Greece at heart of regional gas infrastructure development [Gas in Transition]
Almost 20 years ago, Southeast Europe was in trouble. Russia was embroiled in a dispute with Ukraine over gas transit, prompting Moscow to halt gas supply in the winter of 2006 and again in 2009, plunging much of southeastern and eastern Europe into a deep freeze.
At the time there was much debate over what competing pipeline infrastructure projects might best transport the huge reserves of natural gas in Azerbaijan and even Turkmenistan to Europe. Also under debate was a system to provide all of the EU’s members in Eastern Europe with energy security. At the time, the region lacked interconnection, and most infrastructure was designed only to supply Russian gas.
Infrastructure projects at play
What were once ideas have since become EU-backed realities. The Southern Gas Corridor (SGC), consisting of the South Caucasus Pipeline (SCP), the Trans Anatolian Natural Gas Pipeline (TANAP) across Turkey, and the Trans Adriatic Pipeline (TAP), crossing northern Greece, Albania and the Adriatic Sea to southern Italy, now carries gas from Azerbaijan. The Interconnector-Greece-Bulgaria (IGB) transports Azeri gas to Bulgaria and intersects with the SCP at Komotini in northern Greece. It also runs south to the port of Alexandroupolis on the Aegean Sea, where a new floating storage and regasification unit (FSRU) is being installed and will come into operation in the first quarter of 2024.
The arrival of the Alexandroupolis floating storage and regasification unit (FSRU) in December 2023. Image credit: Gastrade
Greece already has one onshore LNG terminal at Revithoussa near Athens. In January, the Greek company Gastrade will take delivery and oversee the installation of the 153,000-m3 capacity vessel, Alexandroupolis, an FSRU named after the northern Aegean Greek port. Gastrade is scheduled to take delivery of the first LNG cargo in January for testing and then bring the vessel, which has a regasification capacity of 5.5bn m3/year, into operation during the first quarter.
The FSRU is the first in Greece, and probably not the last. It will be anchored 18 km offshore in the Sea of Thrace and linked to the mainland by a 28-km pipeline covering onshore and offshore sections that will enable it to connect to Greece’s domestic gas grid and also to the TAP/IGB intersection at Komotini, putting it at the center of a growing pipeline network expanding into Southeastern Europe.
Alexandroupolis will be able to receive gas from any LNG producer, but much is being said about its receiving gas from the East Mediterranean states of Israel and Cyprus. Natural gas pumped from offshore fields in those countries is expected to be exported to Egypt and processed into LNG at either Egypt’s Idku or Damietta LNG facilities. Israeli gas is already being exported to Egypt, but it is unclear if any is being re-exported as LNG.
Furthermore, there are reports from Greece saying that Gastrade is thinking of installing a second FSRU at Alexandroupolis, and that Greece’s Mediterranean Gas company, in which ExxonMobil is a partner, is planning to install an FSRU in Volos. There is also speculation that Dioriga Gas, a subsidiary of Motor Oil, could install yet another FSRU in the Gulf of Corinth.
Bulgarian media has reported that Bulgartransgaz, Bulgaria’s state-owned transmission operator, is interested in participating in another Greek FSRU. It is already a 20% partner in the Alexandroupolis project. Bulgaria is also making progress on its only underground gas storage facility at Chiren, which will also serve to supply gas to countries through the pipeline links. Greece is also constructing a subsea gas storage facility in a depleted gas field at Kavala.
With Alexandroupolis starting operations in the near term, the EU is supporting capacity expansion of the Greek and Bulgarian-owned IGB from its current 3 to 5bn m3/yr in 2024.
For the EU, the IGB is essential for supplying countries in the region, especially Moldova and Ukraine. The EU also sees the IGB as crucial for the success of the Vertical Gas Corridor (VGC) projects that will link Greece, Bulgaria, Romania and Hungary, and provide eastern countries with an alternative to Russian gas, which is still making its way into the region, primarily through Turkey.
The VGC will interconnect bi-directional pipelines, providing energy security for neighboring states. Work on the EU-backed project is taking shape and discussions are underway to boost the capacities of those pipelines as well. A further thought is that of building out the pipeline system to reach gas transmission systems in the northern countries of Eastern and Central Europe, making gas available to all from several points of origin.
Turkey is supplied with most of its gas by Russia through the Blue Stream and TurkStream subsea pipelines across the Black Sea. TurkStream extends into European Turkey and Bulgaria from where Russian gas is pumped to other nearby European states, including Serbia.
In early December, Serbia, Bulgaria and Azerbaijan commissioned a new interconnector pipeline with a 1.8bn m3/yr capacity. The new pipeline will run between Bulgaria and Serbia and will deliver Azeri gas to Serbia. The gas will arrive in Serbia via the SGC and the IGB.
Greece and Northern Macedonia have recently agreed to build a 123-km gas pipeline that will connect with TAP and provide an alternative to the existing pipeline extending from Bulgaria that delivers gas from Russia. The 1.5bn m3/yr capacity pipeline is under construction and is scheduled to begin operations before the end of 2024. The pipeline can be expanded to 3bn m3/yr.
Southeastern Europe is also served by an FSRU installed at the port of Omisalj in Croatia. Located at Krk Island, Krk LNG has a capacity of 2.9bn m3/yr.
Plans have also been proposed for a gas pipeline running along the Adriatic coast if Azerbaijan boosts its gas volume through the SGC and TAP to 20bn m3/yr in 2027 as planned. The Ionian Adriatic Pipeline (IAP) would connect with TAP in Albania and pass through Montenegro, Bosnia and Herzegovina, running as far north as Split, Croatia, ensuring energy supplies to those Balkan states and making Greece’s pipeline systems and LNG terminals all the more important to regional gas security. But it will take a boost in exports from Azerbaijan before much more is heard about IAP.
EastMed on the chopping board?
One project that is not receiving much attention these days even though it remains on the European Commission’s list of Projects of Common Interest (PCI) is the EastMed Gas Pipeline proposed by Greece’s IGI Poseidon and Italy’s Edison. The scope of that project calls for gas from Israel and Cyprus to be transported to Europe via a 2,000-km long deep-sea pipeline that could reach depths of 3 km. The pipeline would find its way to mainland Greece, run up its western coast and cross the Adriatic into Italy.
EastMed has fallen in and out of favor on several occasions. Currently, it looks like a non-starter due to a cost of at least $7bn and logistics and other questions about the best markets and how to get East Mediterranean gas there. If Israel and Cyprus gas goes to Egypt, then the EastMed will probably not happen.
Overall, it appears that Greece is going to come out ahead amongst countries that declare their desire to be a “gas hub.” Greece is already in that position, with the capacity to receive and transport gas in all directions.