• Natural Gas News

    Greece looks into Russian gas projects

Summary

Athens considering inclusion in Turk stream and joint researches with Russian companies

by: Ioannis Michaletos

Posted in:

Featured Articles, Pipelines, Turk/Turkish Stream, News By Country, , Greece

Greece looks into Russian gas projects

The newly elected Greek administration is considering joining the Turk Stream project and joining forces with Russian companies on energy explorations.

More specifically, the Turk Stream project, which aims to replace South Stream, is being viewed positively by the Greek government after relevant announcements were made by the Energy Minister Panagiotis Lafazanis and Foreign Affairs Minister Nikos Kotzias. The former visited Moscow recently and reiterated the strong energy links between the two states, whilst the latter is due to visit Azerbaijan, followed by consequent working visits in Russia and China, designed to attract investments in the energy sector of the country and to discuss around the existing projects.

Regarding the Turk Stream, it should to be noted that Turkey plays a crucial role due to geography and the fact that it is going to consume a sizeable portion of the gas to be transferred onwards to the EU markets. Gazprom chief Alexei Miller and Turkish Energy Minister Taner Yildiz have already agreed on the strategic aspects of that project which include a route from Russia's Black sea coast, ending near Istanbul's metropolis coastline and close to the borders with Greece.

The Russian side pledges to deliver 63 bcm per annum via the pipeline, out of which 16 bcm will be directed for the domestic Turkish supply, and the rest 47 bcm, will be accumulated in a proposed hub in the Epsila region along the Greek-Turkish borders, for an eventual export to EU market destinations. The timeline of the project calls for an inauguration of the route by December 2016 and from then on the pipeline to the EU could be materialized, unless Brussels and the member states agree on a swift process to proceed in a concurrent construction.

Here is where Athens strives to play a role, and specifically to persuade the EU authorities to move forward with the plan to construct a spur of the Turk Stream via Greece that will end up in Italy, via the "frozen" Interconnector Greece-Italy (ITGI). Moreover the Interconnector Greece-Bulgaria (IGB) will be a card Athens will try to use for getting a backup from Bulgaria which seems to have lost the acceptance by Gazprom to have a major route through its territory.

Nevertheless, there are a number of difficulties and hurdles ahead. The EU is still entangled in a geopolitical row with Russia over Ukraine, an issue which is inexorably related with the plans to deliver gas via a route avoiding Kiev. In the meantime, Greece does not have the necessary capital to commence such a large project by itself, and in fact only a few international companies have the capital and know-how to proceed. Until no there has been no talk on which will be the international corporate partners that would join in. Further Greece is pre-occupied with its negotiations with the EU on the debt issue, thus it remains to be seen if it will have the Turk Stream project high on its foreign agenda and its relations vis-a-vis with the rest of the EU partners. 

Another aspect of the emerging closer gas ties between the two countries is the agreement by Athens with the Russian company Rosgeo, to proceed into joint ventures for hydrocarbon and mineral explorations. The Russian company through its director Roman Panov assures it can offer high quality 3d seismic researches in the country. Also the Russians are interested in submitting their proposals in the future competition for twenty sea blocks that have never been researched and are located mostly South of the Island of Crete and in the Aegean and Ionian seas.

In addition to the aforementioned, Greece's Energy Ministry is drafting plans to commence a new round of negotiations with Gazprom for a gas price reduction coupled with an extension of a long-term supply contract, of approximately 3 bcm per year. Also it strives to include the Russian company in its mid-term plans to proliferate the nationwide use of Natural gas vehicles (NGV) fuelled with compressed natural gas.

Other plan which is due to be discussed in the coming period, is the Russian involvement in a planned floating storage regasification unit (FSRU), which is designed offshore the port of Alexandroupolis and is envisaged to be linked with the mainland through a short pipeline route. This project which is a product of the Copelouzos group, a long-standing collaborator of Gazprom, is seen as viable one, once Turk Stream's gas quantities begin flowing into Greece via the EU-directed pipeline.