Why it is still not possible to set up completely a road map for lifting Greece out of energy poverty and providing energy services of European level?
Various media sources of Southeastern Europe countries noted that in 2016 gas supplies to Greece from Russia increased by 35% to 2.68 bcm. At the same time, gas imports from Russia also rose in other South and South East Europe countries. Russia’s gas supplies to Italy went up 1.1% in 2016 compared with 2015 to 24.7 bcm, to Bulgaria - by 2.1% to 3.18 bcm, Serbia - by 4.3% to 1.75 bcm, Romania - by 740% to 1.48 bcm, Croatia - by 54.8% to 0.76 bcm and FYR Macedonia - by 56.5% to 0.21 bcm.
In Greece, the remarkable increase in gas consumption presents a concrete evidence of recovery of the national economy. Besides, impact of sharp seasonal climatic fluctuations should also be taken into consideration, which in the beginning of this year led many to talk about energy problems caused by insufficient abilities of national gas suppliers fully and promptly to meet the demand in seasonal peak periods. The newly formed EDA THESS gas distribution company, for example, serving the wider Thessaloniki and Thessaly regions, announced a very high level of retail demand for gas. In early January, daily consumption in these regions increased from 2.5 mcm per day on average to 4.5 mcm per day, including up to 3 mcm in Thessaloniki and up to 1.5 mcm in Thessaly.
Back in December last year it became known that company EDA THESS planned to invest roughly 90.7 million euros over the five-year period covering 2017 to 2021 in order to develop infrastructure facilitating natural gas supply to both regions. Recently the necessity of company EDA THESS plan has been more than demonstrated by an unusually cold winter for the Mediterranean country. Along with that after a stressful experience like this not only energy companies, but the population of Greece also should get used to take more care in advance, according to the words of politicians, about their own energy security. On such occasions, residents of Northern Europe and mountain regions in Central Europe rather often providently remember a well-known saying of Thomas Fuller, one of the first English writers who said, "In fair weather prepare for foul." Apparently, this old advice is not sufficiently known yet to energy end-users in such southern country like Greece because, for example, only after the January sharp cold snap company EDA THESS just within a ten-day period received more than 400 applications for installation of gas heating equipment.
Although gas is in high demand not only for heating in the winter season, but also for a comfortable cooling in the summer heat, which consumes a lot of energy generated also from gas. Ongoing provision of support for the development of the gas distribution infrastructure in the domestic market - it is, of course, an important thing for Greece. At the same time, there is another no less important but even more difficult question: where are these energy goods required throughout the whole year going to come from? Whose gas will Greece get in response to increasing demand?
Greece should pursue its own path leaving energy poverty to access energy services of European level
It is often stated that a household is considered to be energy poor, if it spends more than 10% of its income on energy bills. As noted by the leading EU affairs newspaper New Europe, Bulgaria, Greece and Cyprus are European record-holders as regards this indicator. According to the recent evaluation of this indicator one out of three Greek households in 2016 were faced with energy poverty.
The European Commission has proposed many measures to solve the problem of energy poverty including notably improvements in energy efficiency using various methods, and among them building insulation materials and new windows and doors to reduce heat transfer. However, it is obvious that reduction of households energy use alone would be insufficient to alleviate the problem of energy poverty particularly where energy consumption is already critically low. Consumers in Greece primarily should be provided much wider access to new more powerful and reliable sources of energy supply. Therefore, to lift one third of Greek households from the energy poverty trap special attention should be given to development of energy infrastructure necessary for energy resources imports to the country such as gas pipelines, gas storages, LNG facilities, etc.
Realistically, all of that can be expected in the near future is included in a short list of such projects, which are also well-known in Europe because the countries neighboring Greece share critical interests in their implementation.
First among those project by commencement dates in Greece is the Trans Adriatic Pipeline (TAP). With a total length of 878 km, TAP will connect to the Trans Anatolian Pipeline (TANAP) at the Greek-Turkish border, will cross Greece, Albania and the Adriatic Sea. Once completed, the TAP project will transport gas from the Shah Deniz II gas field in Azerbaijan into Europe. The length of the pipeline in Greece is approximately 550 km. Construction officially began 17 May 2016. Around 10 bcm per year of Azeri gas should reach Europe by 2020 through TAP and after reaching the European market around one bcm will go to gas distribution companies intending to supply to each of Greece and Bulgaria and the rest 8 bcm will supply Italy.
After Greece TAP will run 211 km through Albania to the coast of the Adriatic Sea. Since the TAP capacity is actually divided between three countries, it is as yet uncertain whether Albania is going also to get gas from this transit pipeline for its own growing needs. According to the Energy Ministry of Albania, annual demand for natural gas will be 1.8 bcm by 2020 in the country.
It is unlikely coincidence that many media sources have been silent at all on a certain issue: how TAP capacity will be distributed within European gas market. This may be explained by the fact that the 10 bcm of gas provided by TAP is a rather modest contribution to the energy supply of the EU. Although the pipeline was designed with the option to double capacity to 20 bcm per year, it depends on extra gas volumes to come on stream. However, that can happen only if new sources of supply will be connected to TAP because Azerbaijan alone will not be able to provide so much gas supplies.
Still it has to be admitted that the future gas supplies through the TAP, which have already planned for 2020 actually will not be capable to meet the energy demand in the South Eastern Europe market. Obviously, Greece are becoming more aware of this. According to Greek information agency Energypress, speaking at the forum on energy, economic growth and geopolitical future in December 2016, Theodoros Kitsakos, the CEO of Greece’s DEPA public gas supply corporation noted that the EU had been exploring opportunities to implement small scale energy projects such as TAP. Indeed, there can be little debate that even taking into account a market size in Greece TAP can only be consider as a relatively small-scale project in terms of its supplying capacity. Moreover, so far there is no plan for TAP expansion to supply gas to the neighboring countries in the Balkan region, which are also within the zone of energy poverty in Europe.
Besides, as Reuters has recently reported, there are new ecological problems in Italy's Puglia region concerning the construction of the TAP landfall. Local authorities want the pipeline constructors re-routed away part the grove with very old olive trees. Ensuring these ecological requirements would cause a significant delay in the TAP implementation.
Another project currently close to the implementation stage in Greece is FSRU (Floating, Storage and Regasification Unit) LNG terminal near the northern city of Alexandroupolis, which should be built jointly by Greek natural gas company Gastrade and Bulgarian state energy holding company BEH. LNG tanker fleet operator GasLog has recently closed a deal to take a 20% stake in Greek energy company Gastrade to take part in developing the planned floating LNG facility at Alexandroupolis.
The FSRU will be connected to the Greek gas transmission system through a 28 km pipeline that will allow the transportation of regasified LNG to consumers in the local market and to other countries, in particular Bulgaria via the planned Greece-Bulgaria gas interconnector (IGB). The Alexandroupolis FSRU LNG terminal will cost about 370 million Euros and is expected to be operational at the end of 2018. This new capacity of the FSRU import terminal at Alexandroupolis of 6 bcm per year together with the 5 bcm per year capacity of the exciting Revithoussa terminal that is planned to upgrade to an additional 2 bcm per year will give Greece a total LNG import capacity of as much as 13 bcm per year.
The Alexandroupolis FSRU LNG terminal was included in the list of CESEC Conditional priority projects approved during the meeting of the High Level Group on Central and South Eastern Europe Gas Connectivity (CESEC) in July 2015. The condition of the project implementation is "(location-specific) market demand for regasification capacity in Greece".
In the context of gas supplies prospects to Greece, it is also necessary to mention the Interconnection Greece–Italy project (IGI). The feasibility study for the Greece–Italy pipeline was conducted in 2003 with funds provided by the European Commission. The final part of IGI is the Poseidon project that entails the construction of a new offshore gas interconnection between Greece and Otranto in Italy.
Meanwhile, the future of IGI pipeline project is still unclear due to the competing TAP because both pipeline projects were originally intended to transport the Azeri gas. In 2012 IGI project was postponed since everybody realized that there is not enough gas in the Shah Deniz II gas field in Azerbaijan to keep completely filled both pipelines.
In addition to that new strategic opportunities cannot be ignored, which will arise for IGI to develop further as well as for TAP to maximize its capacity utilization owing to implementation of Turkish Stream pipeline project. According to intergovernmental agreement signed between Turkey and Russia in October 2016 in Istanbul, this offshore pipeline will consist of two parallel branches running through the Black Sea, each with capacity of 15.75 bcm. The pipeline’s offshore section is expected to equal about 910 km and its overland part on the Turkish territory 180 km. The delivery hub would be close to the town of Luleburgaz, while the pipeline would terminate on the Greek border in the area of Ipsila. Turkish stream project is scheduled to be completed by the end of 2019.
The first branch of the pipeline is intended for Turkish market while the second branch is planned to deliver gas to Greece, Italy and the Balkan region countries. Unlike the unsuccessful story of South Stream project canceled by Russia in December 2014 in case of Turkish Stream the decision to designate the entry point for gas deliveries at the Greek-Turkish border seems to be more tempting because it would enable to avoid the impact of the EU Third Energy Package.
In February 2016, Greek firm DEPA signed a memorandum of understanding with Russian company Gazprom and Italy's Edison SpA on supplying Russian natural gas along the bottom of the Black Sea and through third countries into Greece, and then from Greece onto Italy. Thus, the supplier of gas from Russia to the EU joined the project IGI Poseidon. It is planned that the capacity of IGI onshore segment of will be 9-16 bcm per year, and offshore part - Poseidon - 10-12 bcm per year. Poseidon pipeline is mentioned in the latest Italian National Development Plan (NDP) while in the Greek NDP there is no reference to the project, since it constitutes an Independent Natural Gas System (INGS). According to the Ten Year Network Development Plan in the EU (TYNDP 2017) prepared by ENTSOG the commissioning of Poseidon pipeline is stipulated in 2020.
Greece can become a new energy gateway to Europe
In the future as a result of projects reviewed above Greece can not only significantly increase the consumption of gas in the domestic market, but also become the country providing transit of more than 20 bcm of gas to other European countries. All of this can make a significant contribution to the gradual recovery of the Greek economy. A prospect such as the present rarely occurs and Greece should not pass up the chance to benefit from available opportunities. It is, therefore, no coincidence that the media in Greece like Energypress now regard natural gas as the leader of Greece's energy diplomacy.
But it looks like we got used to wait for winter energy shortages and other climate troubles to start making progress in solving the vital issues of energy development, why it is so.
Haven't we gained yet enough experience and prudence in the XXI century to see behind mirages of political ambitions and through an absolutely real snow storm a new energy gateway not counting only on Santa's generosity?