by Costis Stambolis*
Once again Greece is back in the news. This time not for its never ending strenuous negotiations with the European Commission, the ECB and the IMF over the country’s desperate moves to clinch a deal and stay financially afloat and within the Eurozone, but for its bold opening to Russia over her government’s ambitious plans to turn Greece into a regional energy hub. Although Greece is a small energy consumer on its own right, with oil use of some 290,000 barrels per day and gas not exceeding 3.5 billion cubic meters (BCM’s) per year, its geographical position favours her in becoming a vital corridor for transporting gas from the East to the West. Where the East could be the Caspian region, with its rich oil and gas resources, Iran, which has the world’s largest natural gas reserves, but also Russia which already covers some 30-35% of European gas needs.
Greece currently obtains 65% of its gas supplies from Russia with deliveries first started back in 1996 through the Trans-Balkan pipeline which passes through Ukraine and delivers gas first to Romania, Bulgaria and then splits in two with one branch going to Greece and the other to Turkey Greece obtains the rest of its gas quantities through an LNG terminal in Revythoussa, an islet off Megara, near Athens, and the Greek-Turkish gas interconnector, which brings gas from Turkey. Following an agreement signed in 2013 between Greece and an international consortium, the Transadriatic Gas Pipeline (TAP), a new pipeline will be built which will cross Greece and then move gas through Albania and underwater through the Adriatic to Italy and then to Europe. Construction of this €3.0 billion pipeline is slated to start next year and will be completed by the end of 2019 transporting some 10.0 BCM from Azerbaijan to Italy. Not a significant amount of gas given European gas needs, which reached almost 500 BCM’s in 2014. Nevertheless, the TAP pipeline is heavily promoted by the EU and the USA as Europe’s best alternative gas supply route in its efforts to lessen its customary dependence on Russian gas. However, TAP even if it doubles its capacity to 20 BCM, as latest plans suggest, it will still provide insufficient quantities to enable it to play a key part in European gas supply diversification.
Meanwhile, Russian state gas company Gazprom is trying to develop an alternative route to transport significant gas volumes to European companies by bypassing troublesome Ukraine, where currently four of its main export pipelines go through. As earlier efforts to develop the South Stream pipeline, which would have taken Russian gas via the Black Sea and then via Bulgaria, Serbia and Hungary to Austria, was abruptly cancelled last December, following intense pressure by the EU on Bulgaria to abandon construction of the project, and a host of legal objections which would have made impossible for Gazprom to sell its gas to its European customers through this particular pipeline. Hence, Gazprom has developed an alternative route, also underwater through the Black Sea, but this time landing on the European shores of Turkey and from there through Greece to FYROM, Serbia and Europe. During a visit to Moscow last May by Turkey’s Energy Minister, Mr. Taner Yildiz, and following a meeting with President Vladimir Putin, the plans for the construction of this new pipeline were finalized with construction of the pipeline to start immediately with its first leg to be completed by the end of 2016. This is a huge pipeline with some 64.0 BCM carrying capacity of which at least 16.0 BCM will be absorbed by the fast growing Turkish market.
In a highly controversial visit to Moscow last April Greece’s Prime Minister, Alexis Tsipras, met with President Putin and Gazprom’s leadership and agreed for the Turkish Stream to be extended through Greece, with a 450 km pipeline to be known as Greek Stream which will transverse northern Greece and connect with another pipeline, known as Tesla, which will run through FYROM, Serbia and Hungary and will end in Baumgarten in Austria with the aim of supplying the main European gas markets. Moscow is now busy finalising details with Athens for the routing of Greek Stream but also in providing financing for its construction.
Should the Greek Stream be eventually constructed, and with the TAP pipeline already scheduled to cross Greek territory, and with a 180 km gas interconnector pipeline to connect Greece and Bulgaria, known as IGB, construction of which will also start early in 2016, northern Greece is likely to become congested with a plexus of gas pipelines. If we are to add two floating LNG terminals, promoted by Greek DEPA and independent gas supplier Gastrade, to be moored off the towns of Kavala and Alexandroupolis respectively, and a Gas Trading Hub to be set up to handle gas supply in the region, Greece’s geopolitical position is to be greatly enhanced as a regional energy hub. This appears to be precisely the goal of Greece’s present political leadership which is trying hard to differentiate its position from EU stated energy policy, which is of course dead against Russia’s plans to develop further its gas infrastructure in SE Europe. It is certainly a coincidence, if not a paradox, that Greece’s strongest ally in this plan is Turkey which being outside the EU, although largely connected with a candidate member agreement, can afford to defy EU policies.
In Greece’s case the odds are against the government’s plans to develop the country as an energy hub given strong opposition from the EC and Brussels from whom the government is totally dependent for further financial assistance in the form of a new bailout expected to be agreed within June. Confounding EU’s opposition to Greece’s bold energy plans is USA government’s stern warning to Greece not to entertain any further thoughts for engagement with Russia in developing the Turkish Stream project and its passage through Greece. During a visit to Athens in May (7/5) Mr. Amos Hochstein, special envoy and coordinator for International Energy Affairs at US Department of State, and following a meeting with Greece’s Minister for Energy, Mr. Panayotis Lafazanis, expressed his deep concern that an extension of the "Turkstream” pipeline across Greece will not help increase energy diversification, while it may also be of concern to EU competition authorities, and therefore does not constitute a long-term solution to Greece’s energy needs.
USA’s negative stance on Greece’s ambitions to elevate itself as a secondary regional hub (the primary being Turkey), whereby TAP and Turkish Stream may coexist as part for an enlarged South Corridor, has to be seen in context of latest moves by Brussels to unseat Gazprom from its commanding position as EU’s main gas supplier. Following the levelling of official anti-trust accusations against Gazprom by the EC on April 22, an open trade war is now in full swing between Brussels and Moscow as Europe tries to curtail Russia’s influence and stronghold on the continent’s energy supplies. According to independent observers the ferocity of this war is such that in the process the ambitions and plans of small and problematic players such as Greece will easily be smashed.
*Costis Stambolis is the Executive Director of IENE
