Greece and Bulgaria: Clashing Gas Hub Ambitions

Greece and Bulgaria over the past few years have placed importance on combining forces and viewing themselves as integral parts of a wider interconnecting gas transit system. Nowadays, it is becoming more and more obvious that both countries have diverging viewpoints and essential strategies that will ultimately clash regarding which country will achieve first and foremost a natural gas hub presence in the Balkans.

Firstly, Greece is seriously promoting both Trans-Adriatic Pipeline project (TAP) and the newly conceived Turkish Stream. Regarding the latter, although it is too soon to have a detailed assessment if it as a viable project to begin with, already the Greek Administration is propping up the idea of resurrecting the Italy-Greece Interconnector (ITGI) which originally was to transfer Azeri sourced gas from Western Greece to Southern Italy via the Adriatic Sea. Due to the existence of the TAP route which will follow more or less the same path, going into Albania and then Italy, Greek authorities are pressing forward for the following plan.

Turkish Stream will traverse the Greek territory as 'Greek Stream' and then it will spread itself into two routes. A main line towards the North via FYROM and Serbia and one towards Italy, merging itself with the ITGI plan. It is of interest to note that ITGI is already eligible under the EU's Projects of Common Interest (PCI) and it is already owned by 50% by the Italian Company Edison which is a subsidiary of the French EDF.

That detail is of great importance regarding the EU Commission's clauses of the Third Energy Package that will prohibit an involvement of Gazprom in that sector. Thus Greek Stream is envisaged as a 50-50 project between the Greek DEPA (and DESFA) and Gazprom and the remainder would be a DEPA and Edison partnership. It is supposed that the Italian market would also be used as a stage point for the introduction of some quantities of Russian gas into France as well.

Of course the bulk of the Turk-Greek stream would still be directed towards the Austrian gas hub of Baumagarten and supply also the traversing counties of the Balkans plus Hungary, as well as, the Northern Italian market.

Greek Energy Minister Panayiotis Lafazanis assumes that this will boost the ambition for a Greek gas hub in the Northern parts of the country, due to the simultaneous introduction of Azeri gas via TAP, along with LNG sourced quantities. The proposed location for the hub is the city of Thessaloniki where also the Greek Stream would be divided into the two aforementioned routes.

US Diplomacy is alarmed by the new developments that occur in the triangle between Russia-Greece-Turkey with the notable inclusion in it of European companies. Amos Hochstein, Special Envoy and Coordinator for International Energy Affairs leading the Bureau of Energy Resources (ENR) of the State Department, has already visited Athens and expressed the negative stance of Washington regarding the Turk Stream in general.

On the other hand the US needs both Greece and Turkey for a variety of geopolitical fronts in the wider MENA region and in particular it eyes closely Greek stance towards the EU lenders and Germany in particular where it seems that US is content having Greece as a "rebel youth" within the Eurozone for reasons relating to the wider Euro-Atlantic relationships and in particular that between Washington and Berlin. 

Bulgaria now has its own priorities which are of contrast to that of Greece. A new Nabucco is envisaged that would bring Iranian gas into Europe. This could be a viable option once and if the embargo in that country is lifted and should the so-called "Iranian Gorbachev" the President Hassan Rouhani, is able to persuade the Iranian establishment to export gas into Europe.

Already the Bulgarian Embassy in Iran has become a hotbed of dialogue between the two countries and the central Administration in Sofia seems eager to get in touch with Rouhani's political environment, assuming that the plan will successful, and quantities of gas up to 50 bcm per annum could be heading towards Bulgaria after 2020.

Concurrently Sofia is aiming to create the necessary gas hub infrastructure that requires underground storage facilities and new transmission networks, basing its aims in the so-called "Juncker package" a pan-European proposed €315 billion capital stimulus. Requests from Sofia towards Brussels to give the green light for a formal announcement of Bulgaria as the preferred gas hub in the Balkans have already been made.

Common ground for both

Despite diverging aims of both counties, there is increasing activity to push forward the Interconnector Greece-Bulgaria (IGB) that is scheduled to commence construction in spring 2016 and be completed by 2019. Furthermore, the Vertical Gas Corridor has also been agreed upon, along with the governments of Romania and Hungary. For that reason the Interconnector Bulgaria-Romania will be operational by early 2016 and the interconnectors Bulgaria-Serbia by 2018, while Turkey will also have a new link with Bulgaria approximately the same period.

As a concluding remark, it can be said that based on the current highly uncertain international climate across Eurasia and the clashes amongst global energy system, both countries are speeding up their efforts to attain a primal position in the gas hub race within the EU.

Nevertheless, they both fail to recognize that all of their trials have a common denominator and that is the further strengthening of Turkey as the unquestionable gas hub. In that sense and bearing in mind the traditional rivalry between Greece-Bulgaria from one side and Turkey on the other, may bring about more upturns and surprises for all sides involved.

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