Gas Strategies Discussed in Greece

The annual Global Oil&Gas Black Sea and Mediterranean Conference took place recently in Athens, Greece, and various stakeholders laid their views upon the gas culminations in the regional markets.

Danila Bochkarev, energy fellow at the EastWest Institute in Brussels, attested that the proposed Turkish Stream pipeline project could indeed become a reality in the coming years, albeit in a different form as presently presented: significantly lower in terms of volume capacity - up to 75% less. That means the pipeline would have a maximum 17.5bcm capacity and chiefly supply Turkish and Greek markets without further expansion.

It is not improbable that the Trans Adriatic Pipeline (TAP) could be used to transfer limited amounts of Russian sourced gas. On the other hand, Nord Stream is currently of outmost importance for the overall energy security of the major EU natural gas markets and in that respect, regulatory affairs should be taken into account regarding EU-Gazprom future supply relations.

The Greek government, through incumbent Energy Minister Panos Skourletis, also pledged to follow through with Turkish Stream without making any assumptions around changes in volume or route.

The impeding opening up of the East Mediterranean natural gas supply route was touched upon by a cadre of experienced policy makers on the subject. The former head of the Energy Ministry directory of Cyprus, Solon Kasinis, placed emphasis on the recent gas discoveries offshore Egypt in the Zohr field, which could have more than 1 trillion cubic metres of gas in place.

According to the Cypriot expert, plans that call for the establishment of a pipeline from that region to the EU via Greece could be revitalized. In the coming months there should be strong competition and collaboration alike by all neighboring countries to firmly set up export infrastructure in the region, with a concentration on LNG installations. The Tamar field is operational and the Leviathan is about to be streamlined as well.

It was also noted that Italian ENI is still pursuing, after a 2-year break, potential gas resources offshore Cyprus in the sea blocks 2, 3 and 9, whilst French Total will commence its research by the end of this year in block 11.

Egypt has certainly emerged a big player and has its own set of options, including stronger cooperation with Israel and Cyprus and significant investment options in the LNG market. By 2021, the situation should be settled and if new discoveries are made, the region could see a golden era of natural gas both in terms of local gasification and in export potential.

Former chairman of the Cypriot hydrocarbon agency, Charles Ellinas, pointed out that the plan to establish an LNG terminal in the Vasiliko area of Cyprus could become a reality if sources of gas are also being directed from Israel.

There are also indications for more gas to be found offshore Cyprus and the major difficulty nowadays is to secure long-term financing for any project at hand. By combining forces with Israel, Nicosia could hope for options to export both to EU and Asian markets.

With the Zohr discovery and optimistic predictions for more reserves, Egypt could again become net exporter by 2022, a development that could ease the country's commercial deficit by many billions of dollars annually.

In terms of price competitiveness, the cost of Cypriot and Israeli gas sent to Europe would be around $12 per MMBtu in today's prices, which is more than Gazprom's price to the same destination. That means that any potential exports will have to take that under consideration. In any event, exports would be a long term issue and not for the short term.

EU authorities, according to Mr Ellinas, are generally speaking in favor of projects such as the East Med pipeline, but it is not in the immediate priorities of the Union or any member states, save Greece and Cyprus. For the moment, the EU is primarily concentrating efforts on the Southern Corridor project with its TANAP-TAP system of pipelines along with assorted interconnectors. Cyprus, therefore, should speed up its efforts for a new round of explorations and be ready to hand out licensing for new sea blocks by 2016.