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| Greece’s Alexis Tsipras, centre, and Russia’s Arkady Dvorkovich at the trade fair in Thessaloniki. (PA) |
Now that the Turkish Stream gas pipeline project is back on the agenda, Russia is making a push for a new "southern corridor" that would see its gas pumped across Greece to the Balkans and Central Europe.
During a visit to the Greek port town of Thessaloniki on 10 September to attend an international trade fair, Russian Energy Minister Alexander Novak and Deputy Prime Minister Arkady Dvorkovich pitched the idea of a new east-west pipeline network with Greece at its epicentre.
Russia’s master plan is to revive the Interconnector-Turkey-Greece-Italy (ITGI) project, devised in 2005 by Italy’s Edison – now a subsidiary of France’s EDF – and Greek state importer DEPA as a way of transporting gas from the Caspian to Italy.
The project, which enjoyed strong EU backing, looked dead in the water in 2013 when the Trans-Adriatic Pipeline (TAP) project was chosen by the BP-led Shah Deniz consortium as its favoured pipeline route. But Gazprom is hoping to bring ITGI back to life using Russian gas supplied via Turkish Stream.
In February, Gazprom, Edison and DEPA signed a memorandum of understanding to examine possible Russian gas deliveries via ITGI, and at the end of August Gazprom Chief Executive Alexei Miller met Edison Chief Executive Marc Benayoun in Milan to discuss the project.
The ITGI scheme is made of several interconnected parts. The most valuable is an existing interconnector linking Turkey with Greece that came into operation in 2007 and has a capacity of 11.5 billion cubic metres per year. But the rest of the project is purely theoretical: it includes building a 600 km pipeline across Greece that would be operated by DEPA subsidiary DESFA, and a 200 km offshore pipeline that would run beneath the Ioniean Sea to link the Greek and Italian coastlines.
Gazprom has so far failed to specify which bits of ITGI it is interested in, nor whether it sees itself as a future shareholder in the project. During his recent visit to Thessaloniki, Novak provided few clues – saying only that Greece "fully supports the [necessity] and feasibility" of a new southern corridor.
There are doubts about how a revamped ITGI would be financed and also whether Central Europe needs the extra gas. "I don’t see any future for ITGI. First it is not needed, and second, who would pay for it?" was the blunt assessment of a US-based energy consultant who has been involved with the region for more than 20 years and did not want to be named.
However, Ed Chow, senior research fellow at the Center for Strategic and International Studies, a Washington DC-based thinktank, told Interfax Natural Gas Daily in March that ITGI had a solid foundation on which to proceed.
Russia’s Greek overtures have given State Oil Company of Azerbaijan Republic (SOCAR) plenty to worry about. The company owns a 20% stake in the TAP project and is also in charge of the much larger Trans-Anatolian Gas Pipeline, which will cross Turkey and link up with TAP.
SOCAR seeking DESFA
SOCAR is still hoping to conclude a deal with the Greek government to acquire a 66% stake in DESFA. It would be a strategic coup for the Azerbaijanis, as DESFA controls Greece’s existing gas pipeline network as well as its only LNG import terminal, at Revithoussa.
But there are signs the Greek government is backing away from its sale of DESFA, which was awarded to SOCAR three years ago. SOCAR’s president, Rovnag Abdullayev, failed to hide his frustration this month when he accused Greece of "breaking rules" by introducing new legislation that would regulate gas tariffs and reduce DESFA’s value.
"According to the amended law, DESFA’s value will be cut in half. We are waiting [for the] Greek government to substantiate this," he said. A deadline has been set for the end of September for the matter to be resolved. If it is not, the DESFA sale could be history.
Russia’s charm offensive has strengthened Greece’s aspirations to become an east-west energy hub. As well as TAP, Turkish Stream, planned as two parallel pipelines crossing the Black Sea each with a 15.75 bcm/y capacity – one supplying Turkey and the other Europe – is set to be underpinned by a Turkish-Russian intergovernmental agreement next month.
Mehmet Ogutcu, a former Turkish diplomat who is now chairman of the Istanbul-based Bosphorus Energy Club, said he believes the first stage of Turkish Stream will happen, but that the prospects for a second line will depend on Russia’s ability to convince Greece, and especially the EU, to support the idea of a second southern corridor.
"Turkish Stream might undermine new sources of supply from Kurdistan, the East Med, Iran and Turkmenistan, while at the same time increasing Turkey’s reliance on Russian gas", he said.
Ogutcu’s thoughts were echoed by Marco Giuli, a Brussels-based analyst with the European Policy Centre, whospoke to Interfax Natural Gas Daily last week.
On the surface, Greece is fully supportive of another Eurasian pipeline. But Nikos Asimakopoulos, senior associate at UK-based consultancy Alaco, said the Greek government may be cosying up to Russia to gain leverage from the EU. "Using increased visibility in Moscow to seek concessions from the EU has been a constant feature of the Tsipras government so far," Asimakopoulos said.
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