Italian interest in Russian pipeline reviving ITGI prospects

Update 11.30am: Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis, speaking at an Economist energy conference in Athens today, has confirmed the interest of Italian companies for development of an additional Greek Stream route to Italy, as previously reported by energypress.

“We would not have any objections for a route towards Italy, via the Adriatic Sea, which would then head further north. Besides, Italian companies are declaring their interest in the prospect,” Lafazanis told the conference.

Earlier today, energypress reported:

Russia’s latest natural gas pipeline proposal for supply to Europe, “Turkish Stream”, supported by Greece and intended to reach the Greek-Turkish border area to serve the continent through the Southern Corridor, is now also attracting Italian interest, despite still being at an embryonic stage without any official agreements.

Roberto Poti, executive vice president at Italian energy company Edison, who met yesterday with Greece’s Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis, is expected to refer to the prospect during a speech today at an Economist energy conference in Athens.

During their meeting, Lafazanis and Poti examined the prospect of developing the forgotten Greek-Italian ITGI pipeline plan as an extension of the Russian pipeline, confirming a preceding energypress report.

Edison and DEPA, Greece’s Public Gas Corporation, had founded a joint venture, Poseidon – under a conservative New Democracy government led by Kostas Karamanlis, Greece’s Prime Minister between 2004 and 2009 – to develop a pipeline that would carry Azeri natural gas from Turkey to Greece and then to Italy, via a submarine crossing through the Adriatic Sea. However, the plan was torpedoed after Azerbaijan opted to develop the TAP (Trans-Adriatic Pipeline) project for this purpose.

Now, Greece and Italy are planning to revive the pipeline plan so that it may carry Russian instead of Azeri gas. The Russian pipeline plan entails developing a route through the Former Yugoslav Republic of Macedonia (Fyrom), Serbia, and Hungary to central Europe. Greek and Italian officials are examining the prospect of developing an additional second pipeline segment to cover the old Greek-Italian pipeline route, from Igoumenitsa, northwestern Greece, to Italy, which would bring the ITGI plan back into play.

On recent official trips to Moscow, both the Greek Prime Minister Alexis Tsipras and Lafazanis, the energy minister, have discussed developing Turkish Stream’s Greek segment, dubbed Greek Stream.

Incorporating the ITGI pipeline plan into the new Russian proposal carries several advantages. Firstly, procedures would be swiftened, while preliminary work already conducted for the Greek-Italian plan, as well as amounts already spent, would be utilized. Despite being stalled, the ITGI plan is still classified as a Project of Common Interest (PCI) by the European Union, meaning priority funding would be available.

Another advantage is that the ITGI pipeline plan, which would include Italian and French corporate involvement, could help soften the European Commission’s opposition to “Turkish Stream”. Italy’s Edison is now under the wings of French company EDF. Italian and French support for the ITGI pipeline would be useful in Brussels for Turkish Stream’s chances.

Also, French and Italian involvement would bolster the project’s commercial prospects. Pipeline infrastructure development relies on securing customers to absorb the natural gas to be trasmittted before any talk of infrastructure development can be considered feasible.

Any route revisions would not prompt Russian objections. The key objective, for both the Russian and Greek governments, is to develop a new Russian supply pipeline to Europe from the south.