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The TAP in north Greece. The pipeline starts from the Caspian sea and reaches the coast of southern Italy
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Can Greece jump on the gas-transit train?

Greece hopes to exploit natural gas pipelines crossing its territory to export its own volumes to Europe

Greece must wait several years to learn whether the Mediterranean Sea will endow the country with natural gas supplies on a par with those off Egypt. But that doesn't mean that people aren't talking about gas. Far from it.

"We are in the middle of huge investment in gas," Greek deputy energy minister Michalis Verroiopoulos told Petroleum Economist. "This is in both international projects and the domestic market. There's a big space for natural gas in Greece."

The minister was speaking on the sidelines of a conference, in the port city of Thessaloniki, that focussed on energy market transition and security in south-east Europe. Greece's interest is both in securing diverse and dependable sources of gas supply and finding ways of transporting any future gas reserves to market.

At present, Greece imports all the gas it consumes. Around 70% comes via pipeline from Russia, 15% from Turkey via the Greece-Turkey interconnector and the rest from liquefied natural gas. The country's sole LNG terminal is at Revithoussa, a small island just to the west of Athens, which began operations in 2000. An expansion project is set for completion this year. When finished it will raise regasification capacity by 40% to 4.7m tonnes a year and involves the construction of a third 95,000-cubic-metre-capacity (3.3m-cubic-feet) storage tank.

Plans are advanced for a floating storage and regasification unit to be established at Alexandroupolis in north-east Greece, close to the Turkish border. Front-end engineering studies for the floating storage and regasification unit were carried out by Ireland's Wood Group. The facility's four regasification units will have capacity to produce a total of 6.1bn cubic metres a year of gas and initially store up to 170,000 cm. A final investment decision is awaited and could be determined by the planned Greece-Bulgaria interconnector pipeline project receiving permission to proceed.

Tanap to Tap

Alexandroupolis lies close to where the Trans Adriatic Pipeline (Tap) connects to the Transanatolian Pipeline (Tanap), which brings natural gas across Turkey from Azerbaijan. Tap, running from east to west across northern Greece, is close to completion. The pipeline will carry on through Albania, with the aim of then routing under the sea to Italy and from there into other European markets. The initial capacity of the pipeline, which has European Union backing, will be 10bn cm/y. The aim is that Azeri gas will reach EU markets in 2020. Under Greece's deal with Tap, the country will receive 1bn cm/y from the pipeline. The shareholders in Tap are BP (20%), Socar (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpor (5%).

Source: Petroleum Economist

In the second phase, Tap's capacity could be doubled. At this point Greece will be hoping that it has gas that could be transported to Europe through the pipeline. Greece is also a partner (along with Italy, Cyprus and Israel) in a plan to transport East Mediterranean gas to European markets. The Eastern Mediterranean gas project (EastMed) envisages the construction of 1,300km (807-mile) offshore pipeline and a 600km onshore pipeline.

It would initially bring Israeli and Cypriot gas to Cyprus. From there the pipeline would pass under the sea for the 700km to Crete, before connecting to mainland Greece in the Peloponnese and continuing to western Greece and Italy. The project is owned by IGI Poseidon, with Greece's state gas firm Depa and Edison owning 50% each. The project has strong EU support.

Energy hub?

In the view of Yannis Bassias, head of state-owned Hellenic Hydrocarbons Resources Management (HRRM), the possibility of two gas pipelines crossing into Europe is hugely advantageous for Greece, opening up the prospect of it becoming an energy hub. "Greece is the western-most part of the Eastern Mediterranean," he told Petroleum Economist, "and the eastern-most part of the West Med. This is an excellent position geographically because from western Greece you go straight to Italy and other European markets." Tap, in its first phase, may not have capacity to take on gas from Greece. But the second phase would be different.

In any case, according to Costis Stambolis, head of the Institute of Energy for South-East Europe in Athens, "building a pipeline from western Greece, offshore or onshore, to Italy is not difficult because Tap is already making plans to lay a pipe from Albania to Italy. The problem is that the communities in southern Italy where the pipeline would go are objecting very strongly to this. I'm sure in the end they will find a solution. But technically it's feasible because we're not talking about deep water."

As for the planned EastMed, passing through Crete, it would be ideally placed to take on export volumes from any discoveries in the two ultra-deep-water blocks off the island that are to be explored by the ExxonMobil-Total-Hellenic Petroleum consortium.

Economic concerns

Voices can be heard expressing doubts about the economic viability of EastMed, given the transportation costs involved and the relatively low natural gas sales price in Europe. But Bassias believes these worries are unfounded. More and more gas is being discovered in the East Med, in Egypt and elsewhere. Egypt's LNG facilities won't be able to handle all the gas in excess of what's consumed domestically. And Europe is anxious to diversify sources of supply as much as possible.

"There's a lot of gas that has to be transported and it's probably not so expensive when you look at it over a time window of several years," HRRM's boss continued. Even if the final cost is, say, $10bn, there are 500m people in the EU, it's not such a big deal for each pocket." A final investment decision on EastMed is likely in 2019.

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