The Role of Greece in the Geostrategic Chessboard of Natural Gas
Amid the hard times Greece is going through, the assertion that it is turning into an important regional player in the natural gas scene is not an exaggeration. Its geostrategic location on the map offers a number of advantages, which can translate to an economic competitive advantage, as well as to an upgrade of its geopolitical role in South-East Europe.
Firstly, Greece's role in the international chessboard of pipelines becomes critical. The selection of the Trans-Adriatic Pipeline (TAP) as the avenue for EU's Southern Energy Corridor, as well as the pending project for the Greece-Italy Poseidon (IGI) pipeline with the participation of DEPA, is decisive; not only will it support local economies during the construction phase, but also 'locks' this particular route through Greece as the main entrance hub of Azeri gas to Europe.
Analysts have pointed out often that the initial capacity of 10 bcm is scant compared to EU's gas imports of ca. 280 bcma (out of 460 bcm of total consumption). However, a quantity of 10 bcm covers to a large extent the import needs of the transit countries and their neighbours, taken into account that Greece, Bulgaria, Croatia, Romania and Albania import ca. 12 bcm cumulatively - with the numbers for Turkey and Italy being 45 bcm and 66 bcm respectively.
This capacity can therefore have a substantial impact on the diversification of supply sources for the aforementioned states, especially if the potential plan for doubling the pipeline's capacity in the future is considered. Moreover, the construction of the interconnecting pipeline Greece-Bulgaria (IGB) as developed by DEPA and its associates, will offer another potential source for diversification, as it will connect Bulgaria with TAP. The pipeline's capability of reverse flow will allow Greece to use current or future regasification infrastructure to supply Bulgaria and the whole region with liquefied natural gas. The further development of an interconnecting pipeline network, such as the proposed Bulgaria-Romania (IBR) and Bulgaria-Serbia (IBS) could help in this direction.
The development of this pipeline network will undoubtedly enhance the energy security for the whole region of South-East Europe, rendering Greece as an integral link of this process. The plan by the Greek natural gas system operator DESFA to construct a third gas storage facility in Revythousa could add an extra 95.000 cm, raising the system's overall storage capacity by 73%. The storage capacity could be further boosted with the proposed project by the Greek oil company Energean SA to turn a depleted oil field in the area of Kavala in Northern Greece into an underground storage facility with an estimated capacity of 1 bcm.
Furthermore, the import of gas from alternative supply sources could be increased substantially from the DEPA-planned Floating Storage Regasification Unit (FSRU) in the area of Kavala, which can bring in the equation another 150.000 cm of storage capacity, as well as the potential of pumping up to 5 bcma into the system. This project, in a potential synergy with a similar project proposed by the Greek company Gastrade SA in the region of Alexandroupolis, is critical in turning Greece in an emergent gas trade hub in the region.
Another factor to be considered is the important synergies with the maritime industry for the import and export of liquefied natural gas (LNG). Interestingly, natural gas could be also used as fuel for the ships, especially in the light of the recent EU proposals on fighting pollution caused by ships, including the Mediterranean Sea.
A special mention is in order with regards to the prospect of the transportation of Cypriot natural gas through the Eastern Mediterranean Pipeline proposed by DEPA. This pipeline, which is put forward in cooperation with the Ministry of Energy, Commerce Industry and Tourism of the Republic of Cyprus, could transfer initially 8 bcma of Cypriot and potentially Israeli gas. Furthermore, the existence of a pipeline network in the area could facilitate the Greek government's planning for the exploitation of its domestic hydrocarbon resources, as these could find more easily their way to the regional markets.
Also noteworthy is the fact that all of the aforementioned projects have been included as Projects of Common Interest (PCI) by the European Commission, which raises their significance but most importantly enhances their prospects of realization. The completion of all these investments would find Greece with an overcapacity of natural gas exceeding by far its annual consumption of ca. 4bcma, which apart from contributing to the energy security of the region, could also open the way for a further commercial use of the exceeding quantities. These developments would also support the aspiration of the Greek government to establish a virtual trading hub for natural gas based (possibly) in Thessaloniki.
The orientation of the Greek government to implement structural reforms and open up the energy market and thus enhance competition across the value chain, from energy generation to supply, as well as the attraction of foreign investments directed to energy infrastructure, could lay the foundation for the emergence of Greece as a strategic entrance and trade hub of natural gas in South-East Europe.
Dr. Kostas Andriosopoulos, Ass. Professor and Director of the Energy Management Centre (EMC) at ESCP Europe Business School, London; Vice Chairman BoD of DEPA (Public Gas Corporation of Greece).
Dimitris Arvanitis, Lawyer, LL.M, Ph.D cand. in Energy Law (City University London).