Conflicting Greek Gas Policy
Since its ascent to power in early 2015, Greece's SYRIZA government has been primarily occupied with debt issue negotiations but is also striving to enact an ambitious gas strategy.
These initiatives are mostly related into establishing a natural gas hub in the country by accepting or participating in multiple pipeline projects and assorted infrastructure. Nevertheless it appears up to date that this has lead into a contradicting strategy that bears little fruit. In the meantime the country has prepared itself on an energy level for the so-called GRexit.
First of all the Interconnector Greece-Bulgaria (IGB) once more is being postponed, regarding its Final Investment Decision (FID), which was supposed to be signed between Athens and Sofia in late June 2015. It appears that this will be achieved later on in the summer, though events also depend on Gazprom-led Turkish Stream. Furthermore, the Greek Energy Ministry is pushing forward the Trans-Adriatic Pipeline (TAP), by sticking to its investment and project schedule and claiming that it could run in parallel and in conjunction with the Turkish Stream.
The important aspect is that the former has a vital need of interconnecting itself with Bulgaria, so as to link the Azeri producers with Bulgaria, which has committed to buying quantities via that route. Greek Energy Minister Panayiotis Lafazanis is pushing forward with Turkish Stream on the other hand by initiating the signing of an agreement between Athens and Moscow by July 2015, before even the Turkish government agrees, which means that currently the pipeline cannot be officially considered as a route after all.
Russian Gazprom and governmental officials in Moscow tend to keep a much lower profile and expectations than Athens. Any investment decisions for Turkish Stream, even at a preliminary level, must to go through Turkey which is the main partner and entry point and then other countries such as Serbia or Hungary should also become parts of it, otherwise there is no practical aspect of pursuing such a route. Thus they are hesitant to confirm Greek initiatives and more reluctant regarding the downpayment of an estimated $5 billion investment that Greek pro-governmental media are relaying over the past period. In fact it is quite obvious to the "specialists" of pipeline strategy in the region that Turkish Stream is a major diversion used by Russia vis-a-vis its relations with Ukraine and not a project for establishing a new route per se.
It would appear, then, that US geopolitical objections to it have to do with the embroilment of Washington and Ukraine, since the US Administration views an alternative route as a downgrading of the Ukrainian transit route thus nullifying the importance of that country as a leverage both towards the EU and Russia. Therefore, the Greek initiative with Turkish Stream only results in downgrading its relations with both the US and Bulgaria without getting any reward points from Russia or Turkey. More importantly it becomes indirectly involved in the Ukrainian crisis. The SYRIZA Administration has also followed a contradictory policy by rhetorically supporting Eastern rebel territories but practically and substantially the Kiev Administration. Of course this is another story, not related to gas or energy.
More interestingly, a major focus of the Greek gas strategy which has been followed for years by successive Administration was the ability to use certain Greek maritime locations as an entry point for LNG sourced gas. Again, rhetorically the current government agrees and emphatically, but on practical terms it has relayed that it is against the only mature project so far, the Kavala LNG terminal which has already been accepted in the Projects of Common Interest (PCI) by the EU and has completed its technical studies, reaching the level of requesting international financing. Concurrently, Alexandroupolis Offshore LNG installations, which is also an infrastructure project in preparation has received no back-up by Athens and in sort the LNG strategy seems to have stopped in effect, despite continuous reassurances.
GRexit in the works
The Greek exit from the Eurozone which is a hypothetical scenario by which Greece, due to its mounting debt issue, will be "forced" to exit the Euro currency zone and adopt its own national currency, is gathering in pace, judging from the negotiations between Athens and its lenders. Regarding the energy sector, Greece is actually well prepared for such a scenario. A prominent Greek energy expert Kostis Stambolis informs that the country can rely on lignite for its electricity production, solar energy, biodiesel and wind energy to cover almost 95% of its current energy use. Regarding oil, although the country imports almost 100% of it, it has already secured 120 days of strategic reserves which will be extended by an obvious national energy use restrain policy, giving thus a period to adapt to the new currency beore re-enacting major purchases. The gas sector will suffer more, since reserves are enough for not more than 20 days of consumption on par with today’s levels.
On the other hand, due to the country's favorable climate which does not experience winter season until December, the consumption of the households, electricity power stations and small businesses could be eradicated and the gas could be directed for the use of big industries only. In such a case there should be enough for the next 160-180 days or even more.
It should be noted that the above only covers a small segment of an overall review of a GRexit scenario in the energy sector. The ability of the country to receive substantial amounts - compared to its GDP - of foreign currency due to tourism (US$20 billion per annum) and shipping (US$18 billion), should suffice for an extended period of 12-18 months needed to secure vital oil and industrial good imports before the new currency could be stabilized. Additionally, Greek citizens living at home and abroad looking to invest in the country would contribute by taking advantage of a depreciating new currency by buying assets via importing foreign exchange.