The European Commission approved a state aid to support Chiren Underground Gas Storage expansion project

On 8 August 2023, the European Commission approved a state aid measure to support the realisation of the expansion project of Chiren Underground Gas Storage.

The measure provides for the issuance of a state guarantee under loan agreements to the Bulgarian gas transmission operator, Bulgartransgaz EAD, which is the owner and operator of Chiren UGS. The effect of the measure is estimated at some EUR 16 million.

The provision of a state guarantee will contribute to the timely implementation of the planned expansion of the only natural gas storage facility in Bulgaria and the provision of the necessary financial resources under the most favourable conditions.

With its decision, the European Commission finds that the measure is necessary, appropriate and proportionate, as the aid will be limited to the minimum necessary to ensure the investment and will not have undue negative effects on competition and trade in the EU.

The expansion of Сhiren UGS is a project of common interest for the European Union and is co-financed by the Connecting Europe Facility with nearly EUR 78 million.

Bulgartransgaz EAD's Executive Director, Vladimir Malinov, thanked for the fruitful cooperation and continued support of the European Commission in the process of implementing the key project for the community, which will contribute significantly to guaranteeing the energy security. He also expressed special gratitude to the Bulgarian government represented by the Ministry of Finance as the National State Aid Authority and the Ministry of Energy as the Aid Administrator.

The growth in natural gas supplies to Bulgaria and the region from alternative sources, including liquefied natural gas, significantly increases the need for the expansion of the gas storage facility.

The project of Chiren UGS expansion will increase the active gas volume up to 1 bcm and the daily withdrawal and injection capacity up to 8-10 mcm. In order to achieve the objectives of the storage expansion, activities are carried out on construction of new above-ground and underground facilities, and of a gas pipeline connecting Chiren UGS with the existing gas transmission system of Bulgartransgaz EAD. It is recalled that the beginning of the actual construction activities involving the construction of the above-ground part was launched on 21 July this year.

The availability of sufficient gas storage, withdrawal and injection capacity is of key importance for ensuring the security of supply, successful entry on the market of alternative sources, including LNG and for the regional market development. The project is in line with the EU policies in relation to ensuring the diversification, the energy security, the European Green Deal and the implementation of the necessary energy transition.