ROMANIA / VALENTIN KUNEV (BBSPA): WITH GAS PROJECTS, IT IS ABOUT EVOLUTIONARY RATHER THAN REVOLUTIONARY CHANGES


30.06.2018
Balkan and Black Sea Petroleum Association BBSPA held recently its annual conference in Bucharest, a two days event with over 20 high class speakers and most of the relevant corporate and state players operating in the region. We discussed with Valentin Kunev, Executive Director with Balkan and Black Sea Petroleum Association, BBSPA, about the main takeaways of the conference and also about the South Gas Corridor – a focal point for all of the individual gas projects in the Black Sea.

Dear Mr. Valentin Kunev, please tell us a few words about the association, for those who are just now discovering it. Which are the most relevant members and what are its main objectives and actions taken in order to achieve these objectives?

BBSPA was founded in 1995 as a non-governmental and non-profit organization. The association facilitates regional oil and gas market development, liberalization and diversification, information exchange and promotes regional projects, business opportunities and encourages investments.

It brings together the main oil and gas and energy companies in the Balkan region, together with major multinational firms, interested in the region. Members of the Association are Romgaz – major gas producer in Romania and in the region, Bulgartransgaz – gas operation of the gas transmission system of Bulgaria, British Petroleum – shareholder in all project for gas supply along South Gas Corridor, Gazprom Schweiz – gas supplier of Russian gas for the region, Total – international oil company with exploration activities in the Black Sea, Anadarko – international oil and gas exploration and production company. Recently the association was joined by ILF Consulting Engineers – international engineering company involved in gas infrastructure projects in the region. The association provides a forum for formal and informal exchange of information and views and facilitates discussion and debate on the issues of the energy sector in the region through its annual conferences and meetings.

We try to facilitate the improvement of investment climate in the petroleum industry and the implementation of business ethics and good practices according to international standards. The Association is observing regional energy markets, publishes market reports and supports web-hosted data base available for the members of the association.

Back to the South Gas Corridor, an umbrella concept for many individual gas projects, now in different stages of implementation. What is essential to know about the South Gas Corridor, and how do you find this concept useful for O&G companies, on one hand, and for the national and EU officials, on the other hand?

South Gas Corridor is a key project, or, as you said, an umbrella or a succession of gas supply projects, including Shah Deniz 2 gas field development in Azerbaijan, South Caucasus Pipeline in Georgia and Azerbaijan, TANAP in Turkey and TAP in Greece, Albania and Italy. It is a huge effort involving several projects, countries and companies along the way of the gas from Azerbaijan to Europe which will diversify gas supplies. It will bring alternative supplies to Europe and the Balkans and will help development of competitive markets.

O&G companies can benefit in various phases of the implementation of the projects from engineering work to construction and operation. The functioning of the new infrastructure itself will open competition, unblock access for new supplies and players and will increase market liquidity. Gas trade and gas market liberalization will be possible following the diversification of gas supplies. Investment climate will be improved and more companies will find the region attractive to invest. National and EU officials will benefit from improving security of supply, when countries and EU will reduce dependence on a dominant supplier. Alternative supplies will improve security of supply and competition will improve quality of service. Gas prices will follow market realities of demand/supply and competition, rather than non-inherent factors like political or geopolitical context.

O&G industry in the region is at the same time a field of cooperation for the neighboring countries, but also a battle arena for divergent interests, as each of these countries projects itself as a major energy hub in the region. How do you see these interests unfolding in relation with the gas pipelines projects, and with what impact on specific projects?

Gas hubs are created to be in favor not only for the country, which would develop the hub, but first of all for all other countries and players which would like to use the hub. A country can be interested in developing a hub, but in order to achieve this goal, it has first of all to follow the interests of others. In order to develop a gas hub, you have to start with the interests of others and if you will succeed in this, then you will be successful following your own interest.

From this point of view, it is not significant where the hub will be developed, if it will equally respond to the interests of all parties and facilitate the wholesale gas trade. The gas hub will be a product of free and voluntary, not imposed actions of gas traders. The projects, which will bring diversification of supply, like TAP, Greece-Bulgaria interconnection and BRUA, will facilitate the development of a hub as they will bring diversification and competition. Competition and more players are needed for a hub to create a margin for gas traders. A vital and real hub is considered when the gas volumes change hands frequently among a sufficient number of players.

Besides geo-strategic reasons, such as reducing dependency on gas imports, these projects must rely on strong cross-border gas flows in the region. What is the situation at present, and what are the foreseeable prospects in this respect?

The above projects will modify the cross-border gas flows and supply patterns to meet the needs for supply diversification. The new gas infrastructure will trigger news supply options and the new capacity allocation platform, being implemented recently for equal, non-discriminatory, competitive and transparent capacity booking, will allow further boosting of market liberalization.

We are well aware of some big projects which have been cancelled in recent years. What are the most promising gas pipeline projects, in your view? Why? Are they all feasible?

The most promising gas pipeline projects are the above-mentioned TAP, Greece-Bulgaria Gas interconnection and BRUA. These projects will foster regional market integration, competition and liberalization. They are feasible with gas being the preferable fuel on the way towards decarbonization.

Bulgaria-Romania Gas Pipeline has already been commissioned, but it is still far from being a game changer in the region. What is still to be done for improving gas flows between the two countries? Can you identify one gas pipeline project which might become such a game changer in the Black Sea region in the near future?

Changes cannot be expected to happen in a moment, it is about evolutionary rather than revolutionary changes. Building of Bulgaria-Romania gas interconnection was a big success for Bulgartransgaz and Transgaz for creating an entry-exit interconnection point for free flow and trade of gas. The importance of the interconnection will grow and will be realized with time, especially after building of Bulgaria-Greece gas interconnection and BRUA first phase when Caspian and Black Sea gas will start flowing through the interconnection.

30.06.2018 · ROMANIA