Greece Turns to US for LNG
The ever changing dynamic in the Southeast European natural gas sector is seeing a shift in strategy by the Greek government, which is pressing hard for the introduction of prospective supplies of US LNG moving into Europe, via the Balkans. Following on this initiative, the Bulgaria government is also stepping closer to establish a mini-diversification route in the Balkans.
The Bulgarian government is proceeding in the upgrade of its underground gas storage facility in Chiren, aiming to enlarge capacity by 20% in the coming two years. In a recent meeting in Brussels, Bulgarian energy minister Temenuzhka Petrova, relayed the aim to diversify its gas imports via establishing in full interconnectivity with Serbia, Romania and Greece facilitated by the Interconnector Greece Bulgaria (IGB).
US diplomacy is engaging with its Greek counterparts to further Bulgaria's diversification efforts. Victoria Nuland, the US Assistant Secretary of State for European and Eurasian Affairs, visited Athens and met with the Greek Prime Minister to discuss the diversification project in advance of a visit to Athens by the Secretary of State John Kerry in mid-November 2015.
The evolving scenario will see a new floating LNG reception, storage and regasification unit built in the Alexandroupolis region close to the borders with Bulgaria, a project facilitated by the GasTrade Company belonging to Copelouzos group, an entity, in an interesting twist of interconnections between big powers, with close ties with Gazprom.
GasTrade, together with the Greek DEPA Company and the US based Cheniere, will establish a mutual holding corporation that will manage the installation and import of LNG sourced from US shale gas. Once gas reaches Greece, it will be gasified, transferred within the Greek internal transmission system and then exported to Bulgaria via IGB route. The final aim of the project is to create a gas trading hub via the future introduction of additional alternative gas sources from Central Asia or from the Eastern Mediterranean.
Greek foreign minister Nikos Kotzias met with his Bulgaria counterpart Daniel Mitov and then relayed to the press that the US gas is the cheapest in the world and that it made financial sense to bring it into the Balkans. The Bulgaria politician was more reserved, but expressed his point of view which is for a swift introduction of the IGB and closer ties between Sofia and Athens.
Nevertheless what it should be noted is that LNG imported from US even with current low price would be significantly higher than gas imported via pipelines from Russia. There is also the fact the Greek plan may potential affect the pricing strategy of the Southern Corridor partners regarding the flow of Azeri gas via the Trans-Adriatic pipeline (TAP).
In short there is a new change of policy from Greece which sees US LNG as the best bet to shore up Athens's position as preferred gas hub in the region. A similar position is being argued by Croatia via its Krk LNG terminal, pointing out that it would be located closer to larger EU markets such as Austria, Hungary and even Poland.
The question remains whether private investors will be able to raise funding for the development of a new LNG terminal. However, expect more twists and turns from the Greek Administration in the "gas hub" race with Croatia, Turkey and potentially from Egypt.