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    DESFA Continues Investment Pace While Waiting for SOCAR



The Greek transmission manager DESFA, is developing its investment project while SOCAR is delaying its investment

by: Ioannis Michaletos

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Liquefied Natural Gas (LNG), Top Stories, Pipelines, Security of Supply, Interconnector Greece-Bulgaria (IGB) , Interconnector-Turkey-Greece-Italy (ITGI) , Trans-Adriatic Pipeline (TAP) , Turk/Turkish Stream, News By Country, Azerbaijan, Turkey, , Belgium, Greece, Romania, Balkans/SEE Focus

DESFA Continues Investment Pace While Waiting for SOCAR

Greek natural gas transmission manager DESFA plays a crucial role in the status of the country vi-a-vis all major pipeline projects including the Trans-Adriatic pipeline (TAP), Interconnector Greece-Bulgaria (IGB) and the newly proposed Turkish/Turk Stream.

In the meantime, there have been considerable delays in the privatization of DESFA and investments from SOCAR, who agreed to pay 400 million to buy 66% in the summer of 2013. European Commission objections based on the interpretation of the Third Energy Package have effectively stalled the process in which the Azeri entity has already paid a €40 million down payment and had concluded the drafting of several investment projects with the Greek side.

Nevertheless, despite the situation that can best described as "in limbo", regarding DESFA's status, the corporation is getting ahead with an overall investment plan that will boost, in the mid and long-term, the usage of gas in the country.

By the end of 2016, the upgrade of the Revythousa LNG terminal close to Athens would have been completed, achieving a 40% increase in yearly capacity. The project being developed costs €180 million and once completed it will boost the energy security of the country and increase the period of time for which the terminal could supply the local market by several weeks in the event of a supply disruption, depending on other secondary measures put up by the respective authorities.

Concurrently, DESFA is seeking investment proposals for the proposed Kavala underground storage facility that would be able to hold 750 million cubic meters of gas and be connected with the national transmission system via TAP and IGB. As such, the project has a regional impact and has gained theoretical approval by the EU for future funding. The Greek side has also put forward this as a plan to be integrated in the vertical corridor, a new axis that includes Bulgaria, Romania and Hungary.

DESFA management is drafting long-term plans to construct a new domestic pipeline route from the Greek -Turkish border on the Evros River to the Ionian Sea in the Igoumenitsa area that will be connected with other trunks traversing both vertically and horizontally to the rest of the mainland. This will be coupled by new compressor stations, with a total cost estimated to exceed €900 million. This particular plan is subject to numerous parameters, including the total volumes to be secured from the ongoing pipeline plans.

Other ongoing investments include the linkage of the main system with several notable industrial complexes, such as the Nickel, in Southern Greece and the ELPE oil refinery unit close to Athens, along with smaller zones of economic and domestic activity with budgets exceeding €250 million. New metering systems, automated control, safety installations, software upgrades, and utility equipment is scheduled to be acquired and constructed with a cost of €100 million. Between 2015-2025 DESFA has put forward a plans that will require more than €2.2 billion concerning domestic projects both planned and ongoing.

The obstacles for the entrance of SOCAR as aforementioned will nevertheless have a negative impact on DESFA's investment plans. The latest information out of Brussels is signalling an eventual decision that not be taken before September 2015, whilst the officials of the Baku-based company have started to relay that they have become much less interested in pursuing the privatization after such a long delay.

Should SOCAR indeed drop its bid, DESFA will need to search for another suitor that would be able to guarantee its investment plans, since it will require importing capital from the international markets as the Greek economy is in dire straits.

Despite the fact that other suitors have indirectly appeared, such as the Belgium Fluxys, the situation is still in flux. Greek Energy Minister Panagiotis Lafazanis emphasized during his official meeting in Azerbaijan the need to secure Azeri participation but it could be safe to predict that the interest of those is waning to the extent that an official withdrawl of SOCAR is not out of the question in the coming two months.