Transgaz to abandon BRUA II project unless bidders show up to contract capacity

Romania’s natural gas transporter Transgaz informed that it wouldn’t start building the second phase of the BRUA pipeline unless sufficient bidders show up for contracting the new capacity, romania-insider.com informs.

The second stage of the BRUA pipeline (Bulgaria-Romania-Hungary-

Transgaz has relaunched the auction for the pipeline’s capacity after several companies that had won the previous tender in 2017 pulled out. Currently, only 40% of the BRUA II capacity is reserved, the company announced.

Under these circumstances, the economic tests ran by Transgaz and Hungarian peer FGSZ, part of the MOL group, “are negative,” the company informed. Unless the situation changes within three weeks, the company won’t build additional capacity.

A negative aspect is that, at this moment, none of the companies involved in exploration and production activities in the Black Sea (OMV Petrom, ExxonMobil, Lukoil, BSOG controlled by the US Carlyle fund) has officially announced that it would move on to the exploitation stage. The latest legislative changes, namely the 2% additional turnover tax and the mandatory sale of 50% of the gas on the local market at a regulated price, changed the investors’ plans again.

“If no additional reservation requests are made between 05.02.2019 – 25.02.2019, the Romania-Hungary open-season procedure is concluded without allocation of transport capacity and there are no prerequisites for the construction of the transport capacity additional to that provided by building the BRUA Phase I project,” said Transgaz representatives.

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