An ambitious investment plan by DESFA, Greece’s natural gas grid operator, featuring well-publicized as well as lesser-known projects, appears to depend on the troubled sale of a 66 percent stake in the company to Azeri firm Socar.
A close look at the figures concerning the investment plan, drafted by DESFA with the sale to the Azeri energy company in mind, leads to this conclusion. As has been widely reported, Socar no longer appears to be keen on finalizing the pending DESFA deal, which places the Greek gas company’s investment plan in doubt.
Socar’s interest in completing the DESFA deal, stalled by a European Commission investigation over EU law concerns, is, at this stage, believed to be lukewarm, at best.
Just days ago, DESFA submitted an application to the European Commission for Greek Stream – the local segment of Turkish Stream, Russia’s latest natural gas supply proposal to Europe, via the south, from the Greek-Turkish border area – to be classified as a Project of Common Interest (PCI), meaning priority funding would become available.
DESFA’s investment plan includes an extensive list of projects. One of these concerns upgrading LNG terminal facilities in Revythoussa, an islet in the Saronic Gulf, close to Athens. Its completion, which would increase the facility’s annual capacity by forty percent, has a budget of 180 million euros.
Another project included on DESFA’s investment plan is the Vertical Gas Corridor (VGC), to interconnect the Greek, Bulgarian, Romanian, and Hungarian gas grids.
Construction of a domestic natural gas pipeline running from the Greek-Turkish border area to Igoumenitsa, northwestern Greece, to be linked with vertical routes, headed both north and south, is also listed. Budgeted at 900 million euros, its development will depend on numerous factors, the most crucial being adequate consumer demand for natural gas.
Other projects included on the DESFA list include connecting to the gas grid major industrial enterprises such as Larko, the state-controlled general mining and nickel producer, which ranks as Greece’s second largest power consuming facility, ELPE (Hellenic Petroleum), as well as smaller-scale industrial plants, at a cost of 250 million euros; and installation of new gas meters and other updates to the system, for a further 100 million euros.
Overall, DESFA will require over 2.2 billion euros of capital between 2015 and 2025, for projects either already under development or still at the planning stage.
If the obstacles impeding the Socar deal are not overcome, DESFA’s ten-year investment plan will be in trouble, which could prompt revisions, as Azeri capital support is anticipated by the plan. Unless, of course, another investor is prepared to step into Socar’s place, such as Belgium’s Fluxys, which has expressed interest in DESFA.