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New step towards the implementation of the Arad-Szeged pipeline

FGSZ and Transgaz signed a Development Agreement

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At Arad FGSZ Zrt. and Transgaz signed a new contract, a so-called Development Agreement on July 1, 2008. The Hungarian and the Romanian company signed the Memorandum of Understanding (MOU) in January 2008 for the inter-connection of their natural gas transmission systems in order that, as the energy companies of the neighbouring EU-member states, they can ensure compliance with the provisions of both the EU Directive (67/EC) and the legal environment of the two countries, respectively. The recently signed document specifies the terms and conditions for the cooperation regarding the project implementation, as well as the structure of guarantee between the contracting parties.

The parties agreed in the said document that FGSZ Zrt. would construct the pipeline section in Hungary, whereas Transgaz would be responsible for constructing the section in Romania. The parties will finance the construction costs for the relevant sections, respectively. The pipeline first will transmit natural gas from Hungary towards Romania, but the parties did not exclude the possibility for securing the technical conditions for a potential reserve flow either.  FGSZ Zrt. and Transgaz intend to prepare and sign two more contracts regarding the operations and selling the transmission capacity of the pipeline.

The new pipeline will have the following technical parameters: in the territory of Romania the total length of the pipeline will be 61,7 km (of this 36,7 km has already been completed), with 700 mm nominal diameter. In the territory of Hungary the total length of the new pipeline will be 47 km. The CAPEX planned for the development project in Hungary is 9 bn HUF.

The purpose of the agreement is, similarly to NETS project, to improve the security of supply, and to diversify the routes and sources of gas supply.


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