Q&A Session Ahead of 'The Future of Greek Gas and Power Markets'
Natural Gas Europe held a Q&A session with Dr. Kostas Andriosopoulos, Executive Director of RCEM and Assistant Professor of ESCP Europe Business School, along with Alexandros Lagakos, Chairman of the Greek Energy Forum, ahead The Future of Greek Gas and Power Markets: Looking Ahead with Optimism and Realism.
The conference will be held in Athens on 29 April 2014 and will focus on the present day challenges and trends of the Greek and EU gas and energy markets from a strategic and tactical point of view. Key aspects of the modern-day natural gas "game" and how this affects Greece's domestic markets and the overall regional and European impact will also be discussed. Special focus will be paid on trends ahead, which will be of great interest to both governmental figures and corporate entities alike. The event will feature speeches by politicians, top level managers, diplomatic delegations and scientific experts.
"Greece is already on the way of progressing into an energy corridor"
Q: The European energy market and in particular the natural gas market can be said to be in a turmoil and in the midst of significant changes. How do you assess from a strategic point of view the current state of affairs?
A: Europe is currently struggling to balance amongst three fundamental objectives, which are not necessarily fully compatible with one another, hence making this a very challenging exercise; low cost energy, security of supply and environmental friendliness – known as the “energy trilemma”. NW Europe has already gone a long way in boosting market competition but in principle this is not adequate to ensure security of supply. The latter requires long-term investments and hence investment repayment via charges and taxes, which impair the competitiveness of European economies. And so does the element of minimising the carbon footprint of our energy mix. These are all noble causes but the society needs eventually to compromise on the best available solution, in our effort to jointly – but not equally – serve the aforementioned strategic objectives.
We think that natural gas as an energy source fulfills the necessary criteria to become our vehicle for a transition to a cleaner, greener, cheaper and more reliable European energy future.
Q: There has been a lot of talk regarding the “diversification” of European natural gas supplies. Do you think that this is a feasible task and what are the challenges ahead?
A: Yes, we definitely believe so. Europe is a traditional natural gas market and hence fundamentally an attractive destination for global supplies. It is solely up to the EU to promote diversification and enable a market-oriented optimisation of flows within the European continent. In order to achieve this, Europe needs to push on harder for the expansion of market integration to the South through more liberalisation and by providing the necessary funding - not just political support - in exploiting indigenous gas resources and building regional interconnections.
There is definitely a monetary value assigned to European security of supply and Europe must help private investors that financially back important energy projects to realise this economical value in their books. For instance, there is definitely a value for Europe in committing gas molecules that will be extracted from SE Med fields to flow via pipeline to EU soil. This is perhaps not yet reflected in free-market economics, so European governments need to make this business proposition more attractive to private investors that will be considering backing any export solutions for SE Med gas, including of course the preferred solution for the Cypriot Government - that of an LNG facility in Vassilikos.
Q: How can Greece become a 'gas price hub' and what should the priorities be of Greek stakeholders in natural gas sector?
A: Greece is already a meeting point of several different sources of gas, originating from different producers and hence each priced on a different basis; indicative examples include Russian and Azeri gas, Algerian and Qatari LNG. So, inherently Greece has great price optionality at its disposal. At the same time, the existing and prospective interconnections that are on the way (existing interconnections with Turkey and Bulgaria, Trans-Adriatic pipeline, Interconnector Greece-Bulgaria) will further enhance trading activity to monetise regional spreads.
On top of that, projects like the expansion of storage capacity in the LNG Revithoussa terminal, the planning for an underground storage in Kavala together with two new LNG terminals in Northern Greece should provide the option for time-spread plays as well. All these physical developments in combination with the intense and ongoing market liberalisation effort that the current Greek government is promoting have the capacity to develop Greece in a gas price and trading hub for the region.
Q: Regarding the Greek market, do you estimate that the country will become an important player in Europe, either as a producer or an energy corridor?
A: Greek gas findings will be a game-changer for Greece and the SE European region and will upgrade their energy prospects and potential in the long-run. Although the impact of this development for the region will be strong, this will only be evident when Greece has managed to demonstrate its role as an energy corridor for the whole of Europe.
Greece is already on the way of progressing into an energy corridor by enhancing its existing regional interconnections as well as investing in new transit routes of pan-European interest. The IGB pipeline will allow for LNG, as well as Shah Deniz volumes, to flow towards the North, whereas TAP will provide an interconnection (potentially bi-directional) between Greece and Italy from 2019 onwards. So, Greece will shortly have a direct connection to two of the biggest European gas markets: Turkey and Italy. If by then TAG has materialised its announced plan to allow reverse flows to Germany, then Greece will end up having a connection interface (direct or indirect) to almost 90% of the pan-European demand. Therefore, we do foresee a positive and interesting future of the Greek gas market with realism and optimism, as per the title of our prospective international energy conference in Athens, on the 29th of April.