Southern Gas Corridor: A View from Greece
The Southern gas corridor is on its last run, and the two competing pipeline consortiums, Nabucco West and Trans-Adriatic Pipeline (TAP) have all but concluded their trials so as to become the winners of this intense race.
At the 4th Mediterranean Oil & Gas conference in Athens, interesting facets of the story were discussed, along with details that are mostly centered aournd TAP's role in the Balkans and Greece and how this project is a "game changer" in a significant number of ways, both for the local and for the European natural gas markets in terms of security, pricing and supply.
Panayiotis Kanelopoulos the CEO of the Greek gas trading corporation M & M, discussed the difficulties of gas-power electricity producers face in the country, having to pay 25-30% price for gas than the rest of the EU markets, especially the larger ones. In short more than €350 million is the extra cost per year. The role of the opening of the Azeri market and the pipeline corridor is crucial as Kanelopoulos noted, since it will significantly diversify the Greek market both by providing a new source and also by boosting the nascent spot market in the country in expense of the oil-priced index.
The general secretary of the Foreign Ministry, Panayiotis Michalos, was keen to state that the DEPA privatization will commence again soon, despite the recent lack of interest towards the final stage. Moreover he added that his Ministry fully supports TAP as a project and has over the past year backed the project via multilateral efforts with other countries and stakeholders. More specifically he pointed out that Athens has informed the Azeri government of the advantages TAP offers for all sides involved and also relayed that Greece played an integral role into pushing TAP's future expansion from Albania to Montenegro, Bosnia and Croatia through the newly conceived stretch of TAP named interconnecting all these countries.
The managing director of TAP consortium , Kjetil Tungland placed importance to the investments windfall for Greece in excess of €1.5 billion and the creation either directly or indirectly of more than 12,000 jobs. Moreover he added that in comparison to Nabucco, his project has a significant shorter length, thus it costs less and this decreases to a great extent the gas being transferred. TAP also aims to open up for the first time the gas markets for countries like Albania and the Western Balkans while it is a project that through the supplementary interconnections will diversify the regional gas imports with a significant lower cost than Nabucco.
The director of international relations of DEPA, Dimitris Manolis, revealed that his company is very much interested in procuring directly gas from Socar for the long-term and in competitive prices, since the main aim of DEPA is to expand the use of gas domestically and also to expand its reach in regional markets through the use of interconnectors. He also talked about synergies between TAP and DEPA. An interesting aspect was that Manolis also connected the future transfer of Azeri gas into Europe with the recent offshore gas discoveries in the East Mediterranean. In that sense he informed the public that DEPA is concurrently drafting its strategy to combine its relation with Azeri sources, along with the East Med. gas pipeline from Cyprus, the construction of the Aegean LNG terminal which will import and export gas to and from the international markets and the IGI plan to transfer gas to Italy, coupled with the IGB pipeline to Bulgaria. The grand plan of DEPA as it was presented is to make Greece a natural gas hub by using the quantities other neighboring nations either produce or trade en mass. For this reason Manolis believes that synergies between DEPA and TAP are far-reaching and for the long-term.
The former energy minister, Ioannis Maniatis in his turn expressed his hope that the Shah Deniz will decide upon purely technical, finance criteria between TAP and Nabucco and in such a case the selection of the former is a certainty. All of the attendees expressed their hope that the selection is due to be concluded soon, so as for projects to take off as soon as possible.
Overall, an interesting aspect is that there is almost universal acknowledgement in Greece that TAP constitutes a milestone in terms of energy security and investment boost for the country, while Athens is obviously drafting plans to combine this pipeline with peripheral projects that involve also liquefied gas and an interconnection with all local Balkan markets, such as the Ionian Adriatic Pipeline (IAP) that was officially agreed upon to include Croatia on the 13th of June in Dubrovnik and is widely seen as a move of the Western Balkan countries and Greece to boost TAP's chances to be selected by Azerbaijan's gas consortium. This pipeline will need additional volumes of 5 bcm per annum and will open up the gas markets in these countries which have rising needs.