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Bulgaria signs 1.1 bln euro gas pipeline construction deal with Arkad

Bulgaria signs 1.1 bln euro gas pipeline construction deal with Arkad Denys Prykhodov/Shutterstock.com

SOFIA (Bulgaria), September 18 (SeeNews) - State-owned Bulgaria's gas transmission operator Bulgartransgaz said on Wednesday it has signed a 1.1 billion euro ($1.2 billion) contract with Saudi-led consortium Arkad for the construction of an extension of Gazprom's TurkStream pipeline toward Serbia.

The project which is of significant importance to the Bulgarian state will be implemented in two stages within a 615-day period, Bulgartansgaz said in a statement. 

In the first stage 308 km of the pipeline's length will be built, from Polski Senovets compressor station westward to the border with Serbia, within a 250-day period. In the second stage, the contractor will build the remaining 166 km, from Polski Senovets to the village of Zlatina in eastern Bulgaria.

The extension of the gas network infrastructure will improve the energy security of the countries of Southeast Europe, Bulgartransgaz noted. 

Works on the project also include delivery of the necessary equipment and materials as well as design.

Bulgartransgaz and Arkad consortium signed the contract two days after Bulgaria's Supreme Administrative Court dismissed the case against a decision by the country's competition authority to reinstate Saudi-led consortium Arkad as winner in the tender for construction of the gas pipeline.

On September 16 the court said that it was closing the case as the Bulgarian branch of Luxembourg-registered Completions Development had withdrawn its appeal against the regulator's decision. A consortium comprising Completions Development and Italy-registered Consorzio Varna 1 unsuccessfully bid for the contract. The court would have carried on with the legal proceedings only if all members of that consortium had agreed on the complaint.

Bulgartransgaz signed the gas pipeline construction deal with reinstated winner Arkad even though the Supreme Administrative Court said its ruling can be challenged before its five-member bench within a seven day period. 

The gas transmission operator originally named Arkad group as winner of its tender for construction of a 484 km pipeline for transit of gas from the border with Turkey to the border with Serbia but subsequently dropped its choice and named as winner the second-ranked consortium comprising  Completions Development and Consorzio Varna 1. Bulgartransgaz said it had revised its decision because Arkad had failed to submit the required documents and sign the contract. 

In July, the competition regulator cancelled Bulgartransgaz' decision to disqualify the original winner and said that the gas transmission operator had been unlawfully holding parallel talks with the second-ranked bidder. Subsequently, the consortium Consorzio Varna 1 - Completions Development offered a price discount for the construction of the pipeline in violation of legal requirements, the regulator said at the time.

Arkad had proposed to build the pipeline for 1.29 billion euro within 250 days, or for 1.10 billion euro within 615 days. The Consorzio Varna 1 - Completions Development group initially offered to build the pipeline for 2.41 billion euro and 1.60 billion euro, respectively, but subsequently lowered its offer for the 615-day period to 1.10 billion euro.

At the end of January, Bulgartransgaz successfully completed the binding Phase 3 of the economic test for the pipeline project - part of a larger project of Russia's Gazprom to build a string of its TurkStream pipeline for transit of gas to Europe from Turkey via Bulgaria, Serbia and Hungary.

The offshore section of the TurkStream pipeline stretching 930 km across the Black Sea from Russia to Turkey consists of two parallel strings with annual throughput capacity of 15.75 billion cubic metres of gas each. One string is intended for consumers in Turkey, while the second will carry gas to customers in Europe through Bulgaria.

($ = 0.90486 euro)

 

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