Russia and Turkish Stream
After the collapse of the USSR, Russia’s new political elite of early 1990s emerged with its liberal orientation, Euro-Atlantic integration aspirations and opposition to supporting anti-western governments. Whereas, Russia after 2000s under Vladimir Putin’s leadership pursued absolutely different path. Alongside with foreign policy, Russian natural gas policy is remembered mostly with gas crisis, gas cut-offs and monopoly of Gazprom in the neighboring European countries. The crisis erupted in Ukraine and annexation of Crimea left Russia little room to maneuver for its South Stream project, which was hindered by the EU’s Third Energy Package rules and international sanctions that blocked financial capability of Russian banks to finance the project.
Meanwhile, election of the radical leftist – Syriza party in Greece is mostly favored by Russia, like other political parties in the EU member states, such as Jobbik (Hungary), National Front (France), National Democratic Party (Germany), etc. not because they are radically pro-Russian, but rather they do not easily conform to Brussels-led policies. New government in Greece appeared challenging the official Brussels by opposing the extension of sanctions against Russia, amidst the Ukraine crisis and the EU’s endeavors of diversifying energy supply and creation of the Energy Union. Meanwhile, official Athens’s favored extension of Turkish Stream through Greece to Europe. New Greek government also eyes an agreement with Russian Rosgeo for exploration of hydrocarbon resources in Aegean and Ionian Seas, to negotiate new prices discounts, Russia’s involvement in Floating Storage & Regasification Unit in the Alexandroupolis port.
However, the statements of New Energy Minister of Greece, Panagiotis Lafazanis couldn’t not disappoint Russia, as he announced the ending of privatization of Public Gas Corporation (DEPA). Tender for the 65 % privatization of DEPA had been already hold in 2013, where, Russian Gazprom and Sintez had proposed the highest bid for DEPA, though privatization failed because of lack of formal bids. Hence, Gazprom and Sintez voluntarily withdrew their bids by making excuse on DEPA’s financial position. However, it was not secret that, official Washington and Brussels had already urged Athens in early 2013 not to sell DEPA to Russian Gazprom. Gazprom’s presence in DEPA as a main shareholder was a serious concern in terms of Russian dominance in the Southeast European energy markets.
Moreover, Russia is very interested in participating in liberalization of Greek energy market by investing there and purchasing certain energy assets. Active presence of Gazprom in the energy sector of Greece with development of gas distribution networks and construction of gas storage facilities is one of the main dimensions of Greek-Russian energy relations for Russia. In this regard, the construction of the Trans-Balkan Burgas-Alexandroupolis oil pipeline in 2007, which envisaged delivery of Russian oil through the Black Sea and Bulgaria to Greece intended to shadow the Baku-Tbilisi-Ceyhan oil pipeline that is bringing Azerbaijani oil through Georgia to Ceyhan port of Turkey to Western markets. Moreover, Russian president Vladimir Putin had proposed Greece to join South Stream gas pipeline in June 2007, because Russia was planning to pave auxiliary route of South Stream towards Greece in case northwestern route to Bulgaria would not come to realization. So, it happened, as Putin halted South Stream and launched Turkish Stream in early December 2014.
With the suspension of South Stream and right there announcement of Turkish Stream, Putin wanted to show that Russia is not isolated from regional energy developments. Whereas, the construction of Turkish Stream is not the only deal. Russia needs customers to buy its gas in Turkish-Greek border. In order to extend the Turkish Stream towards Southern-Eastern Europe, Russia may need separately to renegotiate with the EU/non-EU countries to pave new route for Russian gas, as Gazprom was doing for South Stream. Technically Greece is the most optimal country to buy Russian gas from the border and Greece may become important actor to deliver Russian gas to Europe.
Diversification of Supply and Routes
Previous Greek government had liberalized its natural gas market with new natural gas law in 2009, which led to establishment of transparent natural gas market in Greece by unbundling of transmission, distribution and supply activities and granting third party access to independent suppliers. If in the early 2000s Greece’s domestic energy policy based on liberalization of domestic energy market, developing the energy sector and attracting large-scale investment, following election of new government in January 2015, Syriza prioritized the nationalization of ex-public companies and ending the privatization cases for public companies. Meanwhile, another aim of Greece’s energy policy is becoming an energy hub in the region between East and West by creating new and upgrading existing interconnectors and LNG terminals. Because of its 65 % of oil and 75% of gas reliance on Russia, Greece is one of European countries that is seeking to diversify its energy supply.
Trans-Adriatic Pipeline (TAP) – In 2013, became last chain of the Southern Gas Corridor and new alternative supply route for Greece. TAP pipeline is planned to be linked with Trans-Anatolian Pipeline and to start in the Turkish-Greek border, go through Albania and under Adriatic Sea, and end up in the Southern coasts of Italy (San Foca). However, new demands of the new government in Greece regarding the TAP project to increase tariffs, decrease gas prices, sell only 49% of DESFA to SOCAR and obtain share in TAP blurred the image of Southern Gas Corridor and was not warmly accepted by Azerbaijani SOCAR. Although tale of DESFA is still under questions and SOCAR agreed to grant a stake to Greece in TAP, Azerbaijan did not make concession on price and tariffs issues. Another issue on TAP is its perspective to transport Russian gas. Thus, Russia may book an additional spot in TAP due to the EU Commission’s Regulation, which granted “Third Party Access” exemption to 50 % of TAP, while left another 50 % for Third Party Access. It may enable Russia to request TPA to transport its gas via TAP (as a supplier, not owner) at the second stage of gas delivery or construction of additional entry/exit points in the [Turkish-Greek] border to sell its gas.
Interconnector-Turkey-Greece-Italy (ITGI) – According to Natural Gas Europe, new government of Greece also eyed Russian gas to be transported via Interconnector-Turkey-Greece-Italy as an extension of Turkish Stream from Greece to Europe. The Turkey-Greece natural gas interconnector from Karacabey (Turkey) to Komitini (Greece) that launched in 2005, was intended to enable third suppliers to bring additional natural gas to Greece, thus diversifying its existing natural gas import from Russia (via Bulgaria) and Algeria (as LNG). The construction of the Greece-Italy undersea pipeline was an extension of Turkey-Greece interconnector. Upon the completion of two interconnectors Greece would be able to diversify its gas supply for domestic market from different suppliers. However, ITGI failed because of financial problems of Italy and Greece, though the most of infrastructure was existed and operational. However, the point is that, how Greece will tackle with financing of ITGI, given its economic situation and debt talks with the EU.
Interconnector-Greece-Bulgaria (IGB) – that will be laid down from Greece’s Komotini to Bulgaria’s Stara Zagora, is considered vital link for Southeast European countries in terms of bringing Eastern Mediterranean, Caspian or possibly Russia natural gas to that region. The IGB will be able to facilitate the delivery of Azerbaijani gas from TAP and Mediterranean gas from LNG facility in the Northern Greece towards Southeast and Central Europe. It is also possible to transport Russian gas from Turkey-Greece Interconnector or from TAP towards Southeast and Central Europe via the IGB to Bulgaria or via new pipeline through FYROM and Serbia to Hungary and Austria after gas entered Greece through Turkish Stream. The latter proposal had been highlighted by Hungarian Premier Minister Victor Orban during his recent meeting with Vladimir Putin. Furthermore, the IGB pipeline, which is considered a project of common interest by EU, will be a cornerstone of “Vertical Corridor” that have been agreed in Joint Statement by Energy Ministers of Greece, Bulgaria and Romania in December 2014, in Brussels. Given the lasting delays in IGB project, on February 9, 2015, Energy Ministers of Greece and Bulgaria agreed acceleration of implementation of IGB and sort out Final Investment Decision by mid-2015. However, interconnectors between Bulgaria and Romania, as well as between Bulgaria and Greece remains uncompleted thus far.
Liquefied Natural Gas (LNG) – Meanwhile, “Greece’s DEPA considers developing Floating Storage and Regasification Units, upgrading Revithoussa LNG terminal and construction of Aegean LNG terminal in the Kavala region close to Bulgarian and Turkish borders, where it will be possible to link terminal with Trans-Adriatic Pipeline, Greek gas transmission system, and Interconnector-Greece-Bulgaria. The Revithoussa terminal is important in terms of diversification. Moreover, Greece also considers bringing Algerian LNG into IGB (5 bcm/year) by 2020. Another Greek company Prometheus Gas plans to construct similar terminal near to the Alexandropoulos port. From the other hand, Greece could use Turkey’s two terminals in the Marmara Sea by importing Algerian, Nigerian and Qatari LNG and further delivering it via IGB to Greece.”
Greece may diversify its gas supply from potential Vassilikos terminal of Cyprus as well, either through LNG import via existing Revythousa LNG terminal or through potential Floating Storage Regasification Unit to be located offshore in Kavala city of Greece. Through these facilities, Greece may save additional amount of gas in the gas storages, create interconnections between those and its national gas transmission system in order to further link them into Greek-Bulgarian interconnector and reach into Southeast European markets. Another diversification option might be Eastern Mediterranean pipeline that to be laid down under the Mediterranean and to link Leviathan (Israel) and Aphrodite (Cyprus) fields with either Peloponnese Island or Attica peninsula of Greece.