Following a series of exchange visits between Greek and Russian officials over the last few months it appears that negotiations have now started concerning Moscow’s plans to route the south branch of the planned South Stream gas pipeline through Greece. Last week (March 13) a high powered Russian delegation headed by the deputy minister for Energy Mr.Anatoli Yanofski visited Athens and held meetings with the minister for Development Mr.Christos Folias and executives from the Public Gas Corporation (DEPA).
The two sides decided to go ahead with the setting up of a joint working group which will look into the technical and financial aspects of the project and will work out details of an agreement. The first meeting of the above working party took place in Athens last week while the next one is scheduled in Moscow before the Orthodox Easter. The possibility of one section of the South Stream gas pipeline crossing Greece was first broached in June 2007 during a top level meeting in Istambul between President Vladimir Putin and Greece’s Prime Minister Constantinos Karamanlis.
“Although it appears that the South Stream project has entered a new phase as far as Greece is concerned, there is some well founded skepticism from the Russian side concerning the long term viability of the project”, note diplomatic sources in Athens. The reason for Russian skepticism is Greece’s actual ability to handle South Stream as it seems to be fully backing at the same time the TGI pipeline which will bring in Azeri gas to Italy via Turkey and Greece. The Greek government is apparently totally committed to the TGI project as the latest visit by minister Christos Folias to Azerbaizan over the last two days shows. Following a two day visit to Bakou the Greek minister signed a series of agreements with the government of Ilham Aliev and with the state oil and gas company Socar for the import Azeri gas to Greece for local consumption. The volume of the expected gas quantities has not been disclosed but DEPA sources have mentioned that the offered quantities, from 2010 onwards, shall not exceed 1.5 BCM’s per year. Greece already imports tiny quantities of Azeri gas ( some 1.5 mcm per day) through the Greek Turkish iterconnector which came on stream last November.
Unlike Bulgaria and Serbia, which have already signed final and binding agreements for South Stream routing with Gazprom, Greece is examining other options too for the transit of Eurasian gas through its borders. Azeri gas, through TGI, which is backed by DEPA and Edison, is one option while Iranian and Azeri gas via the TAP pipeline, backed by EGL and StatoilHydro, is another one. Although Greece at this stage is keeping all options open it is becoming increasingly apparent that this is a position that it may not be able to maintain for a long time. Given Azerbaizan’s well known constraints to commit itself to large gas quantities the Russians are banking in on the TGI’s consortium difficulties in raising the necessary finance to build what is essentially a Greek-Italian pipeline.