Russian company Stroytransgaz will start building a gas pipeline in Macedonia that would link the Balkan country’s gas network system to neighbouring Greece.

Stroytransgaz had been commissioned for the construction of the section of Russia-led South Stream gas pipeline in Macedonia's eastern neighbour Bulgaria. However, it pulled out of the project in August 2014 after EU member Bulgaria froze the project citing objections by the European Commission over the project’s incompatibility with EU energy legislation.

The construction of a Macedonian offshoot of South Stream, however, hasn’t been frozen as the section will enable connection to the Turkish Stream project that Russia announced as a substitute for South Stream, newsru.com reported on Thursday.

Under the Turkish Stream project Russian gas will be delivered to Turkey across the Black Sea via an underwater section. A gas hub could be built at Turkey’s border with Greece for possible deliveries to the EU.

In the first phase of the Macedonian project Stroytransgaz will build a 61-kilometre section from Klecovtse to Negotino that will allow gas to be delivered to the city of Stip. The construction of this section is planned to be completed in about a year. In the second phase another 60 km of pipeline will be built to enable connection to Greece’s gas network.

Macedonia imported 46 million cubic metres of Russian gas last year, down 9% compared to 2013, via the existing pipeline from Bulgaria that is transiting Ukraine. One of the main consumers in Macedonia is a Skopje-based thermal power plant owned by a Russian company, newsru.com said.

The estimated cost of the Macedonian pipeline is about USD 75 M. The country will pay USD 15 M, the remainder will be offset against debt owed by the former USSR to the former Yugoslav Federation, of which Macedonia was part.