Long-standing DESFA northern Greece pipeline plan scrapped

Gas grid operator DESFA has scrapped plans for a natural gas pipeline that had been envisioned to run across northern Greece, from Komotini in the northeast to Thesprotia in the northwest, after maintaining the project in the company’s business plans for about a decade.

DESFA reached this decision as Russian President Vladimir Putin is supporting Gazprom’s development of a second branch for the wider Turkish Stream gas project, deviating Ukraine, to supply the Balkans and central Europe via Bulgaria, not Greece, as was initially considered.

A first Turkish Stream branch supplying Russian gas to Turkey is already operating.

“The project remained on the business plan for approximately ten years without progressing to the construction stage, while there is no sign of conditions leading to its construction in the immediate future,” DESFA announced.

The Komotini-Thesprotia pipeline project was budgeted at 1.8 billion euros.

The total cost of projects included in DEFSA’s development plan for 2021-2030 is now budgeted at 545.5 million euros.

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

Three major energy projects of international dimension, the East Med and IGB natural gas pipelines, as well as the Alexandroupoli FSRU (Floating Storage Regasification Unit), all once seeming distant prospects, are now gradually turning into a close reality.

Their development promise to transform Greece into an energy hub and upgrade the country’s geopolitical standing in the fragile southeast Mediterranean and Balkan regions.

The leaders of Greece, Cyprus and Israel are set to sign a trilateral agreement for East Med, to carry natural gas to Europe via these countries and Italy, at a meeting in Athens on January 2. The transmission capacity of this project, measuring 2,000 km, will range between 10 to 20 billion cubic meters. Italy is also expected to eventually join the partnership for this project.

Its development prospects have been further propelled by a decision from Poseidon, a 50-50 joint venture involving Greek gas utility DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

The trilateral agreement promises to further bolster ties between Greece, Cyprus and Israel amid a period of heightened regional intensity. Turkish provocation has escalated. An East Med Gas Forum to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority should help expand the alliance.

The Greek-Bulgarian IGB gas pipeline is expected to have begun operating far sooner, in July, 2021. DEPA holds a 25 percent stake in ICGB, the consortium overseeing the IGB project, whose initial capacity will be 3 bcm. Through this pipeline, DEPA plans to supply the Bulgarian market with Azeri gas hailing from the TAP route, and, as a result, break, for the first time, the existing Russian monopoly in the neighboring market.

The IGB will not only be fed by TAP, running westwards across northern Greece for Azeri supply to Europe. The Alexandroupoli FSRU to be anchored off coastal Alexandroupoli, northeastern Greece, will also feed the IGB, enabling an alternative gas supply source for Bulgaria, other east European countries, and Ukraine.

DEPA is also involved in this project. The gas utility has just decided to acquire a 20 percent stake in Gastrade, the company developing the FSRU project in Alexandroupoli.

Leading Washington officials have expressed their support for the East Med, IGB and Alexandroupoli FSRU projects. Prime Minister Kyriakos Mitsotakis will be seeking confirmation of this backing on an upcoming official trip to the US from President Donald Trump himself.

 

Trump’s stance could reshape Europe’s foreign and energy policies

The election of Donald Trump to the US presidency may bring about changes to Europe’s energy and foreign policies if the new American leader insists on pursuing a path leading to isolationism and warmer ties with Russia.

As for the Russian part of the equation, speculation of Trump’s close personal and business associations with the Kremlin has become widely known. The disclosure of Russia’s alleged intervention in the US elections, the objective being to push Trump to power, has stunned the political landscape worldwide.

If these developments are transformed into foreign policy then major shifts in balances of power can be expected in regions such as Eastern Europe, the Middle East and central Asia.

Trump’s ongoing disparagement of NATO is not an encouraging sign for countries of the former eastern bloc. They view Russia with hesitancy and need allies, Ukraine being an obvious example.

A change of energy market roles for Russia and Ukraine would severely impact Europe’s energy policy. For many years now, Ukraine’s extensive pipeline network has been used by Russia to transmit its natural gas to Europe. However, as a result of troubled relations between Moscow and Kiev, the Kremlin has sought strategic independence from Ukraine over the past decade or so. Russia has been promoting the development of new gas supply lines to Europe such as Nord Stream 1 and 2, South Stream and Turkish Stream, all of which bypass Ukraine.

Russian wants to establish itself as a gas supplier to Europe via a seamless network, which would enable the country to increase its supply and control both networks and the market.

The European Commission claims it wants reduce its Russian energy dependence, despite the fact that consumption has increased, as highlighted by market data for 2016.

Brussels essentially does not want Russia to develop new pipelines as it fears Europe’s influence on energy issues will diminish. Another European fear is that Ukraine will be completely abandoned to Russian intentions. Ukraine’s pipeline network is its most powerful bargaining tool opposite Russia. If Trump insists on a pro-Russia policy, prompting a US-Ukraine split, then Europe will be Ukraine’s only remaining ally.