe by diversifying the regional gas supply. At a national level, the project would enable Romania to import additional gas when required as well as an opportunity to export gas tapped from Romania’s Black Sea field, once developed.

Romania’s gas grid operator Transgaz will likely complete the Romanian section of the BRUA pipeline this year, but with no progress on the Neptun offshore project, it may have little to transport. Moreover, it may increase the price of gas as an official from the Romanian energy regulator, the National Authority for Energy Regulations (ANRE) recently highlighted.

However, according to Mr Popescu, it is mainly the delays at the construction of the Greek-Bulgarian interconnector that sets back the progress of the BRUA pipeline, not the complications of the development of the Black Sea project.

The pipeline has been designed to be able to provide reverse flow to both Bulgaria and Hungary as required by market demands. The first phase of the project enables a reverse flow of 1.5 bcm per year at the Bulgarian border and 1.75 bcm per year at the Hungarian border of Romania, while the second phase would increase this capacity to 4.4 bcm annually at the Hungarian border by late 2020.

The Romanian and Hungarian gas grid operators, Transgaz and FGSZ, were expecting to allocate capacity on the Arad-Csanadpalota interconnector from 2020 onwards. However, as Mr Popescu explained, the second phase of the infrastructure development depends largely on the economic test. The Minister pointed out that the two Hungarian companies which previously booked capacities at the interconnector stepped back, therefore the procedure had to be restarted.

Hungary aims to connect its gas network to the Southern Gas Corridor and buy 1-2 bcm of gas from Azerbaijan from 2023. The country also has a vested interest in the success of Black Sea offshore gas projects and hopes to see progress on the development project soon.

Speaking about the Romanian offshore law allowing the extraction of natural gas under the Black Sea, Minister Popescu explained that the amendment shouldn’t be expected this year because there is no consensus between the parties in parliament.

“The current parliament is not functioning properly to reach conclusions on this issue. This is understood by investors, who expect a political majority to emerge after the parliamentary elections at the end of the year that will be able to change the legislation,” said the Minister.

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