The promising remarks offered by Prem Watsa, founder, chairman and chief executive of Toronto-based Fairfax Financial Holdings, on the Greek government’s ongoing efforts, may contain well-hidden doubt, but no reservations whatsoever are being felt by investors for gas supply to Greece and local gas infrastructure development.
US officials have remained steadily focused on the sector. Development of the LNG station in Alexandroupoli, northeastern Greece, was raised during talks between a delegation of 17 major American entrepreneurs and Greek government officials last Friday.
Less enthusiasm is being expressed for the Israeli-Cypriot-Greek East Med gas pipeline project, as its construction cost is currently made unfeasible by the significant drop in oil and gas prices.
The interest of US firm Cheniere Energy was also discussed during last Friday’s talks between the investors and Greek Prime Minister Alexis Tsipras along with other government officials. Less than two months ago, Cheniere officials declared the LNG-focused enterprise is ready to invest in Greece.
At the time, as still remains valid, it was noted that the level of consumer interest in the wider region for American LNG would be pivotal in Cheniere’s decision to participate, as a minority shareholder, in Gastrade, a Copelouzos corporate group company established for the development of the Alexandroupoli LNG terminal. It will supply the wider region.
To date, Cheniere has held talks with DEPA, the Public Gas Corporation, also a potential participant in Gastrade, and Bulgargas. No agreements have been signed.
Development of the Greek-Bulgarian IGB Interconnector and the result of a second market test for this project, now in progress to determine the interest level of traders, are also crucial for the Alexandroupoli LNG station’s prospects. Cheniere has not expressed any interest in booking a percentage of IGB’s capacity as the company believes this is the responsibility of buyers, not gas suppliers.
Greece’s gas sector aside, it does not look like US investors are keen to place any amounts in the Greek market in 2016. In other words, many local officials believe the current year will be another wasted year with regards to the talk of US investor interest.
Last year, foreign investors, anticipating that the latest review of Greece’s bailout reforms would have been completed this February, had forecast some recovery and an injection of investments by the second half of the year. However, all is now being delayed by the bailout review’s delay.
Even if the review process is completed late in March or early April, as is expected by finance minister Euclid Tsakalotos, 2016 will have vanished by the time any investment activity is generated. Unfavorable local developments are also holding back US investors.