Bulgaria launches gas hub feasibility study

SOFIA, March 15 (Reuters) - Bulgaria, which has ambitions to transform from a transit country for Russian gas to an energy trading centre, said it would start a feasibility study on creating a natural gas hub at the Black Sea port of Varna.

Sofia's plans for the hub are backed by the European Commission. They followed the cancellation in 2014 of Russian Gazprom's South Stream gas pipeline project, which would have shipped Russian gas under the Black Sea via Bulgaria to central Europe.

State gas company Bulgartransgaz signed a 2.3 million levs ($1.5 million) contract on Thursday with a Bulgarian-Swiss consortium, AF-EMG Consult, to conduct the feasibility study and complete it by early July, the Bulgarian energy ministry said in a statement. The European Union has also committed to provide 920,000 euros for the feasibility study.

The cancellation of South Stream was a blow to Bulgaria, which relies almost exclusively on Russian gas, and Sofia hopes the Balkan gas hub project would keep Russian gas flowing through its territory on its way to central Europe.

European Commission Vice President Maros Sefcovic reiterated Brussels' support for the plan, which will help boost gas liquidity and energy security in the southeastern Europe.

"We in the European Commission very much support the plans of Bulgaria to be transformed from a transit country into a gas trading country," Sefcovic told reporters at an energy forum in Sofia.

"We want the Balkan gas hub to be efficient... to be the hub where the gas supplies are coming from different directions but the gas should be traded here, should be sold to the partner and shouldn't be just rushed through the territory to other countries," he said.

At present, Bulgaria transports about 12 billion cubic metres of Russian gas to Turkey a year, but these shipments may stop in 2019 if Russia delivers on its plan to complete TurkStream pipeline.

Bulgaria also hopes to attract Azeri natural gas, as well as LNG supplies from Greece, Qatar and elsewhere.

The cost of building a hub is estimated at between 1.4 billion euros ($1.73 billion) and 2.4 billion euros ($2.96 billion). It would use existing and new pipelines in Bulgaria as well as interconnector links it is building with Romania, Serbia and Turkey and eventually an undersea pipeline from Russia.

Russia has made no commitments to provide gas for Bulgaria's hub project and its scope would be limited it if failed to attract any gas from Russia. Moscow has said it would consider the hub only if it has guarantees that the project would not run counter to EU energy rules. ($1 = 0.8105 euros) ($1 = 1.5848 leva) (Reporting by Tsvetelia Tsolova; Editing by Susan Fenton)