Gamble to become an energy hub

Once again Greece is back in the news. This time not for its never-ending strenuous negotiations with the European Commission, the ECB and the IMF over the country’s desperate moves to clinch a deal and stay financially afloat and within the Eurozone, but for its bold opening to Russia over her government’s ambitious plans to turn Greece into a regional energy hub. Although Greece is a small energy consumer on its own right, with oil use of some 287,000 barrels per day and gas not exceeding 4.0 billion cubic meters (BCMs) per year, its geographical position favours her becoming a vital corridor for transporting gas from the East to the West. Where the East could be the Caspian region, with its rich oil and gas resources, Iran, which has the world’s largest natural gas reserves, but also Russia which already covers some 30-35% of European gas needs.

Greece currently obtains 65% of its gas supplies from Russia with deliveries first started in 1996 through the TransBalkan pipeline which passes through Ukraine and delivers gas first to Romania, Bulgaria and then splits in two with one branch going to Greece and the other to Turkey. Through an LNG terminal in Revythoussa, an islet off Megara, near Athens, and the Greek-Turkish gas interconnector, which brings gas from Turkey, Greece obtains the rest of its gas quantities. Following an agreement signed in 2013 between Greece and an international consortium, the Transadriatic Gas Pipeline (TAP), a new pipeline will be built which will cross Greece and then move gas through Albania and underwater through the Adriatic to Italy and then to Europe. Construction of this EUR 3 bln pipeline is slated to start next year and will be completed by the end of 2019 transporting some 10.0 BCM from Azerbaijan to Italy. Not a significant amount of gas given European gas consumption, which reached almost 500 BCMs in 2014. Nevertheless, the TAP pipeline is heavily promoted by the EU and the USA as Europe’s best alternative gas supply route in its efforts to diversify its gas intake and lessen its customary dependence on Russian gas. However, even if TAP doubles its capacity to 20 BCM as latest plans suggest, it will still provide insufficient quantities to enable it to play a key part in European gas supply.

Meanwhile, Russian state gas company Gazprom is trying to develop an alternative route to transport significant gas volumes to European companies by bypassing troublesome Ukraine, where currently four of its export pipelines go through. As earlier efforts to develop the South Stream pipeline, which would have taken Russian gas via the Black Sea and then via Bulgaria, Serbia and Hungary to Austria, was abruptly cancelled last December following intense pressure by the EU on Bulgaria to abandon construction of the project, and a host of legal objections which would have made it impossible for Gazprom to sell its gas to its European customers through this particular pipeline. Hence, Gazprom has developed an alternative route also underwater through the Black Sea, but this time landing on the European shores of Turkey and from there through Greece to FYROM, Serbia and Europe. Last week during a visit to Moscow by Turkey’s Energy Minister, Taner Yildiz, and his meeting with President Vladimir Putin, the plans for the construction of this new pipeline were finalised with construction of the pipeline starting immediately and the first phase, to be completed by the end of 2016. This is a huge pipeline with some 64 BCM carrying capacity of which at least 16 BCM will be absorbed by the fast growing Turkish market.

In a highly controversial visit to Moscow

last month