A memorandum of understanding to gas Albania was signed between three companies today 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 an interest in sourcing gas from the previously non-functioning terminal in Vlora.
Energy Minister Belinda Balluku, who was also present, said that a big step is being taken and that other countries in the region have also expressed interest.
“We are taking a big step by making it from a local project to a regional project. After announcing our efforts with our American partners in recent weeks, we have expressed a desire to work with North Macedonia and Kosovo to become part of this project,” she said, adding that 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 “Albania2030 net energy exporter”.
Overgas is Bulgaria‘s largest private gas company and is managed by Sasho Dontchev. The company manages more than 2,400 km of gas pipelines and supplies gas to over a quarter of a million Bulgarian homes and 60,000 factories.
Albgaz is 100% owned by the Albanian State.
Albania currently generates almost 100% of its electricity from hydroelectric power plants. This energy cannot be stored, so it is sold to other countries in spring and summer when production is higher. But then, when winter comes, demand means the state has to buy fossil fuels from neighboring countries to meet demand.
Despite repeated warnings over the years to reduce reliance on hydropower, the government has continued to issue permits for dams and plants across the country, often against the wishes of local residents.
But the government recently announced plans to gas the country. The Industrial Activities Commission (KVP) said a total of six projects needed to be implemented in the country to achieve efficient distribution of natural gas.
This includes in particular the expansion of the Ionian-Adriatic pipeline and the development of the Vlora thermal power plant.
The Vlora power plant is located on one of the most pristine beaches in the region. Since its construction and completion in 2005, it has not produced a single watt of power and has been plagued by problems with its cooling system.
In February 2022, the US-Italian consortium Excelerate Energy-Renco announced it would manage the plant. Renco is active in consulting, engineering and construction in the energy sector, while Excelerate Energy has several floating LNG terminals.
Several floating gas terminals are being set up to work with the existing power plant in a project that stakeholders say will make Albania a major gas player in the wider region.
Excelerate CEO Steve Kobos said he hopes to use the Vlora LNG project to expand to other countries.
“It is a good energy project for Albania,” Kobos said of the floating power plant trade Bloomberg. “We hope this will lead to the ability to supply and sell natural gas to Europe via this route.”
But the use of gas, particularly in countries that aren’t currently dependent on it, has raised concerns among environmental stakeholders.
One example is a recent letter from civil society and environmental organizations to the European Commission, urging them to stop funding gas projects in the region and instead focus on sustainable energy solutions.
The coalition of 36 organizations sent a letter to the President of the European Commission, Ursula von der Leyen, demanding an end to gas dependency.
“We therefore demand that the European Commission refrain from promoting new gas infrastructure in the Western Balkans, whether in public statements or in their investments such as those under the Economic and Investment Plan. Instead, we call on the Commission to redouble its efforts to encourage truly transformative investments that have received insufficient attention in the Western Balkans,” the letter reads.
He notes that the signing of the Sofia Declaration on the Green Agenda in November 2020 commits to decarbonization by 2050, which requires moving away from fossil fuels. While the Balkans are not yet highly dependent on gas, governments plan to significantly expand its use and have been “actively encouraged by the European Commission”.
They fear money will be wasted on expensive, time-consuming projects that are unsustainable and tie the region to gas as the rest of Europe looks to switch to renewable energy.
Albania does not currently use gas for energy, either in the public or private sector.