UPDATE 1 - ICGB signs deals for pipe supply, construction of Greece-Bulgaria gas link

The construction of the 123-km section of the interconnector on Bulgarian soil will begin next year, the energy ministry said in a statement.

In May, the ICGB project company picked Greece's J&P-Avax to buid the gas link for 144.8 million euro ($162.6 million), while Corinth Pipeworks Industry was selected to supply line pipes worth 58.2 million euro for the project.

Earlier on Thursday, the European Investment Bank (EIB) said that it will provide a 110 million euro ($121 million) loan to state-owned Bulgarian Energy Holding to fund part of the ICGB project, which will also help establish a link with the Trans Adriatic Gas Pipeline (TAP).

"The project is a key part of the strategy for greater integration of European energy markets focusing on the Bulgaria-Greece, Bulgaria-Romania and Romania-Hungary interconnections," the EIB said in a statement.

In August, Bulgaria issued a state guarantee for the loan.

The project is supported and co-financed by the European Union. The ICGB is included in the list of Projects of Common Interest (PCI), which includes key cross border infrastructure projects that link the energy systems of EU countries.

The gas link will connect the Greek gas transmission system in the area of Komotini to the Bulgarian gas transmission system in the area of Stara Zagora.

The planned length of the gas pipeline is 182 km and the projected capacity will be up to 3 billion cu m per year in the direction from Greece to Bulgaria. Depending on interest from the market and the capacities of the neighbouring gas transmission systems, the capacity of the pipeline can be increased to up to 5 billion cu m per year, thus allowing for physical reverse flow from Bulgaria to Greece with the additional installation of a compressor station.

The project is being implemented by the joint venture company ICGB, in which BEH and Greece-registered IGI Poseidon hold equal stakes. Greek public gas corporation DEPA and Italian energy group Edison own 50% each of IGI Poseidon.

($ = 0.9067 euro)