Work Stalled on EU-Backed BRUA Pipeline that Intended to Bring Romanian Gas to Central Europe as Alternative to Russian Supply

As of April 16, it appears that Romanian and Hungarian natural gas operators, Transgaz and FGSZ have, at least temporarily, halted implementation of the EU-backed Bulgaria-Romania-Hungary-Austria (BRUA) pipeline, due to a lack of sufficient interest among buyers to purchase capacity in the pipeline.   The project if realized, is intended to supply south, central and eastern Europe with Romanian gas as an alternative to Russian supplies.

There is concern that the current downward pressure on the price of oil and gas is negatively impacting the viability of European energy projects, such as the BRUA, that are intended to help the region diversify away from Russian gas. In March 2020, for example, Romgaz S.A. informed shareholders and investors that it was withdrawing from the planned acquisition of a 20% stake in Gastrade, the company developing the Alexandroupolis LNG terminal in Greece – a critical terminal that was to facilitate the import of LNG to the region from the United States and Middle East. Romgaz cited similar concerns as to the economic viability of the project following a failed effort to book capacity among LNG buyers.

 Simultaneously, the Hungarian government is mulling over a new long-term gas contract with Russia, which already accounts for nearly half of the country’s energy imports (both nuclear and gas) — further complicating the region’s diversification efforts.