Can LNG Save Greece From A Russian Gas Collapse?
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This past week, Greece appealed to the European Union for assistance ahead of a possible halt in natural gas from Russia, by way of Ukraine. The country’s heavy dependence on natural gas imports from Russia, which makes up about 60 percent of its domestic demand, has added Greece to the list of European consumers with an uncertain energy future. As tensions have continued to rise between Russia, Ukraine and most of Europe, the threat of a possible halt in gas imports has forced many to seek out possible alternatives to meet their energy needs, especially ahead of the coming winter months.
Like Italy, Greece has sought solutions both at home and abroad, including new import agreements and the possibility of domestic production. For Athens, this would mean building on existing pipeline traffic from Azerbaijan and expanding the country’s LNG capacity, which led to last week’s appeal to Brussels. In a letter addressed to European Energy Minister Guenther Oettinger, Greek Energy Minister Yannis Maniatis asked for some assurance that surplus LNG would be made available in anticipation of a delay or halt in Russian imports.
Any increase would likely work within Greece’s existing LNG infrastructure as relevant plants are long term and expensive efforts, making it unlikely they would play a part in the short term. Greece may be able to win EU support for LNG expansion in the long term as a part of a concerted effort to invest in connectivity infrastructure projects deemed to ensure energy security for European member states, but any such relief would be very long term.
One possible source of relief for Athens could come in the form of less dependence on Russian gas, which is sold the country at often prohibitively high rates compared with other European consuming countries. While any decline in Russian imports would provide plenty of reason for concern among the country’s commercial and industrial consumers, an increase in LNG could provide lower, comparative pricing arrangements.
Greece has also begun pushing for more domestic production to help ease the country’s consistent dependence on costly imports. Like many in the region, Greece has seized onto the possibility of offshore reserves as neighbors like Cyprus and especially Israel make real headway towards exploration and export revenue. In December, Prime Minister Antonis Samaras suggested that Greece could be home to 4.7 trillion cubic meters of gas could one day provide up to 25 percent of European demand. However, many critics have warned against overstating the country’s potential and the long journey from early studies to actual, viable domestic energy production.
Over the last three years, Athens has also made a concerted effort to lay claim to the Eastern Mediterranean’s recent energy rush, both as a potential transport hub for Israeli and Cypriot gas reserves. Earlier this year, Athens entered the transport conversation by offering a tender for a pipeline project that would transport about 8 billion cubic meters of gas into the European market from offshore fields controlled by Cyprus and Israel. According to a Reuters report, the project would link Israel’s Leviathan natural gas field to Europe by way of Greece through the IGI-Poseidon pipeline, managed by Italy’s Edison and Greece’s state-backed utility, DEPA.
Link to source: http://www.forbes.com/sites/christophercoats/2014/08/26/can-lng-save-greece-from-a-russian-gas-collapse/
