Greece’s energy sector is today a hive of activity focused on plugging together several pipelines into a network that will one day pump new sources of natural gas into Europe, weaning the EU off of its overdependence on Russian supplies. Konstantinos Karayannakos, executive director of gas supply, commercial and international activities at DEPA S.A. (Greek Public Gas Corporation), explains how Greece is spearheading this the vision for greater energy security.
How can Greece support the EU’s energy security and diversification strategies?
Greece has already been selected as a main entrance for Caspian gas being piped into the EU through the Trans Adriatic Pipeline (TAP). In reality, Greece offers the only option in many years for Europe to diversify its gas source and reduce reliance on Russian exports. Apart from Western European markets, TAP provides clear benefits for Greece, Bulgaria and other parts of Southeastern Europe.
What projects best define Greece’s strategic role in energy security?
DEPA participates in IGI-Poseidon S.A., which is a joint venture with EDF’s subsidiary Edison, who we have three projects with. The first project is the Interconnector Greece-Bulgaria (IGB), which is the only regional pipeline that provides physical gas flow from the south to north. Currently, the main north-south pipeline allows Russian gas to reach Europe’s south. Therefore, the IGB is the alternative option, providing a reverse flow while creating an integral part of the Vertical Corridor, an EU initiative that aims to create a gas corridor from Greece to Hungary, ultimately providing alternative gas for the entire region. At the moment, Greece, Bulgaria, Romania and Hungary participate in the Vertical Corridor, and countries like Serbia and FYROM should join in the future. The project is co-funded by the EU, and there are already marketers and shippers that are bound by contracts. We will seek additional investors because there is still some capacity that is not covered yet.
What are the other two priority projects you have slated with Edison?
The second route being developed by IGI-Poseidon S.A. is the Eastern Mediterranean pipeline, a development-stage pipeline connecting gas reservoirs in the East Mediterranean to Europe. Initially, this project has been challenging in terms of technical feasibility in deep waters, but to-date we have performed commercial studies and technical surveys, providing plenty of evidence supporting its viability. There is a strong interest coming from gas producers of the area who would like to join the project in the near future.
The third project is really new and revolves around the revival of the Interconnector Greece-Italy (IGI), which aimed to provide an alternative route for Russian gas to Italy. Originally, IGI was one of the projects that competed for the Southern Corridor, but TAP won the bid instead. Nonetheless, there is now a new concept suggesting that Russian gas could be supplied through the Black Sea, and Gazprom is considering the development of two offshore pipelines; a first pipeline is towards Turkey, and the second towards Italy via Greece.
What is the main priority for the EU in Greece now: security, diversification or competitiveness?
The right strategy is to secure as many alternative energy sources as possible. That is the way to achieve diversification and it is crucial in order to secure competitive gas for the European end-consumer. We should not forget that Russian gas constitutes 1/3 of the gas mixture in Europe. Its price also makes it arguably competitive. Based on these solid facts, I believe that in the future Russia will defend its market share in Europe. The raised question is what other gas, apart from Russian, could be supplied to Europe. The Southern Corridor, the EastMed pipeline and LNG terminals have been extremely important initiatives in this matter.
How bright is the future of LNG for Europe?
LNG will be a decisive alternative source of energy for Europe in the years to come. As European domestic production declines in the Northern Sea, there is going to be a supply gap. I am fairly confident about the variety of alternatives we have in our hands, LNG being a main one. Greece will have a significant role in this strategy because we are the only entrance of LNG to the southeastern European region. We have already established an important LNG terminal in Revithoussa, close to Athens, which has recently been upgraded. There is also another LNG floating terminal (FSRU) under development in Alexandropoulos.
What does the future hold for DEPA?
DEPA is today a wholesaler of gas, but our strategic plan is to divert part of our activities to electricity and the retail market. Please note that DEPA has a competitive and diversified gas supply portfolio. E&P will be also an option, and we are currently researching projects in the region. The development of international projects will also remain a main activity.
What would be your final message about energy investment potential in Greece?
Greece’s gas network has not yet been expanded to the entire country. There are many regions without any access to gas, and this is an issue demanding a solution in the near future. We need to promote the expansion of the gas grid and the development of a new retail market to the rest of Greece, either through pipelines and local distribution networks or through remote CNG. Other opportunities lie in bunkering and small-scale LNG. Since LNG has evolved into the main fuel of shipping worldwide, there is higher demand for LNG bunkering in the main ports of the Mediterranean Sea. This includes the biggest ports of Greece, with DEPA having the coordinating role in such projects. Small-scale LNG is another opportunity to expand the diversification in Greece, which would involve technology from European companies.
Why invest in Greece’s energy sector now?
All of these pipeline projects should peak the interest of the biggest European gas companies. Électricité de France already participates in Edison. In the years to come, all these projects will mature and European gas companies will express more and more interest. I am fairly confident that the development of the LNG market in southern Europe is a great opportunity. Last but not least, DEPA’s privatization will be, without a doubt, of great interest to European energy investors.