A Memorandum of Understanding for the gasification of Albania was signed today between three companies, in the presence of Prime Minister Edi Rama and former US Secretary of State Mike Pompeo.
The agreement was signed between Overgas, Linden Energy, and Albgaz, with the former expressing interest in receiving gas from the so far non-functioning terminal in Vlora.
Minister of Energy Belinda Balluku, who was also in attendance, said that a big step is being taken, and other regional countries have also expressed interest.
“We are taking a big step by turning it from a local project to a regional one. In recent weeks, after announcing our efforts with our American partners, we have expressed a desire for cooperation from Northern Macedonia and Kosovo to become part of this project,” she said, adding it is one of the most important projects for the entire region.
Rama wrote on Facebook that the signing of the agreement is another important step towards fulfilling the vision of “Albania2030 net energy exporter.”
Overgas is Bulgaria’s largest private gas company, and it is headed by Sasho Dontchev. The company manages more than 2400 km of gas pipelines and provides gas to over a quarter of a million Bulgarian households and 60,000 factories.
Albgaz is 100% owned by the Albanian state.
Albania currently generates almost 100% of its power from hydropower plants. This energy cannot be stored, so it is sold to other countries during the spring and summer when production is higher. But then, come winter, demand means the state has to purchase fossil fuels from neighbouring countries to meet needs.
Despite multiple warnings over the years to reduce reliance on hydropower, the government has continued to issue permits for dams and plants throughout the country, often against the wishes of local residents.
But the government has recently announced plans to gasify the country. The Commission for Industrial Activities (KVP) said that a total of six projects would need to be implemented in the country to achieve efficient distribution of natural gas.
In particular, these include expanding the Ionian-Adriatic pipeline and the development of the Vlora thermal power plant.
The power plant in Vlora sits on one of the region’s most pristine beaches. Since its construction and completion in 2005, it has not generated a single watt of power and has been plagued by issues with its cooling system.
In February 2022, US Italian consortium Excelerate Energy-Renco announced they would lead the plant. Renco is involved in consulting, engineering and construction within the energy sector, while Excelerate Energy has several floating LNG terminals.
Several floating gas terminals will be set up to work with the existing power station in a project that those involved say will open up Albania to be a key player in gas across the region.
Excelerate’s CEO Steve Kobos said he hopes to use the Vlora LNG project to expand into other countries.
“It’s a good power project for Albania,” Kobos said about the floating plants deal with Bloomberg. “We hope it will lead to the opportunity to deliver natural gas and sell natural gas into Europe from that access.”
But the use of gas, especially by countries that are not currently dependent on it, has raised concerns from environmental stakeholders.
One example is a recent letter to the European Commission from civil society and environmental organisations asking them to stop funding gas projects in the region and instead focus on sustainable energy solutions.
The coalition of organisations, totalling 36, addressed a letter to European Commission President Ursula von der Leyen calling for an end to gas dependence.
“We, therefore, request that the European Commission refrain from promoting new gas infrastructure in the Western Balkans, whether in public statements or its investments such as those under the Economic and Investment Plan. Instead, we ask the Commission to redouble its efforts to encourage genuinely transformative investments which are receiving insufficient attention in the Western Balkans,” the letter reads.
It notes that the signing of the Sofia Declaration on the Green Agenda in November 2020 commits to decarbonisation by 2050, which requires the cessation of using fossil fuels. While the Balkans are not yet highly gas-dependent, governments plan to expand its use significantly and have been “actively encouraged by the European Commission.”
They fear that money will be wasted on expensive, time-consuming projects that are not sustainable and will lock in the region to gas, as the rest of Europe wants to move towards renewable energy.
Albania does not currently use gas for energy use either in the public or private sector.