Greece Joins Gazprom’s South Stream Gas Pipeline Project

Greece Joins Gazprom’s South Stream Gas Pipeline Project

Greece and Russia on 29 April signed an agreement for the construction of Gazprom’s proposed South Stream gas pipeline across Greek territory. Greek Development Minister Christos Folias and Russian Industry and Energy Minister Viktor Khristenko signed the accord at a Kremlin ceremony attended by Greek Prime Minister Costas Caramanlis and out-going Russian President Vladimir Putin. The €10bn project calls for the construction of a 900km underwater pipeline across the Black Sea between Russia and Bulgaria. Italy’s Eni, which partnered with Gazprom for the construction of the Blue Stream project connecting Russia and Turkey, is also 50:50 partner in the 30 bcm/year-capacity South Stream. From Bulgaria, the pipeline’s northern route is to cross Serbia, Hungary, and possibly Austria, to northern Italy. A southern route would swing south through Greece and require the construction of an underwater pipeline across the Adriatic Sea to Italy (MEES, 17 March).

Speaking in Moscow after the signing agreement, President Putin said: “Please, if someone can find some other similar project under economically acceptable terms that can guarantee products of a sufficient volume for these gas systems, we will only be glad. Realizing the South Stream project doesn’t mean that we are fighting some other alternative project,” according to EurActiv.com. Some European observers see Greece joining South Stream as another obstacle to the proposed 31 bcm/y Nabucco gas pipeline project, which aims to ship Caspian region and Middle East gas through a 3,300km pipeline through Turkey and Southeast Europe to Austria (MEES, 24 March). Others argue that EU gas demand warrants the construction of both pipelines and dismiss suggestions that South Stream is a rival project. Most concerns focus on easing EU dependence on Russia, which supplies Europe with more than 40% of its gas requirements. Gas demand in the EU is expected to exceed 200 bcm/y by 2015.

For Greece the agreement strengthens its future role as an energy transit/hub. Greece is partner in the Interconnector-Greece-Italy (IGI) gas pipeline that will transport Azerbaijani natural gas from the offshore Caspian Shah Deniz field through the South Caucasus Pipeline (SCP) to Turkey and the Interconnector-Greece-Turkey (IGT), which came into operation last year (MEES, 26 November 2007). The Poseidon gas pipeline, a joint venture between Greece’s DEPA and Italy’s Edison, will carry gas across the Adriatic to Brindisi. Another project, the €1.5bn Trans Adriatic Pipeline (TAP), backed by Swiss company EGL, plans to branch off from the IGI in northern Greece and build a 10-20 bcm/y pipeline across Albania and the Adriatic. Technical details for the South Stream have yet to reveal if an entirely new pipeline will be constructed, including a third underwater pipeline across the Adriatic. Greece, Russia and Bulgaria are also partners in the Burgas-Alexandroupolis crude oil pipeline (BAPline), construction of which has yet to begin. Russia’s Transneft holds 51% of the project, conceived as a means for Russian and possibly Caspian crude shipments to by-pass Turkey’s congested Bosphorus waterway (MEES, 17 March).

Prodi Turns Down South Stream Chairmanship

Italian Prime Minister Romano Prodi has declined an offer by Russia’s Gazprom to take on the role of chairman of South Stream. Mr Prodi, a former President of the European Commission, will step down as prime minister of Italy next month, when Silvio Berlusconi resumes the office. By offering the position to Mr Prodi, it appears that Gazprom was attempting to recruit European politicians to leading business roles as Russia moves to strengthen its influence in the European natural gas market. In 2005, former German Chancellor Gerhard Schröder accepted an offer from Gazprom to fill a supervisory role in the Nord Stream gas pipeline project, which will deliver Russian gas to Germany via an underwater pipeline through the Baltic Sea, bypassing EU member Poland and Gazprom’s traditional gas pipeline routes to Europe through Belarus and Ukraine. Outgoing Russian President Vladimir Putin had first discussed the position with Mr Prodi during a meeting between the two in Romania in early April. Gazprom CEO Alexei Miller made the offer official in Rome on 28 April.

Copyright MEES 2008.