Bulgaria seeks loan to build key gas corridor for Europe and Ukraine

The Bulgarian state gas transmission operator Bulgartransgaz announced that it is urgently seeking a loan to finance the construction of the Bulgarian section of the Vertical Gas Corridor, designed to transport gas from the Mediterranean to Central and Eastern Europe.

The funding is needed to expand the capacity of two of Bulgaria’s gas interconnectors with Greece and Romania. Bulgaria plans to build a new pipeline stretching hundreds of kilometres from the Greek border to Romania in order to increase its capacity to transport gas from Azerbaijan, as well as American and Qatari LNG.

The state gas operator has awarded construction contracts to consortia between Bulgaria’s Glavbolgarstroy and the US-based Hill International (worth BGN 485.6 million), and to Divicom Inc., the Romanian branch of Austria’s Habau, and Bulgaria’s S.A.I.E., a company linked to controversial Bulgarian businessman Hristo Kovachki, for BGN 100 million.

Once the new sections are completed – expected by the end of next year, the transmission capacity from Greece will increase to 3.5 billion cubic metres (bcm) per year, while exports to Romania will double to 10 bcm annually.

The expansion is expected to accommodate additional volumes of LNG from Greek terminals, which will pass through Bulgarian territory en route to Romania and then on to Hungary, Slovakia, Ukraine, and Moldova. However, none of the other countries along the route have yet taken official steps to expand the capacity of their respective gas transmission networks.

Bulgartransgaz Executive Director Vladimir Malinov said that the implementation of the Vertical Corridor would “significantly strengthen energy security in the region, enhance the competitiveness of the economies, and allow consumers to benefit from supply at optimal prices”.

“Given the stable financial position of Bulgartransgaz and our good reputation as a reliable borrower, we expect strong interest in this loan procedure from leading financial institutions, which will support the implementation of the project within the planned timeframe,” Malinov added, referring to the recently launched tender for a BGN 200 million loan.

On 29 May, a symbolic inspection and first welding ceremony was held on the new pipeline, attended by Bulgarian Prime Minister Rosen Zhelyazkov, the energy ministers of Bulgaria and Hungary, and the Greek environment minister.

The Vertical Gas Corridor will transport LNG from Greece through Bulgaria and Romania to Hungary, Slovakia, Moldova, and Ukraine.

In parallel, Bulgaria also plans to increase the capacity of the Komotini–Stara Zagora gas interconnector, operated by the Bulgarian-Greek-Italian company ICGB, which carries Azeri gas.

The joint project is important not only for its regional value, but also because it offers Moldova and Ukraine a new route for gas imports from the Mediterranean, following the cut-off of Russian supplies, Malinov noted.

In practice, Bulgaria is the first country along the symbolic route of the Vertical Gas Corridor to take concrete steps to expand its northbound gas transmission capacity. The other participating countries – Greece, Romania, Hungary, Slovakia, Moldova, and Ukraine – have not yet initiated such measures.

In both Greece and Romania, market tests have not shown sufficient interest from traders to reserve capacity. The other countries have not conducted such tests at all.

Bulgartransgaz, which is commissioning the contracts for the Bulgarian sections, carried out a non-binding market survey and reported strong interest. However, it did not hold a capacity reservation auction but instead decided to proceed directly with construction.

Caption: A handout picture made available by the Bulgarian government after the first welding ceremony on the new pipeline on 29 May 2025.