ITGI Plans to Link with Cyprus and Israel
The Interconnector Turkey-Greece-Italy (ITGI) pipeline project, which recently effectively lost the Southern Corridor pipeline race to the rival Trans Adriatic Pipeline (TAP) project, is unveiling a new strategy, with plans to link itself with the prospective natural gas reserves offshore Cyprus and Israel.
Speaking at the CERA Week energy conference in Houston, Charis (Harry) Sachinis, President of Greece's DEPA, a major shareholder in the project, proposed that ITGI was not merely a pipeline route but an integral energy system that can easily be used for the transfer of Mediterranean gas from the Leviathan, Tamar, Field 12 and other new projects into Europe.
In this system, as he called it, an additional subwater pipeline from Cyprus to Greece could be linked, as well as LNG stations in Greece.
Southern Corridor 2
Sachinis plan aims to make a way for a 'Southern Corridor 2' that instead of transferring Azeri gas, will be used for transporting Israeli and Cypriot-Greek gas into EU markets.
Plans partially leaked by DEPA's officials envisages a pipeline 1,100 kilometers in length from Cyprus to Crete that could transfer 8 billion cbm of natural gas per year.
Crete would be linked to mainland Greece, a short distance of around 50 miles and be integrated to the Greek domestic gas system with one main branch of the pipeline transferring gas to Italy via the Poseidon pipeline that is the offshore part of the ITGI. Other quantities of gas will be transported via the Natural Gas Interconnector Greece Bulgaria (IGB) to Bulgaria, which recently agreed to also interlink its systems with those of Romania.
Potential Offshore Crete
DEPA believes there is still more gas to be found in the Greek exclusive economic zone (EEZ), south of the coast of the Island of Crete, which could be fed into its proposed plan.
Noble Energy, which drilled the first exploration in Field 12 in Cyprus, plans to sends top officials to meet with the Greek Minister of Energy on the 28th of March in Athens in advance of a planned visit by Noble Energy's President in late May in order to discuss exploration south of Crete. Israel's Delek Drilling, Gazprom, Total and BP are also reported to be interested in exploration offshore Crete.
Sachinis' plans for a Cyprus-Greece pipeline faces several major issues.
Firstly, the overall commercial viability for the exploitation of all natural reserves gas fields in East Mediterranean has to be established. That will take some time.
Secondly, no Greek or Israeli company has the know-how for such a large undertaking, therefore partnerships with major players such as BP, Shell, Exxon. etc., would likely have to be established in order to proceed.
Thirdly, the original Southern Corridor is a mature plan, fully backed by EU and US and constitutes as one of the cornerstone projects for BP and the Azeri state. There would undoubtedly be resistance to emergence of new sources of gas appearing out of Cyprus and Israel impacting the Shah Deniz consortium.
Fourthly, the expense of undertaking such a project is most certainly higher than those projected for the Southern Corridor. Moreover, the project is located in territory of considerable political risk: right beside Syria-Lebanon and within a short distance from Turkey which opposes vehemently such initiatives.
Lastly, DEPA is about to privatized and such a significant undertaking may impact how the company is viewed by prospective investors.
On the other hand, if East Mediterranean gas can be exploited at commercially sound prices and if international energy conglomerates show practical interest, then a new source of EU gas supplies maybe of great importance for the European energy security and can also assist into easing peripheral tensions in the region.
All depends on many political and economic parameters and changes of variables that can affect the course of investments one way or another.
In short, a new round negotiations concerning the Southern Corridor seems to be at hand, this time not related to the culminations between Baku-Ankara-Brussels but rather between Tel Aviv-Nicosia and Athens.