East Med project feasible, IGI Poseidon chief tells conference

Elio Ruggeri, CEO of IGI Poseidon, has stressed the importance for southeast Europe of the East Med pipeline, a project to link Greece with major natural gas deposits in Cypriot and Israeli territorial waters, in a speech delivered at an Economist conference in Athens.

Ruggeri noted that the IGI Poseidon consortium is contributing to the effort to develop a natural gas corridor of multiple uses in the wider region, which will include Russian gas, the most important aspect.

“We are making an effort with Gazprom and, by the end of the year, will know whether the idea will lead to some sort of initiative,” Ruggeri remarked.

Ruggeri added that IGI Poseidon will seek to bring East Mediterranean natural gas to Europe via the East Med pipeline, adding that the project is technically and economically feasible. “There were doubts in the past. We examined the technical and economic sustainability through studies conducted by a leading research firm. This study was completed and showed that the project is technically feasible. Without a doubt, the project can be constructed. The project is also economically sustainable,” Ruggeri noted.

He also said that major potential exists for further natural gas discoveries in the East Mediterranean. “This could mean a new Norway. The region wil require many export solutions. Production and export must be co-developed,” he noted.

TAP consortium has received over 2,500 pipelines for project

Over 2,500 pipelines have been received by the TAP (Trans Adriatic Pipeline) consortium from the Greek ports of Thessaloniki and Kavala, and by rail. A total of 32,000 pipelines will be installed on Greek territory.

The project’s developers have begun preliminary groundwork for the installation of the pipelines, to cross northern Greece as part of the route carrying Azeri natural gas to Europe, via Italy.

The consortium has needed to use the railway network as a result of strike action, lasting many days, at the ports of Piraeus and Thessaloniki.

Rikard Scoufias, TAP’s Country Manager for Greece, who is taking part in an Economist conference today, will present a progress report on the preliminary work being carried out and will also discuss the project’s importance for EU energy diversification.

The TAP official is also expected to make reference to two other possible projects, the floating LNG station in Alexandroupoli and the IGB interconnector between Greece and Bulgaria. A decision on the IGB project is expected in September, after gas trading firms have submitted binding offers for pipeline capacity.

TAP’s Greek segment will measure 550 kilometers in length. The total weight of pipelines to be used will amount to 323,000 tons, the equivalent of 44 Eiffel Towers.

Compressor upgrade to boost Greek-Bulgarian trade ability

The upgraded natural gas system compressor at the Greek-Bulgarian border, launched yesterday in Petrich, southwest Bulgaria, at a ceremony attended by the neighboring country’s Prime Minister Boyko Borisov and energy minister Temenuzhka Petkova, provides new standards and potential for bilateral natural gas trade, including greater inflow from the north.

The compressor, linked to Sidirokastro on the Greek side of the border, will be able to operate in reverse flow at a capacity of three billion cubic meters (bcm), annually, and ensure natural gas supply from Greece for Bulgaria, if required, the Bulgarian energy ministry noted in an announcement.

Petkova, in her statements, highlighted that Bulgaria now possesses the means to receive natural gas from Greece’s existing LNG terminal in Revythoussa, an islet just off Athens.

Upgrade work completed over the past eight months at three more Bulgarian compressor stations, in Strandzha, Ihtiman and Lozenets, will enable greater natural gas imports into Greece from Bulgaria via pipeline infrastructure and also enhance regional gas trade potential, market officials noted.

Earlier this month, small amounts of natural gas were imported into Greece via pipeline by a private-sector trading firm for the first time after pipeline capacity normally reserved for DEPA, the Public Gas Corporation, was made available.

DESFA, Greece natural gas grid operator, and its Bulgarian counterpart Bulgartransgaz are close to finalizing an interconnection agreement that promises to broaden natural gas trading potential.

DEPA, in a statement, offered its support to the ongoing talks between the two natural gas grid operators, noting that all necessary conditions are being established for robust competition in the Greek natural market, which, ultimately, will lead to lower prices for consumers.

 

 

German deputy chancellor to visit following Putin, Valls

Germany’s Vice Chancellor Sigmar Gabriel is scheduled to visit Greece on June 30 as part of the Greek government’s wider effort to draw capital and promote privatizations, two fronts in urgent need of momentum.

Gabriel, head of the Social Democratic Party, part of Germany’s grand coalition, will, according to sources, be joined by MPs and entrepreneurs interested in energy-sector deals, especially renewable energy.

Gabriel’s visit to Athens will be the third in a month by a top foreign government official following the recent visits by Russian president Vladimir Putin and French prime minister Manuel Valls. Though both Putin and Valls had included energy on their agendas, no groundbreaking developments were achieved.

Germany is particularly interested in wind energy investments. The country’s interest was made clear in 2011 when Greece’s ex-finance minister Giorgos Papaconstantinou had proposed an ambitious plan, dubbed “Ilios”, for export of Greek solar energy to Europe. Also, joint Greek-German RES investments had been discussed in 2014 during a meeting in Berlin between Greece’s former foreign minister Evaggelos Venizelos and Gabriel. However, no further progress was made. Former energy minister Yiannis Maniatis, in other Greek-German talks, had looked into the possibility of establishing a superfund to provide funds for eco-friendly upgrades of buildings. German bank KfW, Maniatis had noted at the time, was planning to contribute 100 million euros to this fund. However, national elections intervened and the initiative was halted.

Besides RES interests, German officials are also keeping a close watch on matters such as the TAP and IGB pipelines, the EU’s energy policy, as well as climate change issues amid the environmental targets set for 2030.

 

TAP official: ‘Work to start in 2016 and be completed in 2020’

Construction work on the Trans Adriatic Pipeline (TAP) section traversing Greece will begin within 2016 and the project will be completed by 2020, Rikard Scoufias, TAP’s Country Manager for Greece, assured during a speech at a conference organized by TEE/TKM, the Technical Chamber of Greece/Central Macedonia Section.

Scoufias noted the TAP project stands as “yet another sign of the confidence towards Greece,” while also stressing that the pipeline promises to bolster Greece’s geostrategic role on the energy map.

Scoufias said the TAP consortium is satisfied by its association with the Greek State. He reminded that the first deliveries of steel line pipes and bends to be used for the pipeline’s construction arrived at Greece’s ports of Thessaloniki and Kavala in May.

“Roughly 1,500 pipelines arrived in Thessaloniki and Kavala. Each pipeline measures 80 meters in length and weighs 10 tons. A total of 32,000 pipelines will be installed on Greek territory, while, overall, TAP will be comprised of 53,000 pipelines weighing 500,000 tons,” Scoufias said.

The TAP project will carry Azeri natural gas through northern Greece, Albania, and across the Adriatic Sea to Italy.

Scoufias also pointed out the project’s excellent safety record, noting that safety standards are being fully observed.

He noted that 150 companies active in Greece have so far collaborated with the TAP consortium “not because they are local but the best.”

Local communities are very supportive of the project, Scoufias said, adding that some 600 meetings have been held with local communities to resolve issues.

 

Poseidon reaches agreement with Noble for East Med preliminary work

Athens-based Poseidon SA, a 50-50 joint venture involving DEPA, the Public Gas Corporation, and Edison, has signed an agreement with Noble Energy International Ltd to finalize preliminary procedures for the East Med pipeline ahead of the project’s Front End Engineering Design (FEED) stage. As part of the agreement, Noble will also conduct a sustainability study for the prospective pipleline, to carry natural gas exports from major deposits discovered in the East Mediterranean region.

The East Med pipeline has been designated as a Project of Common Interest (PCI) and is supported by the EU through the Connecting Europe Facility (CEF), a co-funding program.

The East Med project received two million euros in 2015 through the CEF program to fund activies preceding the FEED stage.

Poseidon is involved in the development of three major natural gas pipeline projects, the Poseidon pipeline, a submarine passage linking northwestern Greece with Italy’s south, the IGB, to interconnect northeastern Greece with southern Bulgaria, and the East Med, planned to run from Cyprus to Greece’s northwest via Crete.

The East Med project, including submarine and overland segments, will cover a distance of roughly 1,900 kilometers. It is being planned to carry as many as 16 billion cubic meters of natural gas per yer (bcm/y) from major Levantine Sea deposits located in Cypriot and Israeli territorial waters. The East Med pipeline may also carry possible natural gas deposits in Greek territory.

East Med, combined with the Poseidon and IGB projects, will be able to supply natural gas to Italy and other countries in Europe’s southeast.

 

 

 

First TAP line pipes arriving in Thessaloniki and Kavala

The first deliveries of steel line pipes and bends, to be used in the construction of the Trans Adriatic Pipeline (TAP) section traversing Greece, have started arriving at the ports of Thessaloniki and Kavala, in the country’s north, the TAP consortium has announced.

A ceremony marking the beginning of construction for the project was held last week in Thessaloniki under the auspices of Greece’s Prime Minister Alexis Tsipras. The event was also attended by top-level representatives of countries participating in the implementation of the Southern Gas Corridor; the European Union; the US, Bulgaria and Switzerland.

The first vessels and trains to arrive carried approximately 1,500 line pipes and 200 bends. These will be stored at the Main Marshalling Yards of Thessaloniki, at the Thessaloniki Port Authority, and at Kavala, at its “Philip II” port. All pipes will subsequently be transferred along the routing of the pipeline.

“The delivery of line pipes and bends to the ports of Thessaloniki and Kavala marks the commencement of the construction period for the Greek section of the pipeline. This is the most significant stage of the biggest energy infrastructure project to be currently implemented in Greece, which – thanks to the excellent cooperation of all stakeholders – is advancing as planned and will be ready to receive gas in 2020,” noted Rikard Scoufias, TAP’s Country Manager for Greece. “The deliveries of materials by the contractors are executed in accordance with TAP’s high health and safety standards,” he added.

Approximately 32,000 line pipes will be used for the construction of the pipeline section crossing in Greece. Line pipes are produced by the Greek company Corinth Pipeworks SA (495 km) and the German company Salzgitter Mannesmann International GmbH (270 km). Salzgitter is also manufacturing the hot formed bends.

A total of 323,000 tonnes of steel pipes, the equivalent of 44 Eiffel towers, will be used for the 550 km of pipeline to be constructed in Greece.

TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 878 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before reaching southern Italy.

TAP’s routing can facilitate gas supply to several South Eastern European countries, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, Croatia and others. TAP’s landfall in Italy provides multiple opportunities for further transport of Caspian natural gas to some of the largest European markets such as Germany, France, the UK, Switzerland and Austria.

TAP will promote economic development and job creation along the pipeline route and will be a major source of foreign direct investment. With first gas sales to Georgia and Turkey targeted for late 2018, first deliveries to Europe will follow approximately one year later in early 2020.

TAP’s shareholding is comprised of BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

Time is ripe for investments, PM highlights at TAP launch

Development of the TAP (Trans Adriatic Pipeline) project, to carry Azeri natural gas to Europe via a route including Greece’s north, combined with the anticipated completion of the first review of Greece’s third bailout package by international lenders, promises to pave the way towards major investments in the country, Prime Minister Alexis Tsipras noted during his speech at a ceremony held in Thessaloniki today, marking the launch of construction work for TAP’s Greek segment.

“The hope that we are overcoming the [recession’s] most difficult stage and opening up to the prospect of stability removes a sense of uncertainty that has surrounded the Greek economy and also creates a stable environment for attracting investments,” Tsipras remarked at the TAP ceremony.

Tsipras predicted economic growth from the second half of 2016 and onwards, noted that Greece’s unemployment rate is now de-escalating, and added that the next tranche of bailout money would be used to also cover amounts owed by the State to citizens, all of which would gradually put Greece on a path of sustainable growth, according to the Prime Minister.

Tsipras said the TAP project was justifiably regarded as one of the world’s biggest energy projects at present, adding that it could be interconnected with other existing and future pipelines for access to more markets. He cited the prospective Greek-Bulgarian IGB interconnector as an example, noting its development will serve as a bridge to supply natural gas to central and east Europe.

The Prime Minister once again stressed that Greece is developing into a multidimensional energy hub along with the transformation of southeast Europe’s energy map. He cited the IGB, the prospective LNG floating station in Alexandroupoli, northeastern Greece, and the current upgrade of the existing LNG facility in Rethythoussa, an islet close to Athens, as developments that are reshaping the country’s production potential.

Tsipras pointed out that the TAP project’s budget for the local segment is worth over two billion euros and promises to create 8,000 jobs in Greece.

The project’s development comes at a critical time for the region as “Caucasus and central Mediterranean countries are being called upon to bolster stability and cooperation in an area of conflict,” Tsipras said.

He ranked the TAP project as the biggest foreign investment in Greece, highlighting the involvement of Greek firms and resulting lower energy costs for enterprises.

Georgia’s Prime Minister Giorgi Kvirikashvili, who attended the ceremony, said the TAP project will create a total of 30,000 jobs in the countries it will cross.

Azerbaijan’s First Deputy Prime Minister Yaqub Eyyubov made reference to the role to be played by the Southern Corridor as an alternative energy source, noting it will support the European plan for diversified energy sources and increased energy security.

Ian Bradshaw, the TAP project’s managing director, also made note of the pipeline’s role in diversifying the EU’s energy sources and also took the opportunity to thank Greece’s Prime Minister and the Greek State for the support offered.

Maros Sefcovic, the European Commission vice president responsible for Energy Union, who delivered his speech in the Greek language, described the day as historic and the Southern Corridor as the biggest energy project being carried out at present.

The project’s significance was also underlined by Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, who relayed a message from John Kerry, the Secretary of State. “Completion of the Southern Corridor must stand as a priority in order to ensure energy security. The US supports this project which offers new hope for stability in the region,” Hochstein remarked. “The pipeline can make a difference in the region and help areas that face serious issues with monopoly-related problems,” he added.

Turkish energy minister Berat Albayrak stressed that TAP, along with the TANAP project, will supply greater amounts of natural gas to the region. “We are ready to discuss all the economically feasible projects to support energy diversification,” Albayrak said.

Italy’s minister of economic development, Carlo Calenda, said the Italian government has actively supported the TAP project and recently granted permits for the project’s development.

Bulgarian energy minister Temenuzhka Petkova informed that Bulgaria’s government is placing great emphasis on the Greek-Bulgarian IGB interconnector, to be linked to the TAP pipeline. The second round of a market test for the IGB will begin in June, she noted.

Geopolitical activity heightens for TAP work launch ceremony

Tomorrow’s ceremony to launch construction work for the Greek segment of TAP (Trans Adriatic Pipeline) carries double symbolic meaning. On the one hand, it will mark the first concrete step of a project pivotal to the government’s long-heralded energy policy seeking to establish Greece as a regional energy hub and gateway to the Balkans. On the other hand, the launch for the TAP project, promising 1.5 billion euros of direct private-sector investments, provides Greece with needed investment credibility at a crucial time. The first review of the country’s third bailout package is approaching completion and the government is pursuing a multi-leveled effort to attract investments to Greece’s battered economy.

Officials are expected to maneuver on the sidelines of the ceremony in Thessaloniki, today, tomorrow and Wednesday, especially for energy-sector projects still not confirmed, such as the Greek-Bulgarian IGB natural gas pipeline project and the floating LNG terminal in Alexandroupoli, northeastern Greece.

The country’s energy minister Panos Skourletis will have the opportunity to meet with interested parties and propel the prospects of these projects. A planned meeting with his Bulgarian counterpart Temenuzhka Petkova ranks as one of the most vital on the minister’s agenda. Besides the LNG station in Alexandroupoli, the two ministers are expected to also discuss the prospective IGB project, set to enter a crucial second-round market test requiring binding offers from interested traders, probably around June or July.

Meetings will also be held with a delegation representing US firm Cheniere Energy, primarily active in LNG-related businesses, which is seemingly showing renewed interest in the Alexandroupoli project. It remains to be seen whether Cheniere could limit its involvement to trading activity or also take on some risk by investing in the LNG station’s development.

As has been announced, the Greek energy minsiter’s agenda also includes meetings with Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, Maros Sefcovic, the European Commission vice president responsible for Energy Union, and Ian Bradshaw, TAP’s Managing Director.

Also, according to Azeri media reports, Socar president Rovnag Abdullayev, expected in Thessaloniki for the TAP ceremony, will meet with Greek government officials on the delayed sale of DESFA, Greece’s natural gas grid operator, stagnant over the past three years following European Commission intervention over EU competition and energy security concerns. Socar had agreed to acquire a 66 percent stake of DESFA as the winning bidder of an international tender before Brussels stepped in to demand that the Azeri company surrender 17 percent to a European operator.

The TAP pipeline, planned to run a total of 773 kilometers, including 550 kilometers within Greece, across the country’s north, is scheduled to begin operating in 2019. It will carry natural gas from the Shah Deniz II deposit to the Balkans and Europe.

A total of some 150 Greek firms are expected to be commissioned contracts and sub-contracts for the TAP project’s construction, to create an estimated 8,000 jobs in Greece.

 

Energy issues not a top priority for Putin visit to Athens

Officials in Athens and Moscow preparing the agenda for Russian President Vladimir Putin’s upcoming visit to the Greek capital, scheduled for May 28, are not setting energy issues as a top priority.

Naturally, this does not mean that Moscow’s latest natural gas pipeline proposal for Europe’s southeast, intended to cross Bulgaria, Greece and Italy, will not be raised by the visiting Russian delegation. This latest alternative is being viewed more favorably in Europe than last year’s Turkish Stream as it does not pass through Turkey.

Although Athens will reiterate its plans for a multidimensional energy policy, which includes Russia as a source, it will maintain a mild stance to avoid upsetting the country’s lenders and the USA at a critical point in time when their support is crucial amid the effort to complete the first review of Greece’s third bailout package. Support is also needed as a result of the increasing number of Turkish violations of Greek airspace above the Aegean.

As for Russia, the country has other energy priorities, besides the Southern Corridor, such as Nord Stream 2, a natural gas pipeline plan with a 55 billion cubic meter capacity intended to carry natural gas through the Baltic Sea to Germany. The plan, budgeted at 10 billion euros, has divided European opinion.

The leaders of eight European countries in the east – Czech Republic, Estonia, Hungary, Latvia, Poland, Slovakia, Romania, and Lithuania – clearly oppose an extension of Nord Stream, contending it will increase the EU’s energy dependency on Russia.

Russia is backing the plan, noting it will bypass Ukraine and therefore avoid transit fees as well as political wrangling, which has affected Russian natural gas exports a number of times in recent years.

Considering all the above, Greece and Russia may sign a declaration of mutual cooperation for the energy sector on May 28, which, in actual fact, will not represent anything groundbreaking. Not because both sides are not keen to further develop their ties, but as a result of the political expediency offered to both by restraint, given the current set of respective factors for each.

Over the past eight months or so, the Greek government has redirected the country’s energy interests. It has stepped back from an intention to widen ties with the east and, once again, looked to the west and the US-influenced sphere.

Greece is now focused on the construction of the TAP (Trans Adriatic Pipeline) project, planned to carry 10 billion cubic meters of natural gas, annually, from Azerbaijan to central European countries via Turkey, Greece and Italy, as well as the Greek-Bulgarian IGB interconnector, to connect with TAP’s Greek segment and supply the Balkan region.

Yesterday, DEPA, the Public Gas Corporation, announced that nine non-binding bids were made for the first stage of an IGB market test. The development prospects for the IGB pipeline project will be solidified if this level of interest is maintained in the market test’s next stage, when binding offers will be submitted by potential pipeline users.

According to sources, the Russian agenda for Putin’s upcoming visit will include Gazprom interest for establishing partnerships with PPC, the main power utility, as well as commercial trade plans between Russian petroleum giant Rosneft and ELPE (Hellenic Petroleum). Scenarios alleging Gazprom’s interest for a stake in DEPA and Rosneft’s equity interest in ELPE seem far off at this stage.

 

Effort made to coordinate IGB, Alexandroupoli LNG station

Officials at Greece’s Environment and Energy Ministry are working on a plan that aims to synchronize the development of the Greek-Bulgarian IGB natural gas interconnector and the floating LNG station in Alexandroupoli, northeastern Greece, believing one will benefit the other.

The effort is being made as Bulgarian energy minister Temenuzhka Petkova prepares to make an official visit to Athens to take part in a meeting to focus on the floating LNG station in Alexandroupoli. Officials representing all enterprises interested in the project – the US energy company Cheniere, DEPA, the Public Gas Corporation, Bulgargaz, the Bulgarian state-run gas company, and Gastrade, a member of the Copelouzos corporate group – will all take part in the Athens meeting.

The Bulgarian government appears to have decided it wants to take part in the LNG station’s development.

Should the Alexandroupoli LNG station’s development proceed, a consortium of five partners will reportedly be established for its construction, each holding 20 percent stakes. Cheniere, a second unnamed US firm, which has demanded to remain anonymous for the time being as it is listed, DEPA, Gastrade, and Bulgargaz are believed to be the five firms involved in the plan.

According to sources, the Former Yougoslav Republic of Macedonia (Fyrom) recently also expressed an interest in the LNG station’s development.

As for the IGB interconnector, it has become clear to both Greek and Bulgarian officials that its feasibility depends on the extent to which the infrastructure project’s capacity can be covered. This  detail will soon be determined in the market test’s next stage, when gas traders will be invited to submit their binding offers reserving capacities. It has also become clear that a floating LNG terminal in Alexandroupoli will be meaningless without a co-existing IGB interconnector.

Meeting the required level of capacity to be reserved by natural gas traders for the IGB project will also need to be followed up by actual demand from customers who will purchase these amounts. If this does not occur, the project will not be sustainable.

The IGB market test’s first stage, completed on April 8 and held to establish an estimate of the total capacity required by traders, produced offers amounting to over four billion cubic meters per year, well over the 1.7 billion cubic meters needed to make the project sustainable.

Half of the capacity amount declared was made by Gastrade (2 billion cubic meters). Interest was also expressed by Bulgaraz – it has signed a deal to import one billion cubic meters of natural gas from the Shah Deniz II deposit as of 2020 – DEPA (200 million cubic meters), Italy’s Edison (a similar amount), Socar (roughly 250 million cubic meters), and the UK’s Noble Clean Fuels, which trades natural gas and is focused on the Ukranian market, which it supplies via Slovakia.

An agreement in Athens at the upcoming meeting for the Alexandroupoli LNG station promises to propel the IGB interconnector’s development. In this case, the capacites indicated in the market test’s first stage are likely to be repeated as binding offers in the second stage.

 

 

Energy matters included on Putin’s agenda for May visit

Russian president Vladimir Putin, scheduled to make an official visit to Athens on May 28, will arrive with an agenda to feature energy-sector matters, including an interest for the development of partnerships between Russian firms and PPC, the main power utility.

Assuming the current negotiations on the first review of Greece’s third bailout agreement have been finalized by the time of Putin’s arrrival, the government will no doubt seek to take advantage of the Russian leader’s visit and portray a success story whose dimensions include prospective energy-sector partnerships as well as Greece’s upgraded geostrategic role in the wider region.

Although Russian investment interest in the Thessaloniki port and TRAINOSE, Greece’s railway company, is expected to be reiterated, emphasis will be placed on the energy sector, especially on plans to develop a Russian natural gas pipeline through the region and establish Russian partnerships with PPC.

Moscow is heavily relying on Greece in its effort to serve Europe’s increased natural gas needs. Following the abandonment of the South Stream and Turkish Stream plans, Russia appears to be insisting with a route in Europe’s southeast to run through Bulgaria, Greece, and follow the ITGI submarine route across to Italy.

The Greek government will seek to keep such a prospect open as part of its “multidimensional” energy policy announced shortly after Syriza was elected to power in January last year, despite the fact that the approach runs contrary to an EU direction aiming for reduced Russian energy reliance.

As for the prospective PPC partnerships, Russia’s Gazprom is expected to reiterate an older plan proposed to energy minister Panos Skourletis entailing the acquisition of rights to operate the power utility’s lignite mine in Vevi, which supplies two power stations, Melitis I and II, in exchange for the now-scrapped plan for the construction of hydropower stations by Russian companies in Sykia and Pefkofyto, alongside the Achelous River in the northwest. Prometheus Gas, a joint venture involving Gazprom and the Copelouzos Group, had a leading role in that plan.

Aktor, which had won a previous tender for a licence to operate the Vevi mine and signed an agreement with the ministry that was never ratified in Greek Parliament, could also take part in a consortium for the Vevi mine.

It remains to be seen whether the Greek-Russian discussions will lead to any agreements as financing new projects in the local energy market remains an extremely difficult decision for any investor.

Concern expressed about IGB market test results

An analysis of first-stage market test results conducted to determine the commercial interest for the Greek-Bulgarian IGB interconnector has raised concerns among the project’s partners as well as the governments of both countries.

Although the initial interest concerning capacity level commitment produced satisfying results – the total figure exceeded four billion cubic meters per yer, while the project’s sustainability is assured at 1.7 billion cubic meters – a closer look at the study’s participants and the amounts they declared has created doubts as to whether the levels expressed will be followed up when the time comes to submit binding bids.

Officials are remaining reserved despite the encouraging initial figures as parties had not followed up with binding bids that corresponded with the inital levels of interest expressed in a previous market test conducted.

Six companies declared an interest to reserve capacities in the IGB’s latest market test. These are the Bulgarian state-run gas company Bulgaraz, DEPA, the Public Gas Corporation, Italy’s Edison, Azeri company Socar, UK firm Noble Clean Fuels, and Gas Trade, a member of the Copelouzos corporate group.

Bulgaraz has signed an agreement to import one billion cubic meters of natural gas from the Azeri gas field Shah Deniz II as of 2020 and is interested in transferring natural gas to reach Greece from the TAP pipeline.

DEPA, a member of the IGB consortium, has declared it intends to reserve a small 200 cubic-meter capacity. Edison, also a consortium member, indicated it could reserve a similar amount. Socar, involved in the development of Shah Deniz II, has declared an amount of roughly 250 cubic meters. Gastrade is planning to develop a floating LNG station in Alexandroupoli, northeastern Greece, a project entirely dependent on the IGB’s construction. Gastrade has declared a capacity of more than two billion cubic meters.

Reliable sector sources explained that the combination of interested parties and the capacity amounts they declared do not ensure that all will roll smoothly, despite the fact that the IGB project enjoys backing from Brussels, Washington and the governments of all countries involved.

Roughly half the amount declared in the market test’s first round was maded by Gastrade. It is believed the Copelouzos group, its parent company, will not follow up with a binding offer in the second stage if an agreement has not been finalized with partners for the development of the LNG station in Alexandroupoli. On the other hand, if the IGB’s future is not assured, the participation of companies such as US firm Cheniere, another listed yet unnamed US firm, Bulgargaz, even DEPA, would be doubtful.

An investment plan for the IGB interconnector was finalized last December in Sofia during a visit by Greek energy minister Panos Skourletis.

A first market test completed nearly two years ago showed that just 1 to 1.2 billion cubic meters of the IGB’s capacity would be covered. The project will have an initial capacity of 3 billion cubic meters with the ability to reach 5 billion cubic meters if a compressor is installed.

The IGB project’s budget is estimated at 220 million euros. Its Bulgarian section will cover a distance of 151 kilometers, from Makaza to Stara Zagora, while the Greek stretch will run for 31 kilometers. According to the project’s schedule, construction will need to commence in October this year.

 

 

Local gas network expansion to promote projects abroad

It may not seem apparent at first, but DEPA’s (Public Power Corporation) drive to expand the domestic natural gas network, offering natural gas access to as many consumers as possible, as part of a new strategy adopted by the corporation, is interlinked to the prospective development of major gas infrastructure projects in the wider region, beyond the borders.

The objective of DEPA’s administration is to increase local natural gas consumption, which, it is anticipated, will provide impetus to major projects such as the TAP (Trans Adriatic Pipeline); the revised ITGI project to establish a route for Russian gas through the Southern Corridor across the Adriatic Sea to Italy; the Greek-Bulgarian IGB interconnector, and the floating LNG station in Alexandroupoli, northeastern Greece.

According to available estimates, development of the domestic natural gas network can generate a 20 percent local natural gas consumption boost by 2021 or 2022.

The network development strategy is based on three fronts. Firstly, authorities will seek to expand networks in regions within close proximity of the central transmission system. Secondly, CNG will be transported by tank trucks to remote areas where compressors will be installed and local networks developed, to the degree that consumption levels justify such an investment. Thirdly, LNG facilities will be developed at ports.

Funding for these projects is expected to be made through EU peripheral development programs, DEPA capital, and, possibly, loans from European investment banks, if this is feasible.

The expansion plan’s first stage, covering the period 2016-2025, concerns four regions – Eastern Macedonia-Thrace; mainland Greece-Evia; Central Macedonia, and western Greece. Preliminary work is most advanced for the first three of these regions. LNG transporation is planned to cover western Greece. An area at the Patras port has already been made available for a prospective LNG facility.

The new domestic natural gas network, planned to be constructed by the end of 2021, will add roughly 1,300 kilometers to its exisiting 450 kilometers.

Some 160,000 new natural gas consumer connections are expected to be made over the next decade – 140,000 for household use, 19,000 for commercial use, and 350 for industrial use.

Natural gas network ‘to be expanded to 17 provincial cities’

DEPA, the Public Gas Corporation, plans to expand Greece’s natural gas network so that it may reach an additional eleven provincial cities, and also supply a futher six with tank trucks.

Energy minister Panos Skourletis presented two separate lists for the aforementioned categories during an all-encompassing news conference yesterday.

Alexandroupoli, Komotini, Xanthi, Kavala, Serres, Drama, Kilkis, and Katerini, all in Greece’s north, as well as Lamia, Thiva, and Halkida, are the eleven provincial cities to which DEPA plans to expand its natural gas network.

The second list, concerning supply with tank trucks, is comprised of Patras, Amfissa, Livadia, Karpenisi, Veria, and Orestiada.

Although Greece’s natural gas pipeline network has existed for years, it has simply passed by cities and “gestured hello” Skourletis noted yesterday, criticizing his predecessors at the energy ministry for not having branched out the pipeline to other areas.

The natural gas network’s expansion is included on DEPA’s ten-year investment plan, announced just days ago by the corporation’s CEO Theodoros Kitsakos at an energy conference.

The network’s expansion plan will entail constructing an additional 850 kilometers of pipeline infrastructure, in addition to the existing 460-kilometer network, for a total of 1,310 kilometers, according to DEPA’s ten-year plan.

The initiative promises to connect 140,000 households, 19,000 businesses, and 350 large-scale industrial enterprises to the country’s gas network, while new jobs will also be created, DEPA noted.

According to Kitsakos, Greece’s annual natural gas consumption is forecast to increase to eight billion cubic meters over the next fifteen years, or 0.6 billion cubic meters per year. At present, the consumption level stands at 3 billion cubic meters.

 

Minister critical of PPC tariffs, content with creditor talks

The main power utility PPC’s electricity tariffs will be reduced for all household categories, under the condition that the utility’s just-revised payback scheme, offering softer terms for PPC consumers with arrears, improves the corporation’s electricity bill collection effort and international crude oil and natural gas prices remain low, the energy minister Panos Skourletis noted at a news conference today.

The current combination of lower household incomes in Greece, down by as much as 45 percent over the past few years, and electricity tariff increases by an equivalent percentage, or possibly more, cannot go on any longer, the minister noted, obviously critical of PPC.

PPC’s revised payback scheme, which will be launched tomorrow and offers all consumers the right to settle arrears over 36 installments without any deposit payment, emerged following pressure applied on the utility by the government.

During the news conference, Skourletis acknowledged that PPC’s large amount of unpaid recievables, estimated at 2.3 billion euros by the utility, have negatively impacted its financial standing and ability to reduce electricity tariffs in the immediate future. Earlier this week, PPC reported a 102 million-euro loss for 2015.

As for the natural gas sector, the minister left open the prospect of a tax hike on natural gas but stressed that, even if imposed, prices would remain lower than last year.

Skourletis condemned the EPA Attiki gas supply company, which covers the wider Athens area, for not having sufficiently decreased its natural gas prices. The company lowered its prices by 11 percent last year, compared to 24 percent by EPA Thessaloniki and EPA Thessalia, the energy minister pointed out.

However, Skourletis partially justified EPA Attiki, saying that the discrepancy could be attributed to the much greater penetration of natural gas in the Thessaloniki and Thessalia markets, which makes operating costs for these suppliers lower.

Acknowledging that the cost of natural gas for the industrial sector is hefty, Skourletis said officials are examining ways to reduce the level of various components leading to the final price. An informal committee is looking into the issue, he said.

The minister expressed satisfaction over the progress being made in negotiations with the country’s creditor representatives for major energy-sector matters, especially plans to introduce NOME-type auctions into the Greek market and split the power grid operator IPTO from PPC, its parent company. Both issues will soon be finalized, when creditor representatives return for a bailout deal review, Skourletis said.

The effort to sell a 66 percent stake of DESFA, the gas grid operator, to Azeri energy company Socar and other certified European operators has stalled as a result of a dispute concerning network usage fees. Skourletis wants to nullify original terms that would allow the prospective buyers to significantly increase network usage fees by levels of as much as 60 percent. These network usage fees represent DESFA’s earnings. Skourletis said the Greek government had forwarded a proposal to Socar and is awaiting a response.

The minister declared official the government’s interest in steering PPC towards corporate partnerships with private-sector investors for ventures that would include PPC’s lignite-fired power stations and hydropower facilities. “All is open for discussion,” he commented.

Skourletis also highlighted the importance of major infrastructure projects headed for development, such as the TAP natural gas pipeline, to carry Azeri gas to central Europe via northern Greece, Albania and Italy, and whose construction will be officially launched at a ceremony in Thesssaloniki on May 17; the Greek-Bulgarian IGB interconnector; as well as a floating LNG terminal in Alexandroupoli, northeastern Greece.

 

 

 

TAP has reached deals with some 150 Greek firms, country manager highlights

The TAP consortium has established partnerships with about 150 Greek companies, including DESFA, the gas grid operator, and various companies supplying products and services, Rikard Scoufias, the pipeline’s country manager in Greece, told an energy conference in Athens today.

Scoufias, who delivered a speech at a conference organized by TEE, the Technical Chamber of Greece, titled “Energy Market: Unlocking Greece’s Economic Potential,” noted that construction of the TAP pipeline, to supply mostly Azeri natural gas to central Europe via northern Greece, Albania and Italy, will begin in 2016.

Over 450 meetings were required with local authorities to settle compensation details for owners of property through which the TAP pipeline will cross, Scoufias noted, while adding that the Greek government’s support came as recognition of the consortium’s efforts and procedures.

Socar remains interested in DESFA deal, local chief declares

The Azeri energy company Socar remains interested in completing its long-delayed acquisition of a stake in DESFA, Greece’s gas grid operator, Anar Mammadov, managing director of its local subsidiary, Socar Energy Greece, announced today, responding to reports contending that the company was set to withdraw.

Azeri energy exports will increase drastically over the next few years as new deposits are being developed, the Socar official remarked, adding that the company’s objective is to ensure that supply will be carried out with fair access to networks. More control over networks will help achieve this objective.

Mammadov also stressed that a Greek plan to upgrade the country’s LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens, by adding a third storage tank, is of crucial importance for supply in the wider region.

Socar had originally agreed to acquire a 66 share of DESFA as the winning bidder of an international tender finalized in 2013, but must now surrender 17 percent following European Commission intervention over EU energy security and competition concerns.

Just weeks ago, it was reported that European candidates considering to take on the surrendered 17 percent were advised by consultants to avoid the move as a result of the risk factor surrounding investments in Greece and the possibility of regulatory revisions that would lessen the gas operator’s revenue potential.

 

Skourletis: ‘Greece can develop into a regional energy hub’

Greece’s energy policies as part of a wider European Commission strategy aiming for energy union and security in the EU were discussed during a meeting in Athens yesterday between energy minister Panos Skourletis and Maros Sefcovic, the European Commission vice president responsible for Energy Union.

The two officials focused on the importance of prospective European interconnection projects, both in the natural gas and electricity sectors, institutional framework revisions made in the Greek gas market, as well as expected revisions in the renewable energy (RES) sector.

“We discussed all the issues concerning energy in the EU and, obviously, how these are being shaped for our country,” Skourletis remarked following the meeting. “Greece now possesses all the prerequisites to become a regional energy hub. This prospect is based on the major projects planned – the natural gas pipelines as well as electricity interconnections,” he added.

Describing the session as highly constructive, Skourletis also noted that the efforts being made by all EU member states to achieve secure, reliable, and lower-cost services, both for households and enterprises, were also discussed.

Skourletis and Sefcovic, joined by officials representing DESFA, Greece’s gas grid operator, DEPA, the Public Gas Corporation, and the energy ministry, also visited the LNG terminal facility on Revythoussa, an islet in the Saronic Gulf, close to Athens, where progress on the development of an additional third LNG storage tank was presented.

The Revythoussa facility has acquired a more crucial role as a result of the EU’s increased gas needs in more recent times, as well as the plan to widen LNG supply. The Revythoussa facility’s expansion is expected to be completed within 2017.

 

 

Energy union head reiterates EU support for TAP, IGB in talks with PM

Talks between Prime Minister Alexis Tsipras and Maros Sefcovic, the European Commission vice president responsible for Energy Union, at a meeting in Athens yesterday, primarily focused on Greece’s prospective role as a key energy hub and gateway for new gas entering Europe from the Caspian region, the visiting official told reporters afterwards.

Sefcovic, who is touring European capitals to check on the energy union progress of EU member states, reiterated the European Commission’s full support for the development of both the TAP and Greek-Bulgarian IGB natural gas pipeline projects.

Tsipras told the visiting official that Greece is playing a crucial role in the regional energy sector’s future as a result of the country’s geographical position, while also making note of the effort being made by Athens to utilize opportunities such as that of the prospective TAP natural gas pipeline.

Construction work on the Greek segment of this infrastructure project, to bring new gas to Europe via Greece’s north, Albania and Italy, is scheduled to officially commence in May. A ceremony is planned to take place in Thessaloniki to mark the start.

In an exclusive comment to the Athens News Agency, the European Commission’s vice president said Greece is making satisfactory progress on energy efficiency objectives set as part of the EU’s wider drive towards energy union.

The visiting official said he offered encouragement to Athens to continue pursuing reforms in the energy sector, while adding that he will contribute to an effort for Greece to utilize EU structural funds for investments in energy efficiency projects.

The Commission’s vice president noted that he and Greek partners are looking for ways to boost Greece’s level of innovation, growth, and competitiveness, which, he added, would offer benefits to the Greek economy, citizens and the integrated European energy market.

 

TAP construction set for June following Commission approval

Construction of the TAP (Trans Adriatic Pipeline), to bring new gas to the EU and increase the security of energy supply for Southeast Europe, is set to begin in June, based on the current schedule, following yesterday’s approval by the European Commission.

The prospect is extremely promising for Greek firms that have already been commissioned segments of the project or are presently vying for contracts linked to other sections.

Yesterday’s approval by Brussels essentially declares that the favorable conditions granted by Greece to the TAP consortium, especially ones concerning taxation for a 25-year period from the launch of commercial activity, are compatible with EU law concerning state aid and do not distort competition in the EU market.

The European Commission’s decision, noting that EU law is not violated, means that no other obstacles lie ahead, giving the green light for the TAP project’s development.

Greece’s bolstered geopolitical standing, promising a positive and direct impact on the national economy, stands as a major benefit gained courtesy of the prospective gas pipeline, to run through northern Greece, Albania, and across the Adratic Sea to Italy.

The expected boost for local employment and commercial activity is another benefit. It is estimated that nearly 10,000 jobs will be created in Greece, direct and indirectly, as a result of the TAP project’s development. The involvement of Greek construction companies, as well as supply of local materials, is another plus for the local economy.

According to the TAP consortium, some 150 Greek firms, small and medium-sized, have already signed sub-contract agreements with the consortium. This figure does not include the major firms that succesfuly took part in tenders for contracts concerning construction and supply of materials.

Pipelines

Corinth Pipeworks, a subsidiary firm of Viohalco, belonging to the Stasinopoulos corporate group, has already signed a deal to supply large-diameter pipelines covering TAP’s overland course through Greece, roughly 495 kilometers long. The Greek firm was up against Japanese company Marubeni-Itochu Steel, a global powerhouse, in the tender for this supply agreement.

Corinth Pipeworks, which has invested over 65 million euros for a new production line manufacturing high-pressure overland and underwater pipes, is expected to begin supplying its pipelines within 2016 before completing the delivery in 2017.

Construction

J&P-Avax, as part of a consortium with Italy’s Bonatti, has been awarded a contract through an international tender to construct two of the pipeline project’s three Greek segments  The third segment will be constructed by a consortium made up of Ellaktor and France’s Spiecapag. This consortium is also vying for a segment within Albanian territory. The GEK Terna group appears to be contesting a contract for the construction of compressor stations.

The contracts for the TAP project’s three Greek segments, totalling 550 kilometers, are each worth roughly 230 million euros.  

Besides the TAP project’s 550 kilometers of overland pipelines to run across Greece, a further 211 kilometers will be installed in Albania, and 8 kilometers in Italy.

Cables

Two more international tenders expected to attract Greek industries are currently in progress. One tender concerns the TAP pipeline’s SCADA (supervisory control and data acquisition) system, and the other supply of fiber optic cables measuring 1,550 kilometers. Local industry Hellenic Cables is participating in the latter tender.

TAP consortium

Trans Adriatic Pipeline AG is a joint venture company registered in Switzerland. Its shareholders are BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

The TAP pipeline is the European leg of the Southern Gas Corridor, which aims to connect the EU market to new gas sources. With an initial capacity of 10 billion cubic metres of gas per year, the pipeline will transport gas from the Shah Deniz II field in Azerbaijan to the EU market as of 2020.

The Trans Adriatic Pipeline is recognised as a project of common interest (PCI) in the framework of the EU’s Trans-European Energy Infrastructure Guidelines. PCIs are aimed at helping create an integrated EU energy market and are essential for reaching the EU’s energy policy objectives of affordable, secure and sustainable energy.

The Commission published its first list of PCIs in 2013. The list is updated every two years to integrate newly needed projects or to remove obsolete ones. The current PCI list was approved on November 18, 2015.

 

 

 

Commission approves Greece-TAP agreement for pipeline

The European Commission has found the Host Government Agreement between the Greek authorities and the Trans Adriatic Pipeline to be in line with EU state aid rules, it announced today, noting that the project will improve the security and diversity of EU energy supplies without unduly distorting competition in the Single Market.

The Commission’s agreement on state aid was one of the prerequisites within the Host Government agreement that still needed to be obtained before the Trans Adriatic Pipeline project could start.

Margrethe Vestager, Commissioner in charge of competition policy, stated: “Today’s decision opens the way for a multi-billion infrastructure project in Greece. The Trans Adriatic Pipeline will bring new gas to the EU and increase the security of energy supply for Southeast Europe. The investment incentives offered by the Greek Government are limited to what is necessary to make the project happen and in compliance with state aid rules.”

Maroš Šefčovič, Vice-President responsible for Energy Union, said: “Today’s approval of the TAP agreement is an important step towards completing the Southern Gas Corridor. The Energy Union framework strategy of February 2015 identified this project as a key contribution to the EU’s energy security, bringing new routes and sources of gas to Europe. Just on Monday, the Southern Gas Corridor ministerial meeting in Baku, which I attended, confirmed the determination of all participating countries and consortia to complete this key infrastructure project on time.”

The Trans Adriatic Pipeline is the European leg of the Southern Gas Corridor, which aims to connect the EU market to new gas sources. With an initial capacity of 10 billion cubic metres of gas per year, the pipeline will transport gas from the Shah Deniz II field in Azerbaijan to the EU market as of 2020. The Trans Adriatic Pipeline will run from the Greek border via Albania to Italy, under the Adriatic Sea. The builder and operator of the pipeline is Trans Adriatic Pipeline AG (TAP), a joint venture of several energy companies. TAP will invest 5.6 billion euros over five years in the project, 2.3 billion of this in Greece.

The Host Government Agreement between Greek authorities and TAP sets out how the TAP consortium will construct and operate the pipeline and defines the respective obligations of the parties. In particular, the agreement provides TAP with a specific tax regime for 25 years from the start of commercial operations. This may give the company an economic advantage over its competitors, who would not benefit from the specific tax regime, and therefore involves state aid in the meaning of the EU rules.

The Commission assessed the measure under its 2014 Guidelines on state aid for energy and environmental protection. The Guidelines state that such aid can be found compatible under certain conditions when it furthers objectives of common interest. The Commission found that:

  • the project will contribute to further diversification of European energy supply sources and routes: it will bring gas from the Caspian Sea region and potentially the Middle East to the EU;
  • competition in the European gas market will be increased thanks to the extra volumes of gas and new supply route;
  • the construction of the pipeline requires substantial upfront investment over several years before any revenue will be generated. The project will be funded entirely by private investment and will generate revenues in its Greek part only from the tariffs paid by clients shipping gas through the pipeline. The Commission concluded that the project would most unlikely not be  carried out without aid;
  • the aid is in the form of a specific tax regime that, depending on whether tax rates increase or decrease, will lead TAP to pay more or less tax than it would without the aid. If the rates increase the aid will be limited to the minimum tax benefit for TAP;
  • in particular, the scheme has a built in adjustment mechanism that limits the maximum benefit for TAP. If the Greek equivalent applicable tax rate were to rise or fall beyond 20%, an adjustment mechanism to recalculate TAP’s contribution will come into effect. The Greek authorities will monitor this to ensure that TAP complies with the methodology and therefore the aid is limited to the minimum necessary.

The Commission therefore concluded under the Guidelines that the project’s benefits in terms of increased competition and security of energy supply clearly outweigh any potential distortions of competition triggered by the state aid.

Background

Trans Adriatic Pipeline AG is a joint venture company registered in Switzerland. Its shareholders are BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

The Trans Adriatic Pipeline is recognised as a project of common interest (PCI) in the framework of the EU’s Trans-European Energy Infrastructure Guidelines. PCIs are aimed at helping create an integrated EU energy market and are essential for reaching the EU’s energy policy objectives of affordable, secure and sustainable energy.

The Commission published its first list of PCIs in 2013. The list is updated every two years to integrate newly needed projects or to remove obsolete ones. The current PCI list was approved on November 18, 2015.

The non-confidential version of the decision will be made available under the case number SA.43879 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Revised ‘Greek Stream’ plan to be sought within 2016

Officials at Gazprom, Edison, and DEPA, Greece’s Public Gas Corporation have told energypress that they are now preparing a second step towards reviving the “Greek Stream” project – intended to supply Russian natural gas to Europe via the south – following last week’s signing of a memorandum of understanding (MOU) for the development of the stalled ITGI natural gas pipeline to link Greece and Italy and serve as a route for Russian gas supply to Europe through the Southern Corridor.

As part of the plan’s second stage, the officials will seek to determine a route passing through Bulgaria for the “Greek Stream” project.

Authorities closely involved with the project have noted that much will depend on how Russian-Turkish bilateral ties play out. Bulgarian territory is now being considered as an alternative for the Russian gas pipeline’s route as a result of the troubled ties between Russia and Turkey. Should these two countries resolve their differences, the Bulgarian alternative could be abandoned, but this seems highly unlikely at present.

A date for the next meeting between Gazprom, Edison, and DEPA officials has yet to be set. Technocrats will meet to focus on details such as natural gas quantities to be supplied through the pipeline, cost and financing issues that may ensure the project’s sustainability, as well as the  geographical route. The three companies want to have completed this part of the project’s task by the end of this year.

Besides the technocratic details, work also needs to be carried out at a diplomatic level to secure the European Commission’s backing of the Russian pipeline plan for Europe’s south. Gazprom, Edison, and DEPA officials will seek to secure the EU executive body’s official support for the project by the end of this year. This has already been unofficially granted, it is believed.

The age-old ITGI plan linking Greece and Italy was never carried out but this could now be developed and utilized as part of Russia’s latest plan for natural gas supply to Europe via the south.

ITGI route revived as DEPA, Gazprom, and Edison sign memorandum

A memorandum of understanding (MOU) for the development of a natural gas pipeline to link Greece and Italy and serve as a route for supply of Russian gas to Europe through the Southern Corridor was signed yesterday evening by the chief executives of Gazprom, Edison, and DEPA, Greece’s Public Gas Corporation – Alexey Miller, Marc Benayoun, and Theodoros Kitsakos, respectively.

The signing cermenomy took place in Rome following a meeting between Miller and Federica Guidi, Italy’s economic development minister.

The Greek Foreign Ministry’s Secretary General for International Economic Relations, Giorgos Tsipras, a cousin of Greek Prime Minister Alexis Tsipras, attended the signing ceremony.

The memorandum of understanding, indicating an intended common line of action, reflects the interest of all three sides to develop infrastructure that may carry Russian natural gas through the Black Sea, via transit countries, to Greece and then Italy.

The interested parties plan to utilize, to the greatest degree possible, work already completed by DEPA and Edison for the sidelined ITGI Poseidon project.

DEPA and Edison had originally established Poseidon as a joint venture in the previous decade to develop the ITGI pipeline, planned to carry Azeri natural gas from Turkey to Greece and then Italy, via a submarine crossing through the Adriatic Sea. However, the the plan was abandoned after Azerbaijan opted to develop the TAP (Trans-Adriatic Pipeline) project instead for this purpose.

“The revival of the ITGI Poseidon project reinforces Europe’s energy security with an additional supply route and upgrades Greece’s important role as a significant natural gas gateway, via diversified sources and routes,” remarked Kitsakos.

Sefcovic stresses Greece’s regional gas hub potential

Greece promises to play a crucial role in European natural gas supply as a result of current regional developments linked to the natural gas sector, Maros Sefcovic, the European Commission’s vice president, has pointed out in an interview with EurActiv.com.

Sefcovic, who said he is scheduled to visit Greece on March 10 as part of an Energy Union tour, pointed out that the country is set to play a vital gas transit role.

“The Southern Gas Corridor should bring the new Caspian gas to Europe before 2020, and this pipeline goes through Greek territory. We see very interesting developments in the Eastern Mediterranean, with gas fields discovered around Cyprus, close to Israel, and close to Egypt. Europe could become a destination of this gas, and again, Greece would play a very important role,” Sefcovic was quoted as telling EurActiv.com.

He added that details on the IGB interconnector between Bulgaria and Greece are currently being worked on amid a very positive climate.

“That would be a very important gateway for the new supplies which will be coming to Europe from the Caspian, but also from the Mediterranean, for shipping them north to Bulgaria and the western Balkan countries. These are, of course, projects we will discuss once in Greece,” Sefcovic noted. He added that, based on updates from Greece’s energy minister Panos Skourletis, the IGB will be built on time and Greece will be able to profit from its geographical location and become a crucial transit country for gas entering from at least two directions.

Asked to comment on the continued dominance of main power utility PPC in Greece’s electricity market, still a monopoly, according to the interviewer, Sefcovic responded: “I’m sure the current Greek government has so many issues to deal with. They have to focus based on their priorities.”

Existing gas infrastructure must be better utilized, M&M chief tells

Until now, Greece’s goal of becoming a regional gas hub has been based on the prospect of developing new infrastructure projects but, in actual fact, the most important objective should be to better utilize existing facilities such as the Revythoussa LNG terminal on the islet just off Athens, being utilized at a level of 15 percent, and also to create appropriate conditions for a liberalized market in which consumers may have access to the supplier of their choice, Panagiotis Kanellopoulos, chief executive of M&M Gas, a wholesale trading venture involving the Mytilineos Group and Motor Oil Hellas, has stressed at the Athens Energy Forum.

Kanellopoulos pointed out that although conditions provided by both Greece and DEFSA, the gas grid operator, are ready to fulfill consumer needs for importing natural gas through pipelines from the country’s northern borders, the needed legal infrastructure for such an initiative does not exist in Bulgaria. The official added that a small section of pipeline infrastructure linking Bulgaria with Romania has yet to be constructed, depriving the region from access to central European markets.

The market will determine which new infrastructure projects are truly needed and sustainable, the M&M Gas chief told the energy event.

Both the Greek and regional Balkan market are small, but clever ways need to be found to utilize the exisiting infrastructure and increase their usefulness, Kanellopoulos noted.

EU pushing IGB plan regardless of market test result

Bulgarian energy minister Temenuzhka Petkova’s recent assurance that construction of the IGB Greek-Bulgarian Interconnector gas pipeline will begin in October of this year and the project will be launched in the second half of 2018 certainly came as a surprise for certain authorities, given that the preliminary stage of a new market test being conducted, to check the project’s feasibility, has yet to be completed.

However, this declaration by the Bulgarian minister did not raised the eyebrows of officials closely following the IGB-related developments in Brussels. For them, it has become clear that the European Union wants the project to progress, and is making an additional effort to assure this is achieved. According to energypress sources, moves are being made for further EU financial backing of the project, which has already been classified as a Project of Common Interest (PCI), a status that guarantees EU funding.

According to some pundits, the IGB project will be developed even if the new market test does not produce favorable results. Ideally, a sufficient number of gas trading companies will commit themselves to a certain level of orders that would ensure the pipeline project’s sustainability. Even so, the market test stage, which follows the recent final investment decision agreed to by Greece and Bulgaria, is important, including symbolically.

The test’s first stage, entailing declarations of non-binding interest, will be completed on February 29. The second stage, to involve binding offers from traders, is expected to be finalized around April.

A first market test, conducted between May, 2013 and September, 2014, failed to produce satisfactory results. But the final investment decision was signed as a result of the major emphasis being placed by the EU on the project, which will reinforce the region’s energy security and break Russian gas supplier Gazprom’s dominance. The US has also heavily backed the project.

Based on preliminary estimates, the project’s budget is estimated at 240 million euros, of which 220 million euros concern construction costs, while its annual operating cost is estimated at 4.5 million euros. Signalling this infrastructure project’s importance, the European Commission has committed 45 million euros of furnding for the IGB’s development.

Poseidon SA, a venture formed by Italy’s Edison and DEPA, Greece’s Public Gas Corporation, holds a 50 percent stake in the consortium established to construct and operate the IGB pipeline. Bulgarian state-run company BEH holds the other 50 percent of the IGB consortium.

The IGB pipeline is planned to run from Komotini, in Greece’s northeast, to Stara Zagora in Bulgaria, for a total length of approximately 170 kilometers.

Gas pipelines at the core of Tsipras, Biden talks in Davos

Greece’s economic program, the refugee crisis, cooperation with the US, especially in investments and energy, the Cyprus problem, as well as the name dispute concerning the neighboring Former Yugoslav Republic of Macedonia (Fyrom) were all discussed at a meeting between Greek prime minister Alexis Tsipras and US vice president Joe Biden at the annual World Economic Forum, now taking place in Davos, Switzerland.

Recent agreements reached to pave the way for the development of the TAP (Trans Adriatic Pipeline) and IGB (Greece-Bulgaria Interconnector) natural gas pipeline projects were praised during the talks, while the potential to supply LNG to other parts of Europe via Greece was also discussed. Greece’s role as a prospective regional energy hub was also on the agenda.

The US vice president stressed that stability in Greece is crucially important for wider stability in Europe, according to a statement released by the Greek prime minister’s press office. Swift completion of the next review of Greece’s bailout program is necessary to help propel the country towards economic recovery, the two officials agreed, according to the statement.

Tsipras hailed initiatives taken by the US vice president for closer economic ties between Greece and the US as well as the latter’s promotion of US investments in Greece.

 

Energy ministry endorses TAP project’s local route

The TAP (Trans Adriatic Pipeline) project’s local segment, to run through northern Greece and cover thirteen regions, has been endorsed by the energy ministry, it announced.

The TAP pipeline, to supply Azeri natural gas to central Europe via Greece, Albania, and Italy, will cross through the Greek regions of Evros, Drama, Kavala, Xanthi, Rodopi, Imathia, Thessaloniki, Kilkis, Pella, Serres, Kastoria, Kozani, and Florina.

“The delivery of the Installation Act represents another important step in the development of the TAP natural gas pipeline, currently included in a catalogue listing the world’s ten most significant projects in progress,” the ministry statement noted.

The natural gas pipeline’s construction and operation promises numerous benefits for Greece, including an employment boost to be provided by both direct and indirect jobs linked to the project, estimated at roughly 10,000 in total; the involvement of Greek companies in the project’s construction; as well as local supply of equipment and building materials, the statement added.

The TAP project wll help diversify Europe’s natural gas supply sources and pipeline routes, considered crucial for energy security and sufficiency throughout the EU, including Greece, the ministry noted.

The project also promises to boost Greece’s geopolitical position, offering benefits for the national economy, and, as a result, contribute to the overall effort being made for the country’s economic recovery, the ministry statement added.

Bulgaria mulls doubling IGB capacity ahead of market test

The Bulgarian government is now envisioning the prospective IGB (Interconnector Greece Bulgaria) pipeline as a main gas supply route that may cover both its domestic needs as well as those of the neighboring markets of Romania, Serbia, the Former Yugoslav Republic of Macedonia (Fyrom), and even Ukraine, traditionally entirely dependent on Russian supply.

As a result, Bulgarian officials are examining the prospect of doubling the IGB pipeline’s annual capacity from five billion cubic meters – it will begin operating at three billion cubic meters before being increased to five billion cubic meters – to ten billion cubic meters.

The thoughts of increasing capacity precede the upcoming results of a new market test that will show the gas pipeline’s guaranteed consumer demand level, which will indicate whether the project is economically feasible. The market test result is due at the end of February. These early thoughts of a capacity increase indicate that Bulgarian officials see great potential in the IGB project.

The troubled biltareral ties between Russia and Ukraine and threat of a cut in the Russian supply route to Ukraine has increased the emphasis being placed on the role that may be played by the IGB pipeline in the wider region. Russia has announced it will cut supply to Ukraine in 2019.

If so, Bulgaria plans to make available gas supply running through the IGB pipeline, stemming from the TAP (Trans Adriatic Pipeline) project to carry Azeri natural gas to Europe, as well as US gas via the prospective LNG terminal in Alexandroupoli, northeastern Greece, and other sources, including the LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens.

The IGB project is expected to be completed in 2018. If the thoughts of Bulgarian officials to double its capacity are actualized then a capacity increase of the LNG terminal being planned by Gastrade for Alexandroupoli will certainly follow.

For the time being, a new market test needs to be completed following the recent final investment decision. A first test conducted between May, 2013 and September, 2014 failed to produce satisfactory results.

The project’s budget is estimated at 240 million euros, of which 220 million euros concern construction costs, while its annual operating cost is estimated at 4.5 million euros. Signalling this infrastructure project’s importance, the European Commission has committed 45 million euros of furnding for the IGB’s development.

Poseidon SA, a venture formed by Italy’s Edison and DEPA, Greece’s Public Gas Corporation, holds a 50 percent stake in the consortium established to construct and operate the IGB pipeline. Bulgarian state-run company BEH holds the other 50 percent of the IGB consortium.

The IGB pipeline will run from Komotini, in Greece’s northeast, to Stara Zagora in Bulgaria, for a total length of approximately 170 kilometers.

The main purpose of the IGB pipeline will be to break Bulgaria’s virtual full dependence on Russian natural gas supplied by Gazprom. US State Department officials have expressed great interest in the project’s development, as they have made clear on every recent official visit to Greece. A series of visits were made by US officials to the region last October and November. Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, prepared the ground for an ensuing visit by Secretary of State John Kerry. Also, Greek Prime Minister Alexis Tsipras was in New York City last September, where he met with Kerry.

Construction of the IGB project is scheduled to begin in the second half of this year and is expected to be ready to operate in the second half of 2018.