Details concerning how construction costs for the prospective Greek-Bulgarian IGB pipeline will be divided between participating sides are delaying the delivery of a finalized investment plan for the project, but progress has been made, according to sources.

In addition, issues concerning the quantities of natural gas amounts to be transmitted through the pipeline remain unresolved, as was noted yesterday by energy minister Panos Skourletis, who took part in a three-way meeting in Athens with Bulgarian peer Temenuzhka Petkova and Amos Hochstein, US Special Envoy and Coordinator for International Energy Affairs.

Sources noted that significant progress was achieved, at the meeting, on the bilateral project’s cost division. At this stage, it appears that common ground has been reached. However, this remains to be confirmed next week, when a follow-up meeting is scheduled to take place in Sofia. Developments on negotiations concerning gas quantities to be transmitted through the IGB pipeline are also expected.

The construction cost and gas quantity issues dominated yesterday’s three-way talks, which also involved the participation of investors. The IGB project has been taken on by ICGB, a 50-50 joint venture involving Poseidon (DEPA, the Public Gas Corporation, and Edison) and Bulgarian state-run company BEH. The Greek side was represented by DEPA at yesterday’s meeting.

Negotiations have failed to make progress over the past year, but yesterday’s meeting indicated that a finalized investment plan is near.

Hochstein, the US international energy affairs envoy, is strongly supporting the project’s development, which is expected to boost energy security in the region by providing the wider eastern Balkan region with access to new gas sources, besides Russia.

IGB will be connected to the Azeri-linked TAP (Trans Adriatic Pipeline) and help diversify the region’s supply sources, as Hochstein has repeatedly pointed out. Besides offering Bulgaria, and possibly Romania, the ability to receive Azeri gas via the TAP project, the IGB pipeline also promises to offer access to Greece’s LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens, as well as prospective LNG stations in northern Greece, if this plan is developed.

 

 

(UPDATE) Accelerating procedures for implementation of the TAP and IGB natural gas pipeline projects was the topic of discussions during a meeting on Wednesday between Environment and Energy Minister Panos Skourletis with Amos Hochstein, US special envoy and coordinator for international energy relations with Bulgarian Energy Minister Temenuzhka Petkova.

During the meeting, Skoutletis proposed improving the terms of TAP through Greece both for the state and local societies, while regarding the Greek-Bulgarian pipeline project IGB a new meeting -at ministerial level- will be held next week in Sofia.

The Greek side raised compensation issues for forest areas and state property and more action by the consortium in the field of corporate social responsibility. Amos Hochstein said there was significant progress regarding the Greek-Bulgarian pipeline and urged the Greek government and TAP to openly discuss pending issues and to find solutions the soonest possible.

“The US wants to continue working with Greece for the country’s energy security but mostly on the role to be played by Greece as a strategic partner in the region,” said Hochstein.

Earlier in the day, Energypress.eu reported: 

Amos Hochstein, US Special Envoy and Coordinator for International Energy Affairs, is expected to push for swifter progress of the prospective Greek-Bulgarian IGB natural gas pipeline, a high-priority item on the US agenda, at a meeting in Athens today with Environment and Energy Minister Panos Skourletis.

Besides the IGB project, the two officials are expected to also discuss the TAP project, while talks on Russia’s latest pipeline proposal for Europe’s south may also be included on the agenda. Greek officials are remaining low-key about the Russian plan, currently blocked by Turkey’s stance.

Development of the IGB project would end Bulgaria’s current reliance on Russian gas as the pipeline will be connected to the Azeri-linked TAP (Trans Adriatic Pipeline). Following further development, it would eventually also help Romania, Serbia and Hungary, all greatly dependent on Russian gas, to also be supplied by other sources, such as Azerbaijan, via TAP, and Greece’s LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens.

Hochstein’s return to Athens follows Prime Minister Alexis Tsipras’s recent official visit to New York City, during which he met with Secretary of State John Kerry, who highlighted the strategic importance of the TAP and IGB projects in upgrading Greece’s role as an energy hub.

Development of the propective IGB project has been repeatedly postponed by investment plan delays in Sofia. At this stage, it seems the project is still a long way off, and will not be ready to operate by 2020, when it could supply Azeri natural gas to Bulgaria, via the TAP pipeline to run through Greece and across to Italy.

Pre-construction procedures planned by the IGB project’s corporation, ICGB, a 50-50 joint venture involving Bulgarian state-run company BEH and Poseidon (DEPA, the Public Gas Corporation, and Edison), including a second market test, have been marred by delays. Market tests, demanded by EU law, are conducted to determine the level of interest of prospective users. An intital market test staged in May, 2013, barely satisfied investor objectives. The follow-up test’s delay indicates that the beginning of construction is still a long away ahead.

Both the EU, which is financially backing the IGB project, and the US are keen to see the pipeline constructed as soon as possible to end Bulgaria’s dependence on Russia for gas supply.

From the perspective of Greek consumers, the IGB pipeline will facilitate supply from central European gas hubs, such as Austria’s Baumgartner facility. Russia is using up the entire capacity of an existing Greek-Bulgarian pipeline for its own supply needs.

The prospective Greek-Bulgarian IGB natural gas pipeline, whose arrival would facilitate gas supply security for both neighboring countries, appears to still be a long way from actualization.

Pre-construction procedures planned by the project’s corporation, ICGB, a 50-50 joint venture involving Bulgarian state-run company BEH and Poseidon (DEPA, the Public Gas Corporation, and Edison), including a second market test, keep being delayed.

An intital market test in May, 2013, conducted to determine the level of interest of prospective users, barely satisfied investor objectives. The follow-up test’s delay indicates that the beginning of construction is still a long away ahead.

Given the range of factors delaying the project’s development, concerns have risen as to whether the natural gas pipeline will be ready to operate early in 2020, as planned. The prospective IGB pipeline project, to supply Bulgaria with Azeri gas, via TAP (Trans Adriatic Pipeline), will also be linked to the Greek network.

The EU is offering its support, including financial backing, to the IGB pipeline as it will end Bulgaria’s current total reliance on Russian gas. Besides TAP-derived Azeri gas, the IGB pipeline will also allow Bulgaria to receive gas from Greece’s LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens.

From the perspective of Greek consumers, the IGB pipeline will facilitate supply from central European gas hubs, such as Austria’s Baumgartner facility. This is currently not possible as a result of positions maintained by Bulgarian state-run companies and Russia’s Gazprom.

The US, keen to see Europe’s dependence on Russian gas lessened, is also applying pressure for swifter progress of the IGB pipeline. According to sources, Secretary of State John Kerry is expected to raise the issue during an upcoming official visit to Athens.

 

Greece will offer its support to the local segment of Russia’s latest natural gas pipeline proposal for Europe via the south, an MP of the coalition’s junior partner, Independent Greeks, told Russian news agency Sputnik today.

“Yes, we are ready. Everything now depends on Russia,” Terence Quick, the Independent Greeks MP, told Sputnik, refering to the development of “Greek Stream”, as the prospective pipeline’s local segment has been unoficially dubbed.

Responding to a question on whether the newly re-elected Greek coalition will continue offering support to the pipeline’s development, Quick noted the government will offer long-term support for cooperation with Moscow.

“We will have a stable government this time that will remain in power for four years. Therefore, we can work together with Russia on investments. We must do it this time,” the MP stressed.

The European Union, seeking ways to reduce its dependence on Russian gas, has not fully embraced the Russian plan.

Syriza leader Alexis Tsipras called for snap elections last month, just seven months into his coalition’s four-year tenure, in search of a fresh mandate.

The extent to which the Syriza party’s support for Greek participation in Russia’s latest natural gas pipeline proposal for supply to Europe via the Greek-Turkish border region will be maintained will largely depend on the outcome of the upcoming national elections.

However, support for the plan by Greece’s next government, alone, will not ensure the pipeline’s progress. An investment decision for the pipeline will also depend on whether an agreement is reached between Russia and Turkey on transit terms and the purchasing price of gas to be offered to Turkey. A deal between the two countries has yet to be struck, while the political uncertainty in Turkey is also delaying progress.

EU licensing procedures for the project can also be expected to take considerable time. Moreover, the USA, which opposes any moves that would increase the dependence of regional countries on Russian natural gas, has not embraced the Russian pipeline proposal.

In Europe, the Russian plan has received strong support from certain EU and non-EU member states, Hungary and Greece being examples.

The project, whose Greek segment is planned to run from Evros, at the Greek-Turkish border, up to Greece’s northern neighbour with the Former Yugoslav Republic of Macedonia (Fyrom), has been backed by DESFA, the Greek natural gas grid operator, for classification as a Common Interest Project (CIP), which would ensure favorable EU funding.

Greece’s next government and ensuing energy minister will need to decide fast on its stance concerning the Russian pipeline. Last month – prior to the Syriza government’s resignation for early elections in search of a fresh four-year mandate – the foreign ministers of Greece, Hungary, Serbia and Fyrom agreed to meet in Belgrade within September to discuss the pipeline plan’s progress. They also agreed to sign, at the September meeting, a memorandum of cooperation for the development of Turkish Stream, as the pipeline has been unofficially dubbed, through the Balkan region.

It remains unclear whether this meeting will still take place as a result of the political developments in Greece. If it does, Greece would be represented by an official from the current interim government, whose role would be ceremonial.

Besides having to act fast on a stance for the Russian pipeline plan, Greece’s next energy minister will need to meet with Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, to discuss energy policy matters. This meeting had been arranged last month by Greece’s previous energy minister, Panos Skourletis, and the US Ambassador to Greece, David Pearce.

Greek officials will need to seriously keep in mind that neighbouring Bulgaria is vying for the Russian pipeline to run throigh its territory, as announced by the country’s energy minister Temenuzhka Petkova. Bulgaria’s industrialists federation president Kiril Domuschiev has also expressed support for the Russian pipeline to run through Bulgaria.

 

Most natural gas infrastructure projects in Greece are likely to face delays, regardless of the recent parliamentary approval of a reform package that was needed to kick-start bailout discussions with the country’s lenders.

The second set of measures demanded by eurozone partners was agreed domestically last Thursday and could force a major overhaul of Greek systems and processes. Sources working in the country’s energy market believe that there are likely to be delays in proposed infrastructure projects, even now that the bailout package has been agreed.

The government still needs to negotiate and sign the new deal, a process which is expected to start next week and could last a month.

Part of the now approved second package is likely to include more European intervention on how energy assets are managed. TAIPED, the existing State Privatization Fund, was established in 2011 and is headed up by an all-Greek membership.

According to Theodore Theodoropoulos, CEO of Aegean Gas, a subsidiary of global business Aegean Oil, a reform of the existing fund will take place and most probably will include representatives from the EU institutions.

“The privatisation consultants should be approved from both Greece and the European institutions. Previously consultants were selected by government,” he said. “Energy assets such as DESFA (natural gas grid operator) and DEPA (Public Gas Corporation) and some of the port facilities will be transferred under a new fund, which is likely to happen after October,” he said.

The Greek government will then be required to transfer around 50 billion euros worth of its assets into the fund.

Increased EU involvement is likely to influence future privatizations, including the DESFA sale to Azeri state energy company Socar. “I don’t think that the sale will proceed in its current form,” Theodoropoulos said.

In 2013, an agreement was reached for the sale of a 66% stake in DESFA to Socar, but the deal is still awaiting approval by the European Commission.

Greece’s coalition, led by leftist Syriza, has made no secret of plans to keep the country’s energy companies state-owned. But Prime Minister Alexis Tspiras’s concessions to the EU, which were voted on in parliament last Thursday morning, will most likely reverse the stance.

Theodoropoulos said: “The Greek government was not willing to sell any more than a 51% stake in Greek assets, but I believe that this [proportion] will be higher [in the new deal]. It is also likely that the criteria will be stricter and the deadlines more specific.”

Although most Greek market sources refrained from voicing an opinion on timeliness ahead of the bailout vote, most expected some sort of a delay.

“All these assets are under the privatisation process,” Theodoropoulos said.

“I think all these projects will become realised, but there are likely to be delays and it is difficult to determine how delayed they will be. After October [when the new asset fund is in place] we will have a clearer picture of the Greek market and how these energy projects will develop.”

Anastassis Giamouridis, senior analyst at Poyry Management Consulting, does not think the Trans Adriatic Pipeline (TAP) would be at risk of delay because, unlike other infrastructure projects in Greece, it has an investment decision and is not dependent on Greek demand or finance.

The gas will instead transit Greece and capacities have already been agreed upon, he said.

Construction of TAP has the potential to enhance the importance of Greece’s LNG terminal, as it offers the possibility to transport volumes from this facility to other markets.

TAP will start at the Greek-Turkish border, fed primarily by Azeri gas from the TANAP line, run north to Albania and onwards to Italy. Deliveries to Europe should start in 2020, carrying 10 billion cubic metres (bcm)/year from the Shah Deniz 2 field.

Interconnector Greece-Bulgaria (IGB) – on the other hand – is still awaiting a financial investment decision. A source close to the project noted that negotiations between shareholders were taking longer than expected, partly due to the uncertainty in Greece.

Construction on the 3-5 bcm/year bi-directional pipeline is earmarked to start next March, with completion expected in 2018.

But as Giamouridis pointed out, because the project will primarily deliver Greek exports, there is a likelihood it will be delayed.

“I think IGB would eventually come on line, but not necessarily in its current form,” he said.

He suggested the interconnector, which some have said is necessary before TAP can be constructed, could send Azeri gas to Balkan countries.

This view is shared by Nikos Tsafos, president & chief analyst at US-based energy consultancy enalytica said: “In Greece, the only project with a clear purpose is IGB: to deliver Azeri gas into Bulgaria.

“Then again, if Turkish Stream is built, it is likely that Azerbaijan could deliver gas into Bulgaria at the Turkish-Bulgarian border, obviating the need for IGB.

“In short, the only high-likelihood project is TAP, and I wouldn’t be surprised if TAP were the only one of these pipelines to be built in the next 7-10 years.”

Source: ICIS

Greece’s newly appointed Production Reconstruction, Environment and Energy Minister Panos Skourletis told today’s handover ceremony that his arrival represents a baton change at the ministry, not a change of direction. Skourletis replaces Panagiotis Lafazanis, who heads the radical Left Platform at Syriza, the coalition’s main party.

“We’re not talking about a change of direction, but a baton change,” remarked Skourletis at the ceremony. “The six months of negotiations highlighted the plan of the current dominant forces in Europe, which has very little to do with the people of Europe. The government was forced to agree to this [bailout] deal. It opted for it as, otherwise, a devastating wave threatened to intensify the humanitarian crisis,” he continued.

The new energy minister noted that Athens will continue supporting a plan to develop a natural gas pipeline with Russia as an extension of the Turkish Stream gas pipeline.

The outgoing Lafazanis stated that “pressure won’t stop the government’s effort from developing the Russian pipeline through Greek territory, as this is a significant matter for peace in our region and Europe.”

Lafazanis also noted that the government had made clear its support for the TAP project, to supply Azeri natural gas to Europe, since it was elected into power last January.

The West has not embraced Turkish Stream, Russia’s latest proposal for natural gas supply to Europe from the south.

Lafazanis, who sought to nurture closer ties between Greece and Russia during his six-month tenure, described Turkish Stream as more beneficial for Greece than the planned Trans-Adriatic Pipeline (TAP). “The Russian project will provide more benefits because Greece will own a 50% stake in the pipeline and because tariffs will be higher,” the ex-minister noted.

Greek state-owned Energy Investments Public Enterprise SA (EIPE SA) and Russia’s VEB Capital will be partners in the project. Investments into construction are expected to amount to 2 billion dollars. The project, to be entirely financed by the Russian side, is expected to create 20,000 jobs in Greece.

Greece and Russia signed a memorandum of cooperation for Turkish Stream last month at the St. Petersburg International Economic Forum. Construction of the segment running through Greece is scheduled to start next year and be completed in 2019.

An EU commission for energy projects has decided to provide two million euros for a study concerning the development of the East Med natural gas pipeline, according to sources.

The East Med pipeline will be comprised of a network of submarine and overland infrastructure offering a direct link for deposits in the southeast Mediterranean area with the European gas network via Greece.

The natural gas pipeline, to measure approximately 1,700 kilometers in length, is expected to have an annual capacity of 15 billion cubic meters to supply recently discovered deposits in the Levantine Sea area, to be exploited by Cyprus and Israel, as well as existing deposits, to Greece through the country’s natural gas grid, and Italy, through a connection with the Poseidon pipeline.

The East Med project has been included in the European Union’s Projects of Common Interest (PCI), enabling EU development funding, as its construction would further diversify Europe’s natural gas sources; increase market competition; utilize the Levantine Sea deposits; bolster energy security for the EU; interconnect Cyprus with the European gas grid; support economic growth for Greece and Cyprus, as both countries stand to benefit from production revenues generated by the project; and facilitate the Greek-Italian interconnection.

Development of the East Med pipeline project will also help supply natural gas to areas in Greece that have yet to be linked to the national gas grid, such as Crete, the Peloponnese, and western Greece.

 

Negotiations leading to the signing of a memorandum of cooperation between nine EU member states, including Greece, for a CESEC (Central East South European Gas Connectivity) agreement, have reached an advanced stage. The memorandum is expected to be signed on Friday in Dubrovnik, Croatia.

According to energypress sources, the memorandum includes a detailed action plan and a number of infrastructure projects, the aim being to secure financing for their development through the European Fund for Strategic Investments, with guarantees from the European Central Bank (ECB) and the European Bank for Reconstruction and Development (EBRD).

Four projects of Greek interests have been included in the initiative: the Greek-Bulgarian natural gas pipeline (IGB); reverse flow development of an exisiting gas connection in Sidirokastro, at the country’s northern tip; an upgrade of the LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens; and the TAP (Trans-Adriatic Pipeline) project. Plans for two floating LNG terminals – one in Kavala, northern Greece, and the other in Alexandroupoli, northeast Greece, involving the Copelouzos Group’s Gastrade – were not included in the CESEC initiative, as only one of the two will be developed.

Besides Greece, the CESEC initiative includes Bulgaria, Romania, Croatia, Slovenia, Austria, Italy, Hungary, and Slovakia. The effort was launched last February in Sofia by Maros Sefcovic, the European Commission’s Vice President for Energy Union, who noted its objective is to enable countering an energy crisis in the event that Russia stops natural gas supply to the EU via Ukraine from 2019 and onwards, while also helping cover natural gas needs of the participating EU member states.

The Greek Energy Forum, a group of UK energy professionals sharing common interest in the broader energy industry in Greece and Southeastern Europe, will stage “Energy and Geopolitics in the Eastern Mediterranean and Greece”, a high-profile event to focus on the wider region’s developments, with emphasis on the changing nature of EU-Russia ties, on July 8 in Brussels.

“The Eastern Mediterranean, Greece and South East Europe could play an important role in Europe’s energy strategy, but political and economic tensions and conflicting alliances could harm these ambitions. This event will discuss the most recent energy developments in the region in a broader geopolitical context,” Greek Energy Forum noted in a press release.

While the European Union is re-evaluating its energy plans for the years ahead, it is facing a major challenge in its relations with Russia, one of its key energy suppliers, the forum noted. The EU is looking to minimize dependence on Russian gas and to engage in new energy partnerships which would allow it to improve the security and diversity of the EU’s energy supply, the forum added.

“In the past year, a number of significant energy projects have been announced in and around the EU’s borders, creating new prospective energy players. At the same time, the United States is keen on supporting the EU in achieving its goal of energy diversification and reducing Russia’s stronghold on EU member states,” the noted the forum.

Greek Energy Forum will stage the event with support from the German Marshall Fund of the United States and Natural Gas Europe, a news portal focused on the gas sector.

For further information: Greek Energy Forum – Tel:0032 474943661; Email: info@greekenergyforum.com

 

Prime Minister Alexis Tsipras’s scheduled visit to St Petersburg at the end of this week for an economic forum is expected to coincide with the signing of an agreement formalizing Greek-Russian interest in the Greek segment of Turkish Stream, Russia’s latest proposal for natural gas supply to Europe from the south, via the Greek-Turkish border area.

According to sources, Greek and Russian officials are expected to sign a memorandum of understanding, perhaps even a joint political declaration, to make official Athens and Moscow’s intention to develop the pipeline project.

Although still just a theoretical plan, Turkish Stream has already provoked strong regional reaction. Russian officials seem to have recognized the additional problems caused by the negative reaction of many countries in the Balkan region, from where the Turkish Stream pipleine’s route would cross. The response in the Former Yugoslav Republic of Macedonia (Fyrom) and Serbia has been particularly unfavorable. Also, the EU and US have not embraced the Russian plan.

Meanwhile, on another pipeline front in the region, the IGB interconnector concerning Greece and Bulgaria has run into further delays, once again prompted by Bulgarian officials. Of course, it must be noted that the agreement being worked on by officials for this project would concern a far more advanced stage entailing finalization of financing details.

Certain sources believe Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis will travel to St Petersburg ahead of the Prime Minister to prepare the ground for the Greek-Russian pipeline agreement’s signing. However, pressing matters concerning the bailout talks could alter this plan.

The Greek delegation for the trip to St Petersburg will include a group of local businessmen, including Dimitris Copelouzos, who is scheduled to deliver a speech at the St Petersburg International Economic Forum (SPIEF – 2015), scheduled for June 18.

 

Today’s scheduled signing session concerning a final investment plan for the IGB natural gas pipeline, to interconnect the Greek and Bulgarian systems, has been postponed, local officials were informed yesterday, as certain issues, allegedly technical according to Bulgarian sources, remain unresolved in Sofia.

Meanwhile, the postponement has coincided with a visit to Bulgaria by Amos Hochstein, the US Department of State’s Acting Special Envoy and Coordinator for International Energy Affairs. The American diplomat had recently angered Greek officials by noting that Greece’s interest to participate in Turkish Stream – Russia’s latest proposal for natural gas supply to Europe from the south, via a pipeline running through the Greek-Turkish border area – makes the country part of the problem.

Such remarks, combined with latest information, according to which the IGB investment plan deal’s signing will be delayed for after a business forum in Russia – during which an IGB date may be set – create a foggy picture concerning regional energy strategies and their political undercurrents.

The IGB project’s development is of pivotal importance to the Southern Corridor and the TAP (Trans-Adriatic Pipeline) project, which will supply Azeri natural gas to Europe, via Greece.

Greek officials plan to sign a memorandum of understanding as well as a political declaration in support of Russia’s Turkish Stream project next week, in St Petersburg. Meanwhile, Russian officials appear to have acknowledged the emergence of additional obstacles in a number of Balkan countries, whose territory would be crossed by the Turkish Stream project. The Former Yugoslav Republic of Macedonia (Fyrom) and Serbia are two trouble spots, which, for the time being, seem to be blocking the plan.

As for the IGB project, being promoted for swift development by Greek officials but being slowed down by Bulgarian delays, it appears not only to be encountering technical issues but ones tinged with political concerns as well.

Certain sector authorities believe a balancing game fueled by political maneuverings is currently at play. The US has already openly expressed its opposition to Turkish Stream, while, adopting a less direct approach, the EU appears hesitant at best.