By Kakia Papadopoulou
It seems that Italy’s Edison has pulled back from the much-touted underwater gas pipeline which will carry gas from Greece to Italy and then to Western Europe. Edison which is mainly responsible for the commercial part of the gas has not managed yet to find clients who will ensure the necessary contracts to enable it.
The project is still in the preliminary study phase and it already has run one year out of schedule only one year after the official signing of the agreement. Additionally, Edison has discovered a large natural gas field in Algeria, in a project which it has co-financed. Even if Edison sniffs around for potential customers, the bad financial state of Turkey’s pipeline company Botas, which is on the verge of bankruptcy, doesn’t help the Italian company to ensure long-term contracts.
Botas will carry the gas to Greece from the Caspian and Central Asia and then the gas will flow into the European markets via Italy.
“Edison has no reason at all at this stage to proceed with the project,” said Elias Karidoyannis managing director of EGL Hellas and former state advisor on energy issues. “Otherwise, it will have to drop drastically the natural gas prices in Italy,” he added.
The Greek Public Gas Company, known as DEPA, puts on a brave face and said “we do not worry, the delay has to do with the complex nature of the construction of the project,” according to a high ranking official. But he admitted that “Edison faces some difficulties in its search for customers.”
Last year, Greece and Italy signed a separate EUR350 million agreement for the construction of the underwater part of the pipeline. Botas had said then that it may participate in this part of the project at a later stage.
Before this, Greece had signed an agreement with Turkey for the construction of the underwater section of the pipeline under the Evros River.
The construction of the underwater section between Greece and Italy was scheduled to finish in 2010. Now DEPA sees the completion by early 2012.
Some EUR600 million will burden the Greek side for the overland construction of the pipeline in Northern Greece, which already budgets money from the European Union structural funds.
Despite, Greece, Italy and European Union’s strong will to finish the project as soon as possible, the obstacles are many and from many ends.
The European Union has been committed to finance some 40% of the total cost, as the project is in line with the bloc’s efforts to diversify its energy resources away from energy giant Russia to the energy-rich Caspian Sea and Central Asia countries.
DEPA has signed a contract with Botas for an annual gas supply of 0.7 BCM. This gas will start flowing into Greece from summer 2007.