Greece, Bulgaria, Romania, Hungary agree to boost gas grid interconnections

(Reuters) - Greece, Bulgaria, Romania and Hungary agreed to upgrade the interconnection and transport capacity of their gas grids, part of their long-standing efforts to diversify gas sources and boost their role in Europe's energy supply chain.

In 2016, the four countries agreed to develop the necessary infrastructure for the realisation of the so-called Vertical Gas Corridor, which will enable bidirectional gas flows from Greece to northern Europe, through Bulgaria, Romania and Hungary.

After Russia cut gas supplies to Europe in the wake of the war in Ukraine, European countries have been looking for alternative gas suppliers and have been pursuing energy cooperation more actively.

Under the memorandum of understanding signed on Thursday on the sidelines of a liquefied natural gas (LNG) conference in Athens, Greece's DESFA, Bulgaria's Bulgartransgaz, Hungary's FGSZ and Romania's SNTGN Transgaz agreed to begin talks on regulatory and economic aspects of the corridor, DESFA said in a statement.

The agreement will last three years with the option to be extended by one more, it added.

"(It) is an important step towards the implementation of the Vertical Corridor, a project that will significantly contribute to the supply security of the wider region," Chief Executive of DESFA Maria Rita Galli said in the statement.

She added that it will further strengthen Greece and the wider region's role in energy.

ICGB, the owner of a second gas link between Greece and Bulgaria (IGB) - a key part of the Vertical Gas Corridor which began operations this year - and Gastrade, the developer of a floating storage and regasification unit off the northern Greek port of Alexandroupolis, also signed the agreement on Thursday.

IGB will become more important once its maximum annual capacity of 3 B cubic meters rises.

"In coordination with DESFA, we have the opportunity to increase this capacity (to) up to 5 B cubic meters per year," two senior executives at ICGB said, adding this should happen along with the commissioning of the LNG terminal off Alexandroupolis due in 2024.

Greece has started exporting gas to Bulgaria, which was cut off from Russian supplies earlier this year after refusing to pay in Russian roubles.

The latest development fits well with Greece's plans to become a major transit route for liquefied gas in Europe.

This year, Athens has more than halved its imports of Russian gas, instead ramping up deliveries of LNG, mainly from the United States and Egypt, to its sole LNG facility at Revithoussa near Athens.

(Reporting by Angeliki Koutantou; Editing by Susan Fenton)

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