Memorandum of Understanding signed in support of the Solidarity Ring – the joint initiative of regional gas TSOs
2023. 04. 25.
The ministers of Bulgaria, Romania, Hungary, and Slovakia, together with the minister of Azerbaijan signed a Memorandum of Understanding (MoU) in Sofia today for encouraging cooperation among the relevant gas transmission system operators in their efforts to ensure diversification of supply routes that could facilitate the transport of additional gas from Azerbaijan to the EU. The European Commission was also present at the event.
The MoU supports the realization of the Solidarity Ring transmission corridor – the joint initiative of Bulgartransgaz, Transgaz, FGSZ, Eustream aiming to offer additional natural gas transmission capacities on the TSOs’ networks. In a short-time and with incremental capacity improvements to the existing infrastructure, this truly cross-border initiative could transport up to 5-9.5 bcm/y of gas from Azerbaijan to Eastern, Central and Western Europe via Bulgaria, Romania, Hungary, and Slovakia. The total estimated investment cost of the initiative is ~730 mn EUR, and it could be realized by the end of 2026 with necessary EU financial support.
The joint initiative – also in line with the EU’s energy priorities, such as the REPower EU Plan and the EU-Azerbaijan strategic cooperation agreement – was announced and presented to the European Commission by the four TSOs in September 2022. The initiative had been reviewed and encouraged by the President of the European Commission and DG ENER. At the EU’s Central and South Eastern Europe energy connectivity (CESEC) meeting in Brussels on 19 April 2023, the involved gas TSOs introduced the initiative in detail to the EC which welcomed the cooperation of the TSOs.
As a next step, TSOs agreed to follow the phases described in the Commission Regulation (EU) 2017/459 (CAM NC), starting with a non-binding market survey as a first step, conducted immediately after the annual yearly capacity auction in July 2023. After that, the TSOs will jointly prepare documentation for the alternative allocation mechanism procedure that first has to be submitted to the relevant national regulatory authorities for approval. Such open season procedure is a necessity to assess commercial interest and implement infrastructural developments.
Szabolcs I. Ferencz, Chairman-CEO of FGSZ Ltd.:
FGSZ Ltd., responsible for the Hungarian part of the initiative, welcomes the MoU and its support for the Solidarity Ring, a possible alternative route for gas supplies. The proposed corridor has numerous advantages: the project planning is already well-advanced, it is doable in 3 years with limited advancements to the existing gas transmission system, which would mean a reasonably cost-efficient realization. Today’s MoU underlines the strong political commitment of the involved parties, so we hope that the European Commission will provide financing for an initiative that would significantly contribute to enhancing the otherwise vulnerable region’s gas supply situation. Together with our regional partners and Socar, we have been working to ensure that the natural gas transmission infrastructure fully supports the entry of more Azeri natural gas into the EU market.