The EU’s Projects of Common Interest in Greece Don't All Make Sense

The finalized list of the EU's Projects of Common Interest (PCI) has been fully unravelled in Greece by the general secretariat of strategic investments, an institutional body administered by the ministry of national economy. But the included projects face some difficulties, either because they do not align with the EU's current energy stances or because their viability is uncertain. 

The following projects have been selected: the Interconnector Greece-Bulgaria (IGB); an LNG station to be developed by Greece's DEPA Company and GasTrade in Alexandroupolis city; a new compressor station for the nationwide transmission system of the DESFA Company; the Trans-Adriatic Pipeline (TAP); the Poseidon pipeline; the East Med pipeline; and finally the Tesla Pipeline.

The latter project is a proposed extension of the so-called "Greek Stream", from Northern Greece up to Hungary via the ex-Yugoslav states. Greek Stream itself is a proposed extension of the Turkish Stream, which aims to begin from Russia, crossing the Black Sea into the European part of Turkey. Currently EU appears to be cool on the possibility and importance of Turkish Stream; as such, the inclusion of the Tesla Pipeline as a PCI seems contradictory. Further, the construction of an LNG unit in Alexandroupolis to deliver gas into the Balkans could be seen as being at odds with the supply aims of TAP: The local markets cannot absorb higher quantities of gas from both projects, which could motivate the need for fierce pricing competition that will affect the overall viability of both projects.

The East Med pipeline will also contradict both the TAP and the LNG projects and could be a costly route to implement. That's just the beginning of the challenges it faces. More importantly, in order to have a pipeline you need to first of all have a source of gas in place and the willingness of other parties to export the gas. So far only Israel and Egypt have the gas that could supply the East Med pipeline, but they need to secure their own needs as well. At this moment in time, they have not finalized their export schemes, if any. That makes the East Med pipeline a purely theoretical design.

Practically speaking, TAP is the only a mature project included in the PCIs. When finished, it's expected to deliver gas by 2020 in the region.

Concurrently the Greek Ministry of Foreign Affairs that plays a significant role in shaping the country’s natural gas policy, revealed Athens' energy intentions. In recent weeks, the ministry has said that it welcomes the TAP, LNG, and East Med projects, but also that it is eyeing future imports from Iran and from Northern Iraq plus deliveries from Russia via the Turkish/Greek/Tesla stream. It will also welcomes the possibility of LNG deliveries from both Algeria and Qatar, as well as LNG derived from U.S. shale LNG by 2016.

All of these projects and new gas sources cast doubt on the viability of the announced PCIs. The Balkans cannot absorb all these projects, not even in the long-term, and the ambition of creating a hub of all this different sources is not a realistic one. Europe's major consumers, such as Germany, Italy, France and others, are unlikely to turn to Greece for their energy needs since they have the capacity of securing more direct flow of gas into their markets. Moreover Turkey, which is a major consumer, has its own set of options outside of Greece's proposed PCIs.

Looked at holistically, the PCI listing should not be seen as a list of viable projects for Greece. Instead, it can be perceived as an attempt by Brussels to keep everyone happy. It also ensures that the country has plenty of options for the future, since the wider, ever-changing geopolitical landscape in the East Mediterranean and the Middle East will surely upset many established political balances. T

The PCI listing only realistically be assessed once--and if--the geo-economic situation in the region settles down. Until then a safe bet would be for the continuation of the TANAP/TAP project and multiple changes in preference and value for the rest of the proposed projects.