Efforts to Establish a Gas Trading Hub in Southeast Europe
Over the past few years in countries such as Greece, Bulgaria and Turkey, a discussion has been enacted regarding the viability of the establishment of a peripheral natural gas virtual trading hub that will enable flexibility for the local markets, along with considerable price reductions, especially in times of great demand such as in the winter period.
The Greek Energy Ministry is already looking into this prospect, as well as, the IENE, an energy and analyses institute that recently issued a thorough report on the subject. For the moment, basic requirements for such a course of action to be materialized is to have interconnectors in place such as the Interconnector Greece-Bulgaria (IGB), which is scheduled to be operational in 2016, along with the flow of the Azeri gas from the Trans-Adriatic Pipeline (TAP), due around 2019-2020. The concept as envisaged by governmental figures and industry experts is also based on the upgrade of the Greek LNG terminal infrastructure in the North of the country and close to the regional markets.
Under these terms it has already assessed that no gas hub could be effectively operational before 2020, making Southeastern Europe the only region in the EU without these mechanisms for liberal gas transactions, whilst there are already nine operational hubs across the Continent, which handle more than 40% of the total gas volumes on annual basis.
The Greek Energy Ministry gas assessed that things could move forward sooner through the creation of a large underground storage facility for gas in the Kavala region able to store around 1 bcm per year, along with the concurrent Bulgarian upgrade of its own deport for similar amounts by 2017-2018. Moreover, Turkey is moving along to catch up with the rest of the countries, aiming to establish a hub in Istanbul, betting on the introduction of the Trans-Anatolian Pipeline (TANAP) by 2018 and the increase in gas volumes from Iran, and also Russia, through the recent agreement to upgrade the Blue Stream pipeline. Turkey is also steadily creating an international import scheme from countries such as Algeria, Nigeria and Qatar of LNG shipments and is eying to have also a steady flow of Kurdish natural gas supply.
Turkey has created the EPIAS Energy Exchange, which deals in the electricity market and has as a final goal to enter into gas trade. In that sense, Turkey already has a lead compared to both Greece and Bulgaria, while the quantities that will be available by 2018 for trading in Istanbul will amount to at least 10 bcm per annum, compared to not more than 1-1.5 bcm in Greece after 2020. Infrastructure needed for LNG terminals and storage facilities will require a hefty investment of capital that will certainly need to be sourced from abroad in times of uncertainty with respect to Greece's current economic situation.
IENE has assessed that Greece could have two hubs, one in Athens linked to the Athens energy stock exchange and one in Thessaloniki that will act as supplementary to that of Istanbul. Lastly, it should be noted that the central European hub in Austria, which constitutes a landmark of success for these types of transactions, is betting on a large inflow of gas from the South Stream pipeline project, along with the introduction of more Russian gas through the Nord Stream, indirectly via the OPAL pipeline. At the same time Hungary is upgrading its storage facilities and Serbia is looking into integrating in the central European energy market and not in the Southern Balkans. These are parameters may effectively Greek plans and remain neutral with regards to Turkish expansion.