Saudi-led JV to build Bulgaria section of TurkStream

04 April 2019, Week 13, Issue 493

A Saudi-led JV offered the lowest bid in a tender to build a gas pipeline in Bulgaria that will be a spur of Russia’s TurkStream project. 

Saudi Arabia’s Arkad Engineering, in partnership with an Italy-based JV between Arkad and ABB, bid 1.1 billion euros (US$1.24 billion) to build the 474-km stretch of pipeline by the end of 2020. It also proposed an alternative option that would see it complete the job within eight months – by the end of 2019 – for 1.29 billion euros (US$1.45 billion). 

Negotiations between the preferred bidder and state-run Bulgartrangaz will proceed from here. The scope of the work has yet to be reported. 

The two other bids in the tender came from Hungary’s MOL and from a consortium comprising Italy’s Bonatti, Germany’s Max Streicher and a Luxembourg-based unit of Russia’s TMK. 

Bulgaria wants to create a regional gas hub at Varna near the Black Sea coast. Russia has built TurkStream across the Black Sea and overland across western Turkey to the Bulgarian border. From there, it wants to construct pipelines into Central and Southeast Europe in order to bypass Ukraine as a route for its gas and also to compete with the Southern Gas Corridor (SGC). The SGC is due to start pumping gas from Azerbaijan to Europe in 2020. 

Russia opted for TurkStream in 2014 after the EU rejected its South Stream gas pipeline project because Moscow would not accept EU rules for third-party access. Russia is still insisting that Brussels provide it exemptions before it proceeds with construction, but EU officials have stated that the regulations will continue to apply. 

Russia has built two strings of the TurkStream system to Turkey, each with a capacity of 15.75 bcm per year. One string will supply Turkey with gas that has until now been routed through Ukraine. 

Meanwhile, Bulgartransgaz has received around 27 million euros (US$30 million) from the European Commission for the modernisation and expansion of the Bulgarian gas transmission system. 

The funding is to cover supply, construction and commissioning of two sections of pipeline in northern Bulgaria and also construction supervision activities. The rehabilitation of the pipelines is intended to ensure secure and reliable natural gas transmission in the region. 

Work will be carried out in Bulgaria’s northern semi-ring system covering a total length of around 81 km. One section connects PF Beglej-VA Dermantsi-VA Batultsi-VA Kalugerova, a distance of around 51 km. The other section runs between PF Valchi Dol-VA Preselka, and stretches around 23 km. 

In related news, the EC has announced funding of 33 million euros (US$37 million) for the construction of the 182-km Interconnector-Greece-Bulgaria (IGB) project. The pipeline will connect with the SGC and pave the way for Azeri gas to enter Bulgaria and be transmitted onwards to Greece. 

Edited by

Ryan Stevenson

Managing Editor

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