February 2025, Vol. 252, No. 2
Features
Possible Effects of New Greece-North Macedonia Link for Europe
By Gordon Feller, P&GJ Correspondent
(P&GJ) – The Alexandroupolis Terminal is a proposed floating storage and regasification unit (FSRU) import terminal in the Aegean Sea, off the coast of Greece. Back in February 2022, the national government of North Macedonia initiated a process by which it hopes to secure a firm supply of critical LNG flowing from the Alexandroupolis FSRU.
One key problem threatening the future of this scenario is a stalled pipeline. In March 2024, two high-profile environmental non-profit organizations – CEE Bankwatch Network and Eko-svest – asked the European Bank for Reconstruction and Development (EBRD) to use a special redress mechanism to investigate a planned loan for the new fossil gas pipeline connecting Greece to North Macedonia. This particular pipeline project controversy is becoming quite messy in Europe.
NOMAGAS, a company based in North Macedonia, is set to receive a sovereign-guaranteed loan for up to EUR 98.6 million. The loan is comprised of a committed first tranche of up to EUR 66.34 million for the construction of 100% hydrogen ready gas interconnection pipeline with Greece.
In North Macedonia, where about 40 miles (64 km) of the pipeline would be located, it would connect to a national gas transmission pipeline from Sveti Nikole to Veles.
Pipeline Route and Information
For an overview of this project and other related infrastructure developments, visit Global Energy Infrastructure.
The uncommitted second tranche is expected to be for about EUR 32.25 million for national gas transmission pipeline from Gostivar to Kicevo, 21 miles (34 km) away.
NOMAGAS is a state-owned company and licensed gas transmission system operator (TSO), established in June 2022 from the merger between the two-state owned TSOs, National Energy Resources (NER) and JSC GA-MA Skopje (GAMA).
The Interconnection will be co-financed with a EUR 12.4 million investment grant from the Western Balkans Investment Framework, and a parallel loan in amount of EUR 28.9 million from the European Investment Bank (EIB). The loan will be sovereign-guaranteed by the government of North Macedonia, through the Ministry of Finance.
In 2019, North Macedonia adopted an ambitious Energy Strategy that’s officially known as, The Strategy for Energy Development of the Republic of North Macedonia until 2040. The focus of the strategy is to phase out all existing coal-fired power plants by 2030.
In order to achieve this target, the project will provide new gas supply, which will help to accelerate the coal phase-out and allow faster replacement of coal generated electricity with 1.7 GW of electricity generated by renewables by 2030, in full accordance with the Paris Agreement’s goals.
If successful, the EBRD and NOMAGAS believe that this pipeline project will diversify the sources of natural gas in ways which are critical to ensuring security of supply. The project is expected to reduce air pollution and GHG emissions, by enabling the switch to cleaner fuels in the country’s populated industrial areas.
Natural gas is identified within North Macedonia’s National Energy and Climate Plan (NECP) as an important transition fuel for achieving the target of net 82% reduction in greenhouse gas emissions by 2030. In accordance with the EBRD’s “Energy Sector Strategy (2024-2028).” a cost benefit analysis (CBA) was commissioned. It concluded that the project is consistent with a low carbon transition and Paris Agreement goals.
North Macedonia adopted the Just Transition Roadmap (an effort supported by the EU and EBRD) in June 2023, ensuring protection of vulnerable people and communities. This was recognized and supported by the Climate Investment Funds (CIF), and North Macedonia became the pilot country for the Accelerating Coal Transition (ACT) Programme.
The EBRD also helped to develop at COP 28 with the government of North Macedonia and other partner institutions (EIB, KfW, World Bank, IFC, CIF, CEB and CDP). The focus was an in-country platform for North Macedonia, which aims to mobilize EUR 3 billion by 2030 and “ensure just and accelerated coal transition.”
The sponsors of this project expect it to reduce infrastructure bottlenecks in the gas market – and contribute to the gasification of central and southwest regions of North Macedonia, which are currently not linked to the national gas network.
It’s also hoped that the project will also achieve diversification of gas supply and enhance energy security of the country through the Trans Adriatic Pipeline (TAP) and LNG terminals in Greece.
This will improve competitiveness and reduce gas prices (North Macedonia relies only on Russian gas from Trans Balkan Pipeline (TBP)), through increasing gas supply by 2.5 times, from existing 800,000 MMcm to 3.6 MMcm, and thereby further support decarbonization at lower cost of supply.
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