Natural Gas Sector Developments Highlighted in Southeastern Europe
A recent high-profile international conference hosted by The Economist in Athens, Greece highlighted the importance of the natural gas sector both at a regional and European level.
Interesting revelations were made at The 17th Roundtable with the Government of Greece, beginning with Greek alternate Minister of energy and the person in charge of the local gas market, Asimakis Papageorgiou, stating, with regards to the ongoing privatization of the country's natural gas sector, that the winner should not only have the best price offer available, but also to abide fully by current European rules.
The General Directory of competition of the EU will notify of its approval or not of the winner, after its selection by Athens. Greek media are already speculating that this may conflict with Gazprom's likely win for DEPA if it is ruled that a supplier cannot be an owner of another company as well. On the other hand the lack of other substantial offers, works in favor of another Russian company, namely Sintez, which is not a supplier or a producer but a trader of gas, having as well the largest offer so far and competing for both Greek gas companies, DEPA and DESFA.
Regarding DEPA's plans, company CEO Charis Sachinis revealed that it is in talks with the Shah Deniz consortium for substantial direct deliveries of gas and the main aim is to diversify import sources and reduce prices thereafter. DEPA also keeps its East Mediterranean gas project alive, although Sachinis admits that it is a costly one that is estimated to need $8 billion USD investments for just 8 bcm annual capacity. For the moment, DESFA, Greece's gas network owner, is scheduling the further upgrade of the Revythousa LNG terminal in the country and placed importance into expanding LNG imports into the country in the mid and long-term.
The CEO of M&M gas, a Greek company contesting for the privatization of DEPA, Petros Kanelopoulos, mentioned that prices of gas in Greece are 30 percent more than the EU's average and the country loses a substantial amount of capital each year. He blamed the monopoly of the market and subsequently the role of Gazprom as main supplier and stated that in order to address the issue, importance should be placed in increasing the interconnectors systems between Bulgaria, Romania, Serbia, Hungary and Greece.
The managing director of the Trans-Adriatic Pipeline, Kjetil Tungland, informed the public that €1.5 billion in investments are underway for Greece should that pipeline be selected in the coming period by the Shah Deniz consortium. Moreover, he commented that TAP has the full backing of Greece, Albania and Italy. At that point it should be mentioned that recently the Greek Ministry of Foreign Affairs has decided to back TAP's future entrance into the Western Balkan market, and more specifically into Montenegro and Croatia, in a move seen as aiming to boost TAP's chances of been selected by the Shah Deniz consortium.
The manager of BP Global Gas SPU, Steve Garlick, gave an interesting angle regarding Southern Corridor prospects, by mentioning the chance of both TAP and Nabucco West being selected. Europe will continue to be heavily dependent on gas imports and demand eventually will rise even further. In that sense, room for both pipeline projects may eventually be at hand. Shah Deniz's gas flow is expected around 2018 and the total investment is estimated by BP at $40 billion USD. Lastly BP assured that the June selection in Baku will be made under a thorough review of commercial, financial and strategic criteria.
At the same time as The Economist conference, Gazprom, via Director-General of Gazprom Export Alexander Medvedev, published a one-page promotional article in Proto Thema, a leading Greek weekly. The piece outlined Gazprom's grand plans of making Greece a natural gas hub by placing great value in LNG trading, a move that seemed surprising in the local media but was well reviewed by Natural Gas Europe in late 2012 where an analysis of future Gazprom tactics was presented.