Harsh Winter in S.E. Europe Reveals Regional Natural Gas Developments
The exceptionally bad weather conditions in Europe and in particular in its Southeastern part, has caused a number of developments in the natural gas sector of several countries that revealed tactical moves by all corporate and national players involved.
First of all, Turkey's BOTAS claimed technical difficulties in exporting Azeri gas into Greece. Baku and Athens currently have a deal under which the former supplies the later some 750 million cbm of gas per year through Turkey. Turkey also imports 6.6 billion cbm from Azerbaijan and 10 billion cbm from Iran.
Due to a combination of increased consumption in Turkey because of extreme weather conditions and a significant argument with Teheran on gas pricing, BOTAS was unable to export the necessary amounts requested by Greece's DEPA gas company.
As a result, the Greek company turned to the Russia's Gazprom to fill the gap, which it did by increasing 12% its deliveries in the Greek market since 25th of January. In parallel, last minute orders were given to the Algeria's Sonatrach for LNG shipments, since the climate conditions in Greece had also caused a serious issue with electricity production and certain local energy experts even predicted around an immediate crash on the system.
The story caused a sudden public discourse in the country around speeding up its alternative options for natural gas imports and will certainly have implications for the future plans such as ITGI. Currently Greece has three long-term gas supply contracts. 3 billion cbm from Gazprom, 750 million cbm from BOTAS (Azeri gas) and 750 million cbm of LNG from the Algerian Sonatrach. Already informal communication between DEPA and the Algerians has begun in order to boost imports from them, so as to counteract further decrease of supply by BOTAS, a move that will certainly affect Greek-Azeri gas trade.
Greece presently upgrades its Revythousa LNG terminal, with 160 million Euros contracts that will increase the capacity of the unit from 135,000 cbm of LNG to 220,000 cbm. In parallel vessels of capacity up to 240,000 cbm of LNG from 140,000 will be able to dock. According to a reliable source in the Greek Ministry of Energy, the country, regardless of the developments with the Southern Corridor,will actively upgrade its LNG capacities more in the future by establishing a floating LNG station as well, increasing its reliance on that source of gas.
In another Southeastern European country, Bulgaria, the Minister of Economy and Energy Traikov met with his Russian counterpart Smatko and discussed in details energy plans and in particular the South Stream. Bulgaria was also afflicted by the freezing weather with temperatures reaching minus 30 Celsius, thus its gas consumption reached a historical high. That prompted Sofia to re-examine its nowadays lukewarm stance towards South Stream that seems to gain in pace again, after also recent Montenegro's acceptance into the project and the seemingly fading prospects of Nabucco.
In Albania, the Prime Minister Sali Berisha spoke in favor of the Trans-Adriatic Pipeline (TAP) and made known to the public that he expects one billion Euros of investment by the consortium. Moreover he stated that he believes the gas reserves in Azerbaijan are "colossal" and he announced his visit to Baku on the 10 of February for close meetings with stake holders of the Shah Deniz.
In sort the combination of an abnormal weather period and the culminations regarding the South Corridor, have revealed to an extent three tactic moves by Greece, Bulgaria and Albania, regarding natural gas flow in the region. Athens will pay more attention to LNG as a third gas imports pillar after Gazprom and Azerbaijan, Bulgaria starts eyeing Russia again and in conjunction with its recent shale gas ban, whilst Albania bets its cards on the success of the TAP project, hence on the ultimate ability of Azerbaijan to find its way to export its product to Europe via the Southern Corridor.