ENERGY INTERNATIONAL RISK ASSESSMENT (EIRA)
AN INDEPENDENT MONTHLY REVIEW
February 2014
VOLUME 2
ISSUE 2
 
Greece To Invigorate EU Single Energy Market

The current energy security hurdles burdening debt-ridden Greece can be matched only by the teasing opportunities of gaining a solid ground in relative energy self-sufficiency. No matter how uncertain these opportunities are for a country still basically dependent on energy imports. The prerequisites for Greece acquiring a higher degree of energy security amount to a combination of positive trends within the EU energy industry and depend on the consistent efforts by governments, energy companies, investors, and regulators.

This concept seems to be at the back of the mind of Greece since it apparently wants to capitalize on its EU Presidency, assumed on 1 January. Greek Energy Minister Ioannis Maniatis made clear the Greek government intends to promote a more assertive energy policy on the national level and within the EU.

“The Greek Presidency in the EU has three chief aims: The completion of the internal energy and gas market, the 2015 goal of interconnecting all member states through gas pipelines and the establishment of the framework for the 2015 international agreement on climate change which will be focused also on the expansion of the use of natural gas,” Minister Maniatis announced lately.

Athens places much emphasis on widening the network of pipelines through the construction of interconnectors. In particular, Greece is interested in forging links between various gasification projects in the Western Balkans with the Ionian-Adriatic pipeline. Besides, the long awaited Interconnector Greece-Bulgaria (IGB) could fit well into the overall concept of creating flexibility of supply.

According to official pronouncements, Greece is keen to push forward the long-cherished projects of the European Commission of unifying Central and Eastern Europe through interconnectors involving Hungary, Serbia, Croatia, Romania and Moldova. The expansion of reverse flow infrastructure coupled with the spread of gas hubs will mold the emerging homogenized EU internal energy market.

The second pillar of energy security in South East and South Europe, according to statements by Greek officials, is the Trans Adriatic Pipeline (TAP) linked to Trans-Anatolian Pipeline (TANAP). TAP will run across Greece and Albania before reaching Italy after traversing the Adriatic Sea and deliver 10 billion cubic meters per year of Azeri gas to European markets.

The third pillar of SEE energy security is the prospect of the eventual untapping of the hydrocarbon resources in the offshore zones of the Eastern Mediterranean. Despite recent confusion over the downgraded estimates of the findings, this resource base might still have a powerful impact on the amelioration of the economic crisis and, potentially even pull out Greece out of its foreign debt’s abyss.

Politicians in Athens show strong commitment to the EU concept of “Southern Corridor” and readiness to lobby its implementation in a wider context, meaning to complement Azeri gas with hydrocarbon from East Med offshore fields, irrespective of its origin, be it Israeli or Cypriot gas. It will perfectly fall within the framework of the EU strategy of diversification of energy sources, aimed to a large extent at mitigating the current dependence on Russian gas supplies.

For the moment Greece cannot free itself from the dominant position of Gazprom who provides the bulwark of gas supplies (total of 2.62 bcm in 2013). Greece keeps paying one of the highest prices for Gazprom’s gas in Europe in absence of a viable alternative, in terms of volumes. Nevertheless, Charis Sachinis, the CEO of DEPA, recently denied media allegations that Gazprom was supplying gas to Turkey at a lower price than to Greece.

However, on the last day of January, it came to pass, the Greek Public Gas Corporation (DEPA) managed to strike a deal amending the price formula which will bring down the actual price for Russian gas.

Greece will assume a stronger bargaining position when Azeri gas will start flowing along the TANAP-TAP, although one has to wait since the project is due for completion only in 2019. Another bargaining chip is the wider use of the LNG unit at Revithoussa, if Cyprus decides in favour of building a liquefaction plant to have enhanced flexibility for exports.

Another valuable asset would be the underground gas storage unit in the South Kavala gas field with chances of capitalizing on its geographical proximity to TAP.

hether or not these plans are built on sand or on solid rock, depends on the business rationale. The epic fail of Nabucco, labelled “Pipeline Opera”, is an indication of the need to make ones’ homework diligently.

“If European energy security remains currently dependent upon Russia today, the quiet close to the “pipeline opera” demonstrates that largescale investment decisions may be dictated by political objectives, but implementation will ultimately be susceptible to economic feasibility,” wrote William Hudec for International Security Observer (ISO).

Greece faces formidable challenges in its righteous ambition to invigorate the EU single energy market but the alternative is much worse.

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