South East Europe: Greece the Gateway for the EU Gas Supply

By virtue of its geographical location, the strategy of Greece in the natural gas sector is to contribute to the development of a competitive, liquid market in South East Europe and to maintain the momentum on energy security as well as the need for further diversification of sources and routes. For this, Greece is supporting projects to function in reverse-flow infrastructure that will enable gas to be priced at actual market conditions. As the European Commission noted in its 2011 report on energy markets “in light of its geographical location, Greece should facilitate cross-regional projects aiming at market integration and diversification”.

South East Europe (SEE) is the closest market via Greece, to new sources. Moreover the selection of Trans Adriatic Pipeline (TAP) consolidates Greece’s position as Europe’s gateway for Caspian gas and could boost the development of further infrastructure and the market.  In addition, SEE is a growing market in urgent need of both diversified sources and the corresponding infrastructure, and it is one of the regions with the most “catching up” to do, in order to bridge the energy gap with North West Europe.

With the selection of TAP and the sales agreements concluded between European gas companies and the Shah Deniz II consortium, the development of the Southern Corridor is underway. However to be successful, the Southern Corridor should not only be limited to the markets which are directly on TAP’s route but also to look at how synergies between existing or planned infrastructure can be developed in order to enable as many states as possible to have access to diversified sources of gas. Together with the European Commission, Greece is promoting cooperation of Member States on the basis of targeted MOU’s.  Moreover, let us not forget that the 10 billion cubic meters coming from Shah Deniz II represents only 2% of the EU’s demand for gas. Therefore the possibilities for more supplies, from the Caspian, the Eastern Mediterranean, including possibilities for indigenous production in Mediterranean Member States, should be further explored.

It is also expected that the Interconnector Greece-Bulgaria (IGB) will strongly impact the SEE market and the Governments of both Greece and Bulgaria have recognized it as a project of national importance. Its regional significance has been reaffirmed by European institutions which are stead-fast in their support. The Greek Public Gas Corporation DEPA has entered into a constructive relationship with the European Bank for Reconstruction and Development regarding financing. The EU has allocated 45 million euros towards IGB’s realization and the project is being seriously considered as a Project of Common Interest (PCI). IGB literally constitutes a gateway, providing access of diversified sources of gas to the markets of SEE and creates synergies with smaller interconnectors in the region (eg: Bulgaria-Romania). Also by working in reverse flow it significantly enhances the region’s energy security. Finally it is ideally located to carry gas from existing (Revithousa) and planned (Aegean LNG) regasification terminals in Greece. The project has obtained the necessary environmental licensing. The Final Investment Decision is scheduled to be taken within 2014. However IGB is a project which can create synergies with TAP for the benefit of the SEE region and this should be endeavored.

DEPA is also working on the Aegean LNG terminal (floating storage and regasification unit). While today only 20% of Europe’s gas supplies are transported through shipping the EU is now encouraging investments in LNG a means to boost liquidity. In this context - and having worked with the European Commission –the Aegean LNG can be selected as a PCI project.  The advantages of this project are that it will facilitate the SEE region’s access to more LNG capacities (in addition to the LNG terminal in Revithousa) and, working in conjunction with the IGB, it has the potential to make a real contribution to the market’s integration and development. The feasibility study has been completed, the project’s technical feasibility has been established, the Environmental Impact Study has been awarded and work has recently begun. In order to benefit from the advantages of a competitive and liquid market which prevail in North West Europe, the Balkans need to urgently develop infrastructure to increase market integration and deliver diverse supplies of natural gas.

Both IGB and Aegean LNG projects are designed to promote this objective efficiently because this LNG system constitutes a single EU entry point through which multiple countries may be served and creates synergies with other infrastructures as well as the Aegean LNG is the closest and least expensive route to the Greek, SEE and Turkish markets.

Theodoros Christopoulos, Energy attache, Permanent Representation of Greece to the EU