Southeast Europe: Gas Trends Unfolding
The 8th South East Europe Energy Dialogue that was held in Thessaloniki-Greece on the 11 &12th of June 2014 was filled by interesting notices and streams of information regarding the unfolding trends in the modern day natural gas sector in Europe and in Southeast Europe in particular. The conference was under the auspices of the Greek Presidency of the EU and the World Energy Council.
Trends in gas production in Europe was examined closely. According to the CEO of the Gas Strategies consulting, Chris Walters, gas production in the Continent will be reduced by at least 100 bcm by 2030 and that means that Russia, North Africa and Azerbaijan will be key winners of such developments since they will have to fill up for the loss. Regarding a potential US role with regards to a shale gas revolution, it was noted that there will be indeed some developments occurring in that aspect, on the other hand, the EU is starting to rely again more on cheap coal which in turn decreases profit margins for gas, making a trans-Atlantic gas trade less likely at least for the short term.
A great deal of attention was paid to infrastructure gas projects in Southeastern Europe, with the general technical director of Greek DEPA placing importance in the Interconnector Greece-Bulgaria along with a potential new LNG installation codenamed Aegean LNG that will boost diversification in the region, especially if an East Med pipeline would bring gas from Israel and Cyprus. Croatia from its part through the words of the director of development of the Plinacro Company, Vladimir Durovic, is aiming at the realization of the Ionian-Adriatic Pipeline, an extension of the Trans-Adriatic Pipeline (TAP) from Albania to Croatia through Montenegro. The TAP-TANAP system of pipelines, which is in essence the Southern Corridor connecting Shah Deniz to EU, is going to have another importance according to the member of the Greek regulator agency for energy (RAE) Michalis Thomadakis, and that is the existence of reverse flow capacities so that a larger market hub will be created pushing prices downward in the long-term. By late 2015 he assesses that the overall plan by RAE and DESFA regarding a gas hub in Greece in particular will have been completed whilst the EU's Projects of Common Interest (PCI) will include in Southeast Europe most of the Greek propositions that are specifically tailored made to pursue the aspect of gas hub.
The general director of the Turkish Angoragaz, Gokhan Yardim, stated that Turkey has immense gas sector potential, with a current established gas network with a length of 13,000 km and expanding, while the country although relying heavily in Russia for its imports with some 57% share from Gazprom, it also actively seeks alternative suppliers. Moreover, he estimates that Turkey is better placed in acting as a physical and virtual gas hub for the region. His Greek colleague the CEO of M&M gas Panayiotis Kanelopoulos, is optimistic that this role could be taken by Greece, only if the country moves fast in upgrading its infrastructure in gas storage, interconnectors and LNG terminals. Regarding the latter, CEO of Copelouzos group, Konstantinos Sifnaios, believes that the proposal by his company to build a floating storage and regasification unit (FSRU) in the region of Alexandroupolis right beside the borders with Bulgaria (IBG) and Turkey (TAP-TANAP) greatly facilitates such aim.
Overall, the general sentiment as expressed both in the limelight and in the sidelines of the conference, is that the Southeastern European region can play an enchased role for the EU's energy diversification and security, in light of the increasing reliance of almost all member states in natural gas imports in the mid-term. In that respect emphasis should be noted into linking peripheral markets together, and upgrading import terminals and storage capacities, so as to create thereafter more flexible pricing mechanisms though the use of trading hubs.