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    Greece Balances its Natural Gas Policy

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Summary

Greek government eyes both Russia and Azerbaijan in terms of strategic gas policy

by: Ioannis Michaletos

Posted in:

Liquefied Natural Gas (LNG), Top Stories, , Trans-Adriatic Pipeline (TAP) , Turk/Turkish Stream, News By Country, Azerbaijan, Russia, , Greece, Balkans/SEE Focus

Greece Balances its Natural Gas Policy

A recent reshuffling within the Greek government of several key Ministries led to the appointment of Panagiotis Skourletis as Minister of Productive Reconstruction, Environment and Energy. Minister Skourletis replaced Panagiotis Lafazanis who is now teamed up with several SYRIZA party figures against the party line of Prime Minister AlexisTsipras to achieve a new bail out agreement with the country's creditors.

As a result, a stabilisation of cabinet priorities is now taking place with regards to Athens' natural gas strategy with an even focus on Moscow and Baku. The previous Minister was widely criticized for an over-reliance on Gazprom, based on beliefs stemming from swift Turkish Stream plans and its Greek Stream offshoot, which aims to devliver gas to Italy.

One of the first initiatives of the new Minister was to arrange a meeting with top-level SOCAR official, Anar Mammadov, who is responsible for ongoing projects in Greece. The meeting concluded with the full support of Athens in the impending privatisation of the Greek transmission company DESFA.

For the time being the deal has been blocked by the EC's Directorate-General for Competition and it is probable that SOCAR will team up with an EU firm in order to buy 49% and an additional 17% in shares to be acquired by a company such as Fluxys. In all terms Skourletis promised that he will prioritize this agreement during his Ministerial term.

Furthermore, Skourletis met with a representation of the Trans-Adriatic Pipeline (TAP) Consortium in Athens, which included Greek Country director Ian Bradshaw, Rikard Skoufias and Director for External Affairs Michael Hoffmann. All sides confirmed their will to proceed as soon as possible with the establishment of the pipeline route and there was a detailed conversation on how to deal with several technical aspects. The Greek side also made a promise to prioritize this project and arrange consecutive meetings between all sides to speed up the process. This is a significant change from the previous administration that requested transfer fees to be paid along with extra infrastructure costs to be made. It's look as thought Athens is fully determined to have the pipeline running by 2019 as prescribed in the Consortium's original business plan.

Minister Skourletis also communicated with Russian Energy Minister Alexander Novak to discuss and re-affirm agreements on both sides for the Greek Stream project. They discussed technicalities such as investment volume, timetable and favoured routes within the country. It was also agreed upon to keep up with joint working groups that will bilaterally set up a conclusive intergovernmental agreement. It is important to note that in order to get a go-ahead for the project, they would have to wait until Turkish Stream is constructed as it will serve as an offshoot. For the moment, Minister Skourletis has guaranteed that in early November 2015 Greek and Russian Energy Ministry representatives will meet in Athens to lay down the prospects of this project, along with a broader range of issues between the two sides, such as extension of a long-term contract with Gazprom, possible price reductions, inclusion of Gazprom in Greek LNG projects and a proliferation of gas used for transportation.

The Greek gas market is on the cusp of a significant shift as Minister Skourletis has vowed to implement full liberalization by early 2018, which is estimated to lead to considerable price reductions both for high-volume consumers and households alike. Together with multiple low and mid-level infrastructure projects and strategic projects such as TAP and Greek Stream, the coming decade should witness a steady growth in gas consumption in the country. Athens-based research institutes such as IENE have concluded that by 2025 Greece could consume 8-9 bcm per year, which would be the second largest in the Balkans. Most importantly, a liberalized market would enable projects such as LNG exporting and LNG fuel supply vessel projects to develop, thus making the country not only a consumer market but also a transit hub for international markets.