Euro zone wrangling may cost Greece 2 bln euros in 2013: sources

Πηγή: Reuters
By Martin Santa and Lefteris Papadimas
June 19 2013

European foot-dragging could leaveGreece short of 2.0 billion euros ($2.7 billion) this year as some euro zone creditors are reluctant to roll over their Greek debt holdings, Greek and euro zone sources involved in the matter told Reuters.

Greece's creditors - euro zone countries, the European Central Bank and the International Monetary Fund - agreed last December that the bloc's 17 national central banks would replace some of the Greek bonds they hold with new Greek paper as the debt matures.

This measure, called the "rollover of ANFA holdings", was expected to spare Greece from having to redeem 3.7 billion euros of debt in 2013-2014 and 1.9 billion euros in 2015-2016.

But the bond rollover has hit a snag because some central bankers are worried that it might be seen as direct financing of the Greek government, Greek officials said. The law governing the ECB forbids it from such direct financing.

"The main issue is that ANFA is considered by some central bankers as direct government financing from the ECB," a senior Greek financeministry official told Reuters.

"We have kept our pledges, now our lenders must do the same," another Greek official said.

Senior euro zone officials with direct knowledge of the matter confirmed that a gap could open up in the bond rollovers.

"There could be a financing gap between 1.5-2.0 billion euros in Greece until the end of this year and the question is how will Greece deal with this and make it," another senior euro zone official told Reuters.

The shortfall is a threat to Greece's bailout program because International Monetary Fund rules require the country to be fully financed at least 12 months in advance in order to continue the program of support for Athens.

In a report last month, the IMF said it projected a financing gap of 4 billion euros would open in the second half of 2014 and that additional financing should be quickly found to cover it.

Athens and euro zone officials were already working on a "technical" solution to plug the hole, the one Greek official said.

Greece's financing gap may widen further due to home-grown problems caused by the slower-than-expected pace of privatizations.

Athens failed to find any buyers for natural gas firm DEPA last month, which could blow another hole worth about 1 billion euros in the program's financing.

"It's kind of a deja vu with Greece," one of the euro zone officials told Reuters. "Real implementation of prior actions is slowed by the performance of the public sector... privatization is proceeding slowly as well".

Gazprom withdraws interest for Greek gas firm DEPA on deadline day, say reports

Πηγή: ekathimerini
June 10 2013

Russian energy giant Gazprom did not submitt a binding offer for Greek natural gas firm DEPA before Monday’s deadline, reports said.

Gazprom was expected to be the only major bidder for DEPA but both capital.gr and Reuters reported that the Russian firm did not declare its interest.

Capital.gr reported that a disagreement over the price at which Gazprom would supply gas to Greek households led to the firm withdrawing its interest. Greece currently pays about 30 percent more than the European Union average for the natural gas it imports from Russia.

The government had been hoping to secure a commitment from Gazprom to lower prices.

Gazprom's only rival for DEPA is M&M Gas, a joint venture by Greek energy firms Motor Oil and Mytilineos. But reports suggested that M&M had also failed to submit a binding bid by Monday’s deadline.

The Russian firm has made a preliminary bid of 900 million euros, whereas M&M offered 550 million.

The failure to secure an offer for DEPA would be embarrassing for the government, which had extended the deadline as it sought to accommodate Gazprom.

The sale of DEPA, along with that of state gambling firm OPAP, were the flagship privatizations of this year. Even with those sales, it appeared that the government would not meet its reduced target of 2.6 billion euros in revenues for this year.

Reuters also reported that another Russian firm, Sintez, withdrew its interest for the purchase of gas network operator DESFA on Monday.

If this is the case, Azerbaijan΄s state company SOCAR is likely to be the only firm to place a binding offer for DESFA.

Editor's note: According to protothema it was the EU Competition Commission that blocked potential acquisition of DEPA and DESFA by Gazprom and Sintez respectively.

SOCAR vs. Gazprom for Greece’s DEPA

Πηγή: New Europe
By KOSTIS GEROPOULOS
April 6 2013

BAKU – State Oil Company of Azerbaijan SOCAR is competing with Russian gas monopoly Gazprom for Greece’s public gas corporation, DEPA, which is being sold as part of the Greece's privatisation programme. But there is more at stake than just buying one more EU energy company.

SOCAR is likely to compete with Gazprom to control non-Russian transportation routes to Europe, Gulmira Rzayeva, Research Fellow at Azerbaijan's Centre for Strategic Studies, told New Europe in Baku on 5 April. This is a healthy competition in the tender bidding for the same stake although the companies' financial capacities are not equal, she added.

“The Azerbaijani company will also need the Greek gas transmission company to invest in the EU country’s downstream market, which is in line with SOCAR’s long-term strategy,” she said.

It seems that SOCAR does not want to let Gazprom take over the control of transportation of the gas via Greece, the only entry point to the South Europe, Rzayeva said.

Even if the Shah Deniz consortium picks Nabucco instead of the Trans Adriatic Pipeline (TAP) to carry 10 billion cubic metres of Azerbaijani gas to Europe, SOCAR wants to keep the Greek market in hand to use the infrastructure to export up to 1 billion cubic metres to the Mediterranean country via the Turkey-Greece Interconnector, she said.

Greece’s DEPA has 50% stake at the Greece-Bulgaria Interconnector (IGB). Another 50% belongs to Italian Edison. Edison is a close partner of Gazprom in the Russian-backed South Stream gas pipeline project as well as one of its biggest clients.

Considering the importance of IGB in the Southern Corridor, Gazprom, by influencing Edison, can freeze indefinitely the construction of the 168-kilometre pipeline, Rzayeva said, pointing out that during three years the construction of the pipeline has still not been completed.

A Memorandum for understanding has been signed between Bulgarian BEH EAD and the Greek gas distribution operator DESFA, which foresees natural gas supplies for the Bulgarian market through utilisation of the capacity of the Greek liquefied natural gas (LNG) terminal Revitusa, gas interconnection Greece-Turkey, as well as capacity in the Greek national gas network if required by the Bulgarian country in compliance with the national legislation.

Rzayeva said that by buying Greece’s DEPA/DESFA, SOCAR can also automatically get a share in IGB as DEPA has stakes in the project and push the project to finalise the construction.

Asked if Azerbaijan is interested in DEPA, Minister of Industry and Energy Natiq Aliyev told New Europe in Baku that this is a decision that concerns SOCAR. He added that it’s too early to say about interest in DEPA because it is not known which pipeline route will be selected.

Azerbaijan’s Shah Deniz consortium said on 1 April it started a final “detailed evaluation” on the Nabucco West and the Tran-Adriatic Pipeline (TAP) proposals. “At the end of June it will be clear,” Aliyev said, adding that Azerbaijan does not prefer one project over the other. “Both of them Nabucco West, TAP are a priority of the European Union. But I think for us there is no difference,” Aliyev said.

Rzayeva told New Europe that the final proposals submitted by Nabucco West and TAP as well as the sale and purchase agreements between gas buyers and the Shah Deniz consortium will play a key role in the decision.

“Both projects have their strengths and weaknesses. For example, to build TAP is cheaper than Nabucco. On the other hand, the Italian market can be oversupplied in the short-term and gas demand there will not grow,” Rzayeva said. “More or less both projects are now equal. It’s the final countdown. We have to wait two more months to see."

Greece Considers LNG Option

Πηγή: Natural Gas Europe
March 11 2013

The Greek natural gas sector, and in particular the public natural gas supply corporation DEPA, is examining at length the possibility of boosting its local and regional LNG market, according to recent presentations announced in Athens at the 2nd International Conference on Energy & Shipping, which was focused mainly on the LNG industry worldwide.

Spyros Paleogiannis, Vice President of DEPA, said that LNG trade is one of the mid to long-term priorities for DEPA, which aims to use Greek territory as an import-export springboard for such trade in the region and beyond.

DEPA is drafting plans on how to expand the use of LNG and CNG to cover Greece's extensive Island communities by creating several terminals for gas consumption.

An important part is the supply to the Island of Crete via a Floating LNG terminal of around 150,000 cm of capacity, so as to replace the needs of the power station company that are currently being met by expensive oil imports. Crete has a permanent population of 700,000 people and accommodates more than 4 million tourists, having considerable energy needs which can be covered via natural gas, a cheaper and more environmentaly friendly fuel than oil.

Another plan maturing in Greece is the construction of the Aegean LNG terminal in the Kavalla port in the northern part of the country, close to the borders of both Turkey and Bulgaria. The plan calls for a 180,000 cbm of capacity with a price tag of around €500 million, aimed primarily at neighboring markets. DEPA, along with most major Greek shipping companies are expecting a further boost of worldwide LNG trade and also estimate that by 2020 around 1,000 maritime commercial vessels will operate with LNG fuel, thus creating a need for LNG refuelling stations across major maritime routes.

Already Greece is a prime re-fuelling territory for commercial ships operating with oil engines, and natural gas is being seen as a fuel of the future in this specialized market. Moreover the Greek-owned shipping sector has in the past few years built almost a third of the world's vessels designed to carry LNG and is a main lobby force behind the push in Greece to establish an LNG hub. The main issue concerning the aforementioned is for DEPA to acquire the necessary capital for that purpose, which may well be found amongst the present day contesters in its impeding privatization.

In another interesting development related to the above, representatives from the Qatar sovereign fund met with Greek energy businesses recently in Athens and expressed interest in participating in the project by the Kopelouzos energy holding company regarding a floating LNG terminal close to the port of Alexandroupoli. The Greek company has submitted a business plan last year to the Greek regulatory authorities, which was subsequently accepted, and is in talks with potential investors. The Qatar fund is interested in investing and making an inroad to the nearby region by placing funds in the railway connecting Alexandroupoli with Turkey and Bulgaria up to the Black Sea.

According to the details released by the Greek regulatory authority, the project of Kopelouzos group details around an offshore floating LNG installation and degasification terminal around 22 Km South West from the port of Alexandroupolis in the Aegean Sea. A pipeline will connect the terminal to the mainland where the natural gas will be then imported in the Greek nationwide pipeline system in the location of Amphitriti. The terminal will have the capability of storing up to 145,000 cubic meters of LNG and its yearly capacity will reach 2.6 billion cubic meters of natural gas. The plan is also to link the system with the Interconnector Bulgaria-Greece pipeline (IGB), so as to supply that market as well and from there on to be able to ship the commodity through the rest of the EU-backed interconnectors up to the Central European markets.

Greece: ‘Heading for turmoil in the Aegean?’

Turkey have recently received a special boat with which it will start surveying inside Cyprus’ EEZ

Recently Greece’s creditors expressed their disappointment on the issue of privatizations.

One that is pending without any visible reason is that of DEPA and DESFA the state oil and gas companies since November.

 It seems that from the 5 companies that have expressed interest and are still in the bid giving non-biding offers the two Russian are the favourites as their offers are almost the double from the second.

The state company that arranges the privatizations (TAIPED) said that it is going to accept the highest bid (without any regard on geopolitics).

But it seems that Washington as well as Brussels have a different opinion.

That is why TAIPED changed the clauses and now asks from companies that had left the bid during an earlier stage to come back and make new offers cooperating with any of the five existing ones.

On February 13th it will be signed the agreement between Greece-Italy-Albania on the TAP (Trans Adriatic Pipeline).

There will be present a delegate from Azerbaijan from where the gas will be transported to Europe and which is to decide if TAP will be built rendering Greece’s existing infrastructure useful.

Interestingly the ‘second’ company apart from the two Russian (Gazprom and Negusneft) is the Azerbaijani state oil and gas company SOCAR which is the head of the Shah Deniz joint venture.

SOCAR is said that after the change of clauses will join the two Greek consortiums comprising M&M GasCo, Mytilineos Holdings, Motor Oil Hellas Corinth Refineries and a joint bid by PPF and GEK Terna Holding Real Estate Construction. Bilateral relations with Greece with emphasis on the energy sector are dated back to 2011.

This scheme is supported by US ( U.S. ties with Azerbaijan serve to “contain” Russian and Iranian influence and diversify the European energy sector, See page 50) and the owner of Motor Oil Mr. Vardinoyannis knows personally the President of Azerbaijan Mr. Ilham Aliyev.

On early March Mr. Samaras is going to visit Washington while a trip to Moscow is reported as canceled. At the same time EU is going to decide about bailing out Cyprus (which is accusing of laundering money of the Russian mafia), Russia will decide on easing the terms of the loan it has already extended to Cyprus and Turkey have recently received a special boat with which it will start surveying inside Cyprus’ EEZ and near the Greek island Kastelorizo (inside Greece’s potential EEZ that recently the government leaked that is ready to declare).

At the same time in Athens the 54th round of exploratory talks between Greece and Turkey have started but passing unmentioned.


UPD: It is said that finally Sintez (Negusneft's affiliated company) decided to leave from the bid since its offer (1,9 million euros) was by far the highest but TAIPED hesitated to make decisions and delayed the possess.

UPD1: Sintez on Feb 7th denied that is leaving from the bid. The deadline for the final offers will be on April 12th.

CEO of Sintez Group: 'Greece’s transformation into a natural gas transit hub for Europe'

Πηγή: Natural Gas Europe
Jan 29 2013

The CEO of Sintez Group, Andrey Korolev, provides us his views and comments regarding the participation of Sintez's subsidiary Company Negusneft in the privatization competition for the Greek natural gas companies DEPA & DESFA.

He answers on the key questions surrounding this privatization, especially competition issues, corporate challenges and considerations, along with Negusneft’s future intention regarding the Greek natural gas market.

"If we win the DEPA/DESFA auction we will be committed to comply in full with EU energy regulation"

What are the general intentions regarding Negusneft's participation in the DEPA-DESFA privatization process, and more specifically, how does your company view the prospects of the Greek natural gas market?
“We believe that DEPA and DESFA are high-quality assets that can play a meaningful role inGreece’s transformation into a natural gas transit hub for Europe. This development would clearly be of benefit to the Greek economy through diversifying Europe’s gas supply options and ultimately bringing gas prices to a more competitive level, with lower energy prices being a key element of any long term economic recovery. As a long-term player in the Balkan’s energy market, SINTEZ wants to play a role in that transformation.

DEPA and DESFA are a natural fit with SINTEZ Group’s existing business assets in the Balkans, namely our combined cycle heat and power project in Skopje, which we have already been in talks with Greece about connecting to DEPA via a Greece-Skopje interconnector project. There are a number of additional infrastructure-related opportunities that make DEPA and DESFA a strong platform for growth in the region.

The challenges that Greece is currently facing cannot last forever. Having operated for 25 years in the former Soviet Union and countries such as Namibia and Indonesia, our company is quite adept to working in such challenging and transitional environments.”

What is your opinion regarding any challenges you may have experienced as a company during the privatization process thus far and how do you assess your communication and cooperation with the Greek authorities?

“We are pleased that the HRADF (Privatization agency) recently has commenced the final round of the privatization of DEPA and DESFA, albeit later than was originally announced. Now, shortlisted companies, including SINTEZ subsidiary Negusneft, will have access to the data room and necessary documentation in order to put together a comprehensive binding offer for DEPA and DESFA.”

It would be of great interest to note from you, around the future projects or strategy by your company in relation to DEPA-DESFA. How do you see a potential partnership unfolding and what may be your investment plans for these companies?

“Clearly, the transformation of Greece into a gas transit hub for Europe will require a great deal of investment for new infrastructure. However, it goes without saying that the development of the Greek gas market will be beneficial for the country, as it can create new jobs and, more importantly, diversify natural gas supplies into the country, thereby spurring competition and having a positive effect on gas prices in the region.”

With regards to another issue that has recently gained prominence in the EU and Greece, that is the competition rules as implemented by Brussels and the compliance of natural gas companies with the Thrid Energy Package. In your view, does this affect your company in relation with its intentions to bid for both DEPA & DESFA?
“SINTEZ Group is an independent company and we do not have the conflicts of interests as with some other bidders, who are state-owned gas producers. If we win the DEPA/DESFA auction we will be committed to comply in full with EU energy regulation, while at the same time diversifying gas supplies and investing in infrastructure to transform Greece into a natural gas transit hub. We remain confident that given our strategic focus on the Balkans and relevant sector expertise, SINTEZ Group is the right fit to further develop DEPA and DESFA.”

Editor's note: According to Al Jazeera "The waters off the Greek island of Crete could hold up to 3.5 trillion cubic metres of natural gas

".

Gazprom and the European imbroglio

Πηγή: Europolitics
By Marie-Martine Buckens
Jan 18 2013

The presence of the Russian giant Gazprom on the short list of companies selected by the Greek privatisation fund as potential buyers of the Greek gas company DEPA is still a hot topic of debate (see Europolitics 4563).The Financial Times reported, on 10 January, that the EU and the United States had cautioned against seeing the Greek economy controlled by Russian interests, while a Commission spokesman, interviewed byEuropolitics on 17 January, simply stated that “the Commission, in the framework of the World Bank, IMF and EU troika, is in permanent contact with the Greek government and the privatisation fund in particular on the privatisation of DEPA and its subsidiary DEFSA”. He added that the executive “is aware that while the privatisation fund has not yet finalised its selection process, the acquisition of DEPA and/or DEFSA will have to comply fully with competition rules in force in the EU single market”.

The fact remains that Gazprom’s intrusion in Greece adds to the Russian firm’s image of dominant position, already fuelled by the anti-trust procedure launched against it by the Commission last September.

INTERVIEW WITH AURÉLIE BROS

Things are not quite that straightforward, according to Aurélie Bros, doctoral candidate in geopolitics at University Panthéon-Sorbonne and at the Russian Academy of Sciences. For this researcher, co-author with Yann Richard of a study entitled ‘Les stratégies de Gazprom: un problème géopolitique?’ (‘Gazprom’s strategies: A geopolitical problem?’), the company’s relations with the EU should be analysed in the light of the structural divisions that can be observed in Europe and not as a head-on confrontation between the EU and Gazprom or even between the EU and Russia. There is no real consensus for now on the position to take towards Gazprom, whether at European or national level, or between energy firms. But above all, she adds, it is important not to mask the strategies of large European firms that participate in steering this dialogue with the Russian firm by setting up consortia, common projects and so on.

In your 2011 study (1) , you highlight the fact that European gas companies find themselves caught between EU legislation, in particular the third energy package, and their need to carry out profitable operations.

The energy sector has been built on vertically integrated companies that operate primarily on national markets. At present, EU legislation and particularly the third energy package has prompted these firms to reconsider their strategy, organisation (separation of certain activities), etc, since the EU’s aim is to create a single market. This phase of adaptation for energy companies has created tension.

This tension is not limited to differences of views between the EU institutions and companies, which have to combine strategy and compliance with internal market rules. It is very difficult to build consensus in the energy sector and there is multi-scale opposition. It can be seen within member states. Take the case of Germany, for example, where the phase-out of nuclear power is still giving rise to many questions. There are also divisions between member states, divisions stemming from history, geography, etc. The Western EU countries do not have the same position on Gazprom or Russia as the Central and Eastern European member states. And there are many more examples. This accumulation of divisions that are not always directly perceptible confuses the issue, with the result that the foreign partners, in this case Russia, sometimes have trouble analysing and understanding the European market.

What is your analysis of the policy implemented by the EU institutions, the Commission in particular?

Within the Commission there are also different ways of addressing the problem. That is the case for the anti-trust procedure initiated last September against Gazprom. It was launched by DG Competition, whose role is to guarantee fair competition.

In parallel, DG Energy tends to focus more on establishing and strengthening dialogue with external partners, for instance with its negotiation of the EU-Russia road map until 2050, aimed at setting up a stable and lasting energy sector dialogue between the EU and Russia.

How do you analyse developments in the Southern Corridor gas negotiations?
This is a key project for the European Commission, aimed at supplying Europe with gas resources from the Caspian Sea (Shah Deniz). The negotiations have not been completed but it is certain that the Nabucco project in its initial form will not come into existence. It is more likely that there will be a smaller, mixed project. The EU’s support is primarily political, yet in the final analysis it is companies that will have to put up the money. The case of Nabucco – backed by the EU – is exemplary. It turned out that the project was no longer profitable and that gas supply was uncertain, since Iran cannot be considered as a potential supplier. The Russians wish to circumvent Ukraine after the tension that occurred in 2009 and will build the South Stream gas pipeline, a project that does not form part of the Southern Corridor.

How do you explain that, in contrast with Gazprom, there are no European companies on the list of possible buyers of the Greek public gas company?

Good question. I can only say that Greece has a very advantageous geographical situation. The country is close to Turkey, through which gas from Azerbaijan will likely be delivered, but also to Israeli and Cypriot gas fields. Gazprom will have to comply with the separation of gas production and distribution activities required under the third energy package. In the case of Greece, the distribution aspect is important. The companies are positioning themselves either on the production aspect or on distribution. Gazprom seems to be giving priority to distribution.“The Western EU countries do not have the same position on Gazprom or on Russia as the Central and Eastern European member states” 

 
(1) The study is available here

Russia’s Motives in Cyprus and Greece

Πηγή: Energy Tribune
By Michael J. Economides and Nicholas Mitsos
Dec 24 2012

Russian involvement in natural gas developments in the eastern Mediterranean is motivated by more than a desire for profit or the pursuit of political ends. It is also a defensive action to protect Russia’s national income from competitive supplies of natural gas from new prospective exporters into Europe.

Russia depends on oil and natural gas revenues for at least 70% and perhaps 80% of its federal budget. This causes the Russian government to be vulnerable to declines in international oil and gas prices, to international competition for oil and gas sales, and to disruptions or complications relating to its domestic production and processing.

In 2013, regarding natural gas it will export to Europe, Russia anticipates a price decline from $11.33 per Mscf (thousand cubic feet) to $10.50/Mscf. Russia exports about 5 Tcf per year to Europe, so this price decrease will lower Russia’s annual export revenues by over $4.5 billion, or 1.25% of Russia’s $360 billion total federal budget. Russia is also vulnerable to oil price declines; for every $1 per bbl decline in oil prices, Russia’s export revenue falls by 0.7%.

Discoveries of large quantities of natural gas in offshore Israel and Cyprus, and the likely discoveries of deposits in offshore Greece, present the most obvious direct threat to Russian federal receipts, because the most likely market for this gas is Europe. Gas production in Norway, the second largest exporter of gas into Europe, is gradually declining as its fields mature. With regard to natural gas from Iraq, Iran and the Caspian, the Nabucco pipeline to deliver this gas to Europe may never be built. Due to the membership of Cyprus and Greece in the Eurozone and to the enormity of their probable reserves, it is in Russia’s national interest to seek to participate in developments there – but not in ways to promote maximum production quickly.

The financial rationale is simple. When Russia exports gas from its domestic fields, it receives 100% of the revenue. But if Russia produces and exports gas from foreign blocks, at best it can expect to receive 30% of revenues in standard production sharing agreements. Furthermore, adding new supplies of natural gas into the European system will harm Russian income. As the recent experience of the US with shale gas shows, gas demand in the medium term is inelastic so that increases in supply cause sharp price declines.

If Cyprus were to construct three LNG trains for exporting 20 million metric tons (MT) per year to Europe, this would equal 20% of Russia’s current total exports to Europe, which would be sufficient to lower gas prices. Greece has the possibility of developing its natural gas fields and exporting even more gas than Cyprus into Europe via pipeline, further driving down gas prices and Russian export revenues.

Russian officials no doubt were aware of these realities when the Greek government recently conducted a bidding round to sell its controlling interest in DEPA, the national gas company. DEPA owns and operates the gas pipeline bringing gas to Greece from Russia. Although DEPA attracted no major Western European bidders, it did get a bid from Gazprom. It is obvious that if Gazprom wins control of this pipeline, Gazprom will be uncooperative if and when the pipeline flow should be reversed to sell Greek natural gas into the European grid.

In Cyprus last month, a Russian company was selected by the Cypriot cabinet as part of the winning bidders for Block 9, even though the bid was ranked fourth by the evaluation committee. There were allegations in the press that this award was motivated by a desire of Cyprus’s President to secure for the country a desperately needed €1 billion loan from Russia in advance of the national elections in early 2013. Subsequently this bid was abandoned, for unclear reasons. But the pattern seems to be that Russian generosity to the Cypriot government has an implicit quid pro quo involving natural gas.

It is clear that if oil and gas prices fall from recent levels, the Russian government will be forced to run larger budget deficits. It is not a simple matter for Russia to make up a revenue shortfall by exploiting new domestic deposits because they mostly are in or near the Arctic. Drilling for oil and gas in blizzards is not simple or cheap.

It is not in Russia’s national interest for its government to help Greece and Cyprus become significant exporters of natural gas. The governments of the eastern Mediterranean should be mindful of this reality as they seek partners to develop their game-changing hydrocarbon resources.

Gazprom may buy gas company DEPA from cash hungry Greece

Πηγή: RT
Nov 7 2012

Russian energy companies Gazprom and Negusneft are among the main bidders for Greece’s state –owned gas operator DEPA. The deal is largely expected to bring Greece between €500mn and €1bn, which could make a small dent in its huge debt.

Azerbaijan's SOCAR, as well as two other Greek consortiums are also on the DEPA short list, as the deadline for accepting preliminary applications expired on Tuesday. The Greek Government plans to sell its entire 65% stake in the gas company, as well as the remaining 35% owned by Hellenic Petroleum by the start of 2013.

The deal enters a livelier stage right before Greece is set to vote on another austerity package on Wednesday. Athens has already received €240bn in loans from the EU and the International Monetary Fund, and international creditors are insisting Greece should tighten its belt further in return. The next €31bn tranche of bailout funds would cost Greece €13.5bn in wage cuts and tax hikes by 2016. The looming austerity caused massive protests across Greece, with the 48-hour strikes having almost paralyzed the country.Public transport, schools and air traffic control were shut down, and hospitals are also working with skeleton crews. News broadcasts and publications were halted as journalists joined the nationwide strike.

Given past rows with Ukraine over gas deliveries to Europe Russia’s interest in the region’s energy players looks logical. But the deal is likely up against serious hurdles from the EU. It is seeking to cut its energy dependence on Russian resources. At the moment the Union is monitoring Gazprom for price manipulation, while the third energy package bans the Russian gas monopoly from controlling European pipelines.

Among other contenders for the Greece’s gas asset were Italy's ENI, French EDF's subsidiary Edison, and Spain's Gas Natural and Enagas.

The sale of DEPA comes as part of Greece’s broad privatization plan, which includes the sale of the betting company OPAP and prime real estate projects. Through privatization the country hopes to raise up to €11bn by 2016.

Gazprom set to bid for Greek energy firm

Πηγή: EurActiv
Oct 24 2012

Gazprom has expressed the strongest interest of all prospective bidders eyeing the privatisation of Greek gas firm Depa, two Greek energy sources said yesterday (23 October). The deal could undermine EU efforts to reduce Russian involvement in Europe's energy markets.

The sources said the Russian firm has lobbied across media, industry and government ahead of a sale decision which is due in January.

Both sources shied away from touting Gazprom as the likely tender winner, however, stressing that the outcome remains wide open.

Depa plays a key role in integrating south-east European energy markets with interconnectors.

Greece could also become a vital link in bringing vast East Mediterranean and Caspian Sea gas resources to western Europe.

Commission ‘not happy’

"Gazprom has expressed the strongest interest in Depa and [oil refiner] Hellenic Petroleum ... although the European Commission [is] not so happy about this," a source familiar with the situation said.

Greek sales of energy assets have been imposed by lenders including the EU to help Athens repay debt. But they could also contradict wider EU energy goals if Gazprom beats rivals to buy the regionally strategic gas company, the source said.

Gazprom's pursuit of Depa clashes with EU efforts to diversify gas supplies away from Russia, which provides about a quarter of Europe's gas demand, by bankrolling new import corridors from the Caspian Sea via Azerbaijan and Turkey.

The EU has also launched a probe into Gazprom amid allegations that it is hindering the free flow of gas across the continent and overcharging customers.

"Gazprom as well as all other potentially interested investors should be treated equally as long as compliance with third [energy] package [regulations] and merger rules are guaranteed," said an EU official, who wished to remain anonymous.

Gazprom is also pursuing other interests in the region, including a stake in Israel's Leviathan gas field, the source with knowledge of DEPA said.

As an acquisition target, Depa offers Gazprom a chance to head off competition from new suppliers in the East Mediterranean.

But the Greek firm is also in talks with Texas-based Noble Energy and Israel's Delek Group to combine gas exports from Leviathan via a pipeline to Europe,

Other companies bidding for Depa (see background), include Azeri state-run energy firm Socar, Italy's Eni and Edison, Spain's Gas Natural and Algeria's Sonatrach. Non-binding offers and business plans are due by 6 November.

The East Mediterranean has emerged as a significant gas province on Europe's doorstep in recent years following a string of discoveries in Israeli, Greek-Cypriot and Lebanese waters that companies are now racing to develop.

Currently, Russia supplies Greece with a majority of its gas under a 20-year deal set to expire in 2016.

Political instability

In the meantime, a concession from Greece's lenders on Tuesday failed to win over two junior parties in the ruling coalition who blocked agreement on a vital austerity package because they oppose labour reforms.

Hopes that a final deal on the austerity cuts was near had grown after inspectors from the lenders left Athens last week saying the two sides had agreed on most reforms and austerity cuts needed to unlock the country's next tranche of aid.

Still, Greece's government first has to overcome internal divisions before it can strike a comprehensive deal on the cuts.

The Democratic Left and PASOK Socialist parties in Prime Minister Antonis Samaras's conservative-led coalition have long opposed unpopular proposals from EU and International Monetary Fund lenders to cut wages, reduce severance payments and scrap automatic pay rises.

"I won't accept or vote for the labour reforms the troika demands, and neither will the deputies of the Democratic Left," Fotis Kouvelis, the party's leader, told reporters after a meeting of the three leaders in Samaras's coalition.

Evangelos Venizelos, head of the PASOK Socialists, also reiterated his opposition to the reforms and urged Samaras to convince his European counterparts to back down on the proposals.

The continued refusal of the junior coalition parties to approve the package threatens a political impasse that could jeopardise Athens' efforts to obtain aid before cash runs out next month.

Greece to sell gas firm, grid operator this year: source

Greece's Prime Minister Antonis Samaras addresses parliamentarians during a session at the parliament in Athens July 8, 2012.

Πηγή: Reuters
August 6 2012

Greece wants binding bids for its state-owned natural gas company and gas grid operator by the end of September and hopes to complete their sale in late autumn as it revives its privatization drive, a government official told Reuters on Monday.

Hoping to regain credibility with international lenders keeping Greece afloat, the new conservative-led government has made speeding up privatizations a priority but has admitted delays from repeat elections in May and June.

After a meeting between political leaders and the finance minister on privatizations, the official said the government's priorities also included the sale of betting firm OPAP, the old Athens airport and buildings in Athens and on the islands of Corfu and Rhodes.

"What we're aiming for through the privatizations, apart from generating revenues, is to change the role of the state in the economy," the official said on condition of anonymity.

He said Russian, Italian, U.S. and French companies had expressed an interest in the natural gas company DEPA and gas grid operator DESPA.

Athens initially targeted privatization proceeds of 50 billion euros ($62 billion) by 2015 but cut the target to 19 billion euros after a making slow start on the program.

Former privatizations chief Costas Mitropoulos, who stepped down last month after accusing the government of hindering his efforts to sell assets, estimated that Athens would not raise more than 300 million euros from privatizations in 2012.

It had targeted 3 billion euros for this year.

More than 90 percent of the privatization program includes the lease and sale of concessions of state land and infrastructure, the government has said.

TAP Pushes its Plans in Greece

Πηγή: Natural Gas Europe
July 30 2012

A high level delegation representing the Trans-Adriatic Pipeline consortium met with Greek officials, including the alternate Minister for Energy Makis Papageorgiou, in order to push forward its plans for the project, which has gained a momentum after the developments of the past few months.

TAP's officials, Rikard Skoufias country manager for Greece, and Michael Hoffman, Director of External Affairs and Communications, stressed first and foremost the importance of official support for the project in order for the Southern Corridor to be realized through Greece.

In that respect they relayed their views that a tripartite declaration by the governments of Greece, Italy and Albania is needed, in order to show a solid political support. Already the latter has agreed to back up TAP, so as to be included in the Southern Corridor axis and bolster its energy security.

Moreover TAP is open to an agreement by which a Greek partner, namely DEPA would be accepted as a partner in the consortium and information was made known, that already four meetings with DEPA officials have taken place recently upon that subject.

Furthermore, TAP made a surprise announcement by stating that a Greek company "Greek pipe works S.A" has been pre-selected the estimated 500 million Euros contract for the construction of the pipeline. Should TAP is awarded the Southern Corridor route, this company which currently has a turnover of 260 million Euros (2011), would see its sales multiplying, thus boosting local industrial production.

TAP is also talking in parallel with ENEL in order to partner with it and secure Italian support. In that respect on the 15th of August the market study that will determine the market natural gas potentials in the long-term in Greece, Albania, Italy would be ready, so as to be able to then proceed into solid cooperation with individual companies such as ENEL and DEPA.

TAP officials were placed on the defensive last week follwing Azerbaijani Energy Minister Natiq Aliyev’s statement favoring the rival Nabucco West project in the contest to carry Caspian gas to Europe. Informed sources told Natural Gas Europe that the Minister's comments reflected his personal point of view and not the position of the Azeri government or of the Shah Deniz consortium.

Skoufias noted that "Competition with Nabucco West is tough and we are doing our best...by October 2012 we should expect a positive and definite answer by the Greek government". It is interesting to note that the Italian minister of development Corrado Passera has indirectly sided with TAP, by stating "Italy needs foreign direct energy investments that will be self-financed". TAP believes that Italy and Albania are on their track.

In receiving the comments, the Greek energy ministry deferred to provide definitive support.

Minister Papageorgiou told TAP's officials that any answer will come after a final decision by the Greek Prime Minister's office and after consultation with the Italian government and the EU. Moreover, the Greek side has certain terms it wants to secure, such as the inclusion of DEPA and the securing of favorable long-term gas deliveries.

What’s more important though, is that the Greek government tends to believe that actually TAP will be the winner of the Southern Corridor route, thus they want to raise the bar of their expectations for as much as possible supplies of gas, in as less as possible prices, along with a sizeable percentage for DEPA in the consortium, which some local insiders point out that it should be around 20%.

Athens is also anxious to view of the Italian decision, which has in parallel been promoting the South Stream project, another pipeline where DEPA is also involved. Lastly, DEPA is also looking to extract as many advantages as possible through its - indirect for the moment- involvement in the offshore natural gas reserves in Cyprus.

Recently the ex-President of USA, Bill Clinton paid a visit to Athens, where reliable sources indicated that Noble Energy's activities in the Eastern Mediterreanean and plans for Southeastern Europe were discussed, in light of Washington's increased interest. DEPA's officials were also consulted as the potential partners in such mid-term plans.

The main question that arises is will Greece be ready to take a definite decision by the last quarter of 2012 and if so, what will be the TAP's consortium's initiatives in order to firmly secure its position.

BP Ventures to Greece - TAP on the Table

Πηγή: Natural Gas Europe
July 16 2012

Senior BP officials involved with the Shah Deniz consortium recently travelled to Athens to meet with Greek governmental officials to discuss the prospects of the Southern Corridor and specifically, the potential role of the Trans Adriatic Pipeline in the movement of natural gas from the Azeri field.

Alasdair Cook, BP's Vice President for Shah Deniz Full Field Development (FFD) recently revealed that the company will take a "substantial" stake in the pipeline project, after it dropped plans to pursue its SEEP project.

The Shah Deniz consortium has also indicated interest in acquiring a stakeholding in TAP’s competitor, the Nabucco West pipeline, indicating that the consortium will, either way, hold an interest the winning proposal to bring gas from the Caspian Sea to Europe.

Cook and BP political adviser John Baldwin, met with Greek energy minister Makis Papageorgiou (a former chairman and chief executive of  DEPA, the natural gas supply corporation of Greece) to discuss the position of the new Greek government.

According to well-placed sources, BP is seeking a trilateral joint declaration by the governments of Greece, Italy and Albania in favor of TAP.

Mr. Cook noted in statements to the local press that BP has four distinct points to offer to Greece, should it support TAP.

Firstly, it would allow for the placement within the country the critical EU project of the Southern Corridor. Secondly, it would provide for the diversification of Greece's natural gas imports by the importation of Azeri gas. Thirdly, it would provide increased competition within the domestic gas market and fourthly, it would provide a large infrastructure investment that is sorely needed for an ailing Greek economy.

Cook noted that binding governmental support is required so as for the project's partners to be able to consider the country as a preferential territory for the pipeline.

Furthermore Cook said that BP is closely looking into the process of  DEPA's pending privatization, whose prospects would be enhanced by the import of Azeri gas. Moreover DEPA's entrance into the TAP consortium, would be welcomed.

TAP could also compliment the Greek-Bulgarian Interconnector (IGB) which is scheduled to be operational next year, a clear indication for leverage for this pipeline in light of the wider diversification criteria that the EU is seeking for Southeastern Europe.

The Greek Minister indicated a position of encouragement towards TAP, without binding Athens for the time being. The recently formed government is a coalition of three parties with diverging energy policies, and it speculated it will take some time before a joint stance is found.

BP's officials also met with Ioannis Maniatis, Secretary of the PASOK party and former Deputy Minister for the Environment, Energy and Climate. During the talks, Maniatis spoke to Greek position in detail.

Maniatis mentioned geopolitical issues to be addressed along the Southern corridor's route, the potential involvement of DEPA into the project, the details around the import of Azeri gas under long-term contracts and the pros and cons between TAP and Nabucco West relating to the supply of the Balkans.

BP's point of view was to note of the points raised and agreement was reached for further visits to Athens in order to clarify the points under which both sides can have a solid cooperation.

Although the full transcripts of both meetings with Papageorgiou and Maniatis were not released, sources from the Greek Ministry of Energy indicate that we are in the beginning of a long-process of negotiations, since the policies relating to TAP have to take into account several other important factors, such as DEPA's privatization, the role and the stance of both Italy and Russia and the specific needs of each Balkan state. Lastly the relations between Greece and Turkey are another point, that requires the consideration of the Greek side.

Shah Deniz consortium is due to take its final decision on which pipeline, TAP or Nabucco West, will transport Azeri gas to Europe, by May 2013.

Greece-Cyprus-Israel Energy Triangle: Dynamics and Potentials in the East Mediterranean Basin

Πηγή: Natural Gas Europe
By Petros Makris-Kourkoulos
April 14 2012

In the mid-60s, John F. Kennedy stated the famous geography has made us neighbors, history has made us friends, economics has made us partners and necessity has made us allies having the flourishing US-Canadian alliance on his mind. Fifty years later, those words have a deep meaning for a newborn block in the East Mediterranean Sea. The potential “third energy corridor” is the most prominent ace up Europe’s sleeve to reshuffle and win the energy game, as for the Greece-Cyprus-Israel triangle to lead the sequence of the raising pots and eventually, to win a hard pot of poker.

On 28th and 29th of March, a significant Investment Energy Summit was held in Athens regarding prospective energy projects which can upgrade the geo-political role of the East Mediterranean Basin. The “East Mediterranean Gas Politics” is a concept which was born after the discovery of vast gas fields in the eastern side of the Mediterranean Sea. The Israeli “Tamar” and “Leviathan” gas fields as well as the “Aphrodite” offshore gas field off the southern coast of Cyprus located at country's maritime Exclusive Economic Zone, created new attractive potentials for a third energy corridor to Europe in parallel with the existing Nordic and the upcoming Southern. Numerous officials from Greece, Israel and Cyprus, involved with the energy sector, participated at the conference making substance to a rising dynamic triangle in the chessboard of energy game while, the special envoy appointed by Hillary Clinton for Eurasian energy Mr. Richard Morningstar and industry participants from Noble Energy and Gazprom as well gave an extra significance. The creation of LNG stations in Cyprus and Israel and the creation of a pipeline connecting the fields with Greece and from there on to the EU via Italy are some of the most crucial issues were discussed. But what is the meaning and the geostrategic reality of such a conference?

The triangle’s geo-political role in South Eastern Europe



Speaking about international politics, it is quite clear to understand a necessity for a geo-political block among Greece-Cyprus-Israel which is going to play a key role in the energy transportation to Europe. Having the Russian Nord corridor which is used to monopolize the gas streaming to Europe and to exercise political pressure on ex-Soviet states, the planned rival Southern corridor is backed fully by the EU and generally by the West for energy security reasons. However, the existence of a third alternative would add more options towards this goal as it could strengthen Europe’s negotiating tools in the market. Of course, it is noteworthy to mention that this third corridor has more stable and reliable potentials on the grounds that Greece and Cyprus are direct parts of Europe, and Israel is an honest and trustworthy ally where bilateral relations have to be enhanced more by such economic and strategic agreements. Moreover, Ambassador Morningstar’s presence, as that of Noble energy as well, gave a plus prestige to the highest importance of this triangle for the US’s interest in the area. The Tamar gas field is the largest organic find ever discovered in the under-explored area of the Mediterranean Sea and Noble Energy is the basic operator with a 36% working interest on it. Additionally, Noble started drilling the offshore prospect south of Cyprus, which lies close to large discoveries off Israel, at the end of September 2011.



In one other point of view, a dynamic triangle between Greece-Cyprus-Israel could be treated as an efficient geo-political counterweight to Turkey. In a same sense, Abraham Lincoln aptly expressed his view on friendship and rivalry in politics stating that a friend is one who has the same enemies as you have; and it is quite obvious that there is a crying need for balance of power in the region. Turkey, has already disputed energy explorations in the Cypriot exclusive economic zone reacting aggressively because it considers that its regional energy primacy could be threated. Indeed, regarding energy domain, I would dare to say that Turkey is one of the fastest growing energy markets in the world having introduced the “East-West Energy corridor Concept” many years before. Its geographical proximity to energy producer (Azerbaijan-Turkmenistan-Iraq-Russia) and consumer (Europe) has highlighted its geopolitical significance as energy intermediate. Turkey has deployed outstanding oil and gas pipeline system which has its roots in the mid-70’s while now, it negotiates the significant Russian South Stream gas pipeline via Black Sea and the Western backed pipelines such as the imposing almost 4000km Nabucco with 31 bcm/a capacity, the 520km Trans Adriatic Pipeline (TAP) with 10 bcm/a and the 807km Interconnector Turkey-Greece-Italy (ITGI) with 10 bcm/a. By the end of this year, one of these pipelines will be chosen to transport gas to Europe bypassing Turkey. Therefore, Turkey will assume full authority to preside over the route enhancing its geo-political role in the Mediterranean Sea.

Suggestions for a feasible Greek strategy 


Greece is given outstanding multiple chances in the middle of an economic storm. What Greece must do and what could be gained by this alliance is simple. Initially, Greece must walk the tightrope and balance between tough domestic reforms and an unstable external environment. Thus, the most important Ministries of Foreign Affairs and Energy ought to be secured. The Ministry of Energy must give an extra focus on the proved offshore natural resources underneath the Ionian Sea and Crete in order to be capable of join the triangle more active. It is inconceivable to think the reason of past years’ torpidity in the field of energy exploration and production if we think that countries like Norway cover close to 20 per cent of European gas consumption. More recently, the Cypriot celerity to exploit its energy potentials has shown how a small state can make energy jumps towards energy emancipation and exports. Additionally, the Greek benefits from a direct pipeline from Israel and Cyprus to European markets could be highly effective as intermediate while the support on the southern corridor which probably is going to be TAP is strictly necessary. TAP pipeline will eventually bypass Turkey, Greece and Albania in order to transport the Azeri gas to Europe through Italy.



Lastly, Greece must ameliorate the domestic regulatory system in order to create the breeding ground for foreign investments. Competitiveness is a key word towards this way. Unfortunately, Greece is at the bottom of the European competitiveness rankings lying in the last position (27th). Specifically, according to Formula Europa Institute analysis, Greece is among the less competitive countries in Europe in terms of political stability (25th), government effectiveness (24th), regulatory quality (26th), control of corruption (25th); these are factors that without any doubt drive back foreign capital and potential investments at flourishing sectors like energy. Last Friday, the open call for competition on the state-own oil company DEPA ended presenting a number of candidates who are ready to take on the management of the company. However, the question is how effective can be a privatization of DEPA with a possible Gazprom’s participation which obviously reveal Russian intentions in strengthening its influence over southeastern Europe.

This article was first published by Research Institute for European and American Studies (RIEAS). Petros Makris-Kourkoulos is a Research Associate and Energy Security Analyst at RIEAS.

Greece's Mytilineos, Motor Oil to bid for gas company DEPA

Πηγή: Reuters
By Ingrid Melander

March 28 2012

Greek metals group Mytilineos will bid for state-owned gas company DEPA together with Greece's second-biggest oil refiner Motor Oil, the company said on Wednesday.

"Mytilineos will submit a letter expressing interest, jointly with Motor Oil and M&M Natural Gas Co to acquire 100 percent of DEPA Group excluding its fully-owned gas grid operator DESFA," Mytilineos said in a bourse filing.

Greece invited bids for state-owned gas company DEPA in February as part of a plan to raise 19 billion euros from privatisations by 2015.

DEPA is active in wholesale, trading and supply of gas to retail and industrial clients. Its wholly owned subsidiary DESFA operates a high pressure gas transport network and liquified natural gas facilities in Greece.

Gazprom considering bid for Greece's DEPA

Πηγή: UPI
March 19 2012

Russian state-owned energy firm Gazprom says it's considering bidding for Greek counterpart DEPA as cash-strapped Athens seeks to sell off state assets.

ATHENS, Greece, -- Russian state-owned energy firm Gazprom says it's considering bidding for Greek counterpart DEPA as cash-strapped Athens seeks to sell state assets.

Greece announced last month its Public Gas Corp. would be put on the auction block as part of the debt-burdened country's efforts to raise $25 billion through the sale of government-owned property -- a condition of its European bailout package.

Also being put up for sale is the Greek gas pipeline operator DESFA. Together the sale of the gas infrastructure could generate as much as $2.6 billion.

About 20 companies are expected to make bids by Thursday with a final selection to be revealed in early August.

As expected, Gazprom is among those expressing interest. The company said Friday Chief Executive Alexei Miller and Dimitrios Kopelouzos, his counterpart with Greek partner Prometheus Gas, "discussed the possibilities for Gazprom Group to take part in Greek DEPA Group privatization through a bidding procedure."

Miller and Kopelouzos "addressed the prospects for Russian-Greek cooperation deepening in the energy sector," the statement said, including "the current status and the outlook for the Greek gas market."

Gazprom's interest in acquiring DEPA could be part of a strategic move to influence the development of a Southern Corridor gas conduit connecting Europe with the vast reserves of the Caspian Sea -- a move aimed at lessening the European Union's dependence on Russian supplies.

The Southern Corridor aims to tap up to 30 billion cubic meters of gas annually from Azerbaijan, Turkmenistan and other possible sources to provide the EU nations with more stable and cheaper alternative to Gazprom.

The buyer of DEPA could exert a big influence of over its development, analysts say.

Under some of the proposals, the Southern Corridor route would run through Greece -- as could Moscow's own entrant in the region, South Stream. That competing plan would send Russian gas to Europe under the Black Sea, bypassing Ukraine, used in the current supply route, as a transit nation.

Other likely bidders for DEPA and DESFA include Italy's Eni, which has worked with Gazprom in the South Stream effort, as well as the main Southern Corridor supplier, SOCAR, the state oil company of Azerbaijan, The Wall Street Journal reported.

The newspaper said liquefied natural gas supplier Sonatrach of Algeria and other European utilities would also likely be part of the process.

Not, however, among the bidders will be German utilities E.ON and RWE, which told the Journal they don't have interest in either of the Greek assets at a time when they have been hampered by Germany's move to ramp up its exit from nuclear energy.

The indication of Gazprom's interest came less than two weeks after a high-level meeting between its vice president, Alexander Medvedev, and Greek Energy Minister Giorgos Papaconstantinou in Athens.

Also present were DEPA Chief Executive Haris Sachinis and Kopelouzos, the Prometheus Gas chief, Athens daily Kathimerini reported.

The energy ministry said the privatization program was a topic of discussion, as was the spike in Greek demand this winter caused by a prolonged cold snap.

That meeting came after the DEPA-backed Southern Corridor entrant -- the Turkey-Greece-Italy pipeline -- was eliminated a preferred alternative by the SOCAR-led Caspian Sea supplier consortium.

ITGI Plans to Link with Cyprus and Israel

Πηγή: Natural Gas Europe
March 13 2012

The Interconnector Turkey-Greece-Italy (ITGI) pipeline project, which recently effectively lost the Southern Corridor pipeline race to the rival Trans Adriatic Pipeline (TAP) project, is unveiling a new strategy, with plans to link itself with the prospective natural gas reserves offshore Cyprus and Israel.

Speaking at the CERA Week energy conference in Houston, Charis (Harry) Sachinis, President of Greece's DEPA, a major shareholder in the project, proposed that ITGI was not merely a pipeline route but an integral energy system that can easily be used for the transfer of Mediterranean gas from the Leviathan, Tamar, Field 12 and other new projects into Europe.

In this system, as he called it, an additional subwater pipeline from Cyprus to Greece could be linked, as well as LNG stations in Greece.

Southern Corridor 2

Sachinis plan aims to make a way for a 'Southern Corridor 2' that instead of transferring Azeri gas, will be used for transporting Israeli and Cypriot-Greek gas into EU markets.

Plans partially leaked by DEPA's officials envisages a pipeline 1,100 kilometers in length from Cyprus to Crete that could transfer 8 billion cbm of natural gas per year.

Crete would be linked to mainland Greece, a short distance of around 50 miles and be integrated to the Greek domestic gas system with one main branch of the pipeline transferring gas to Italy via thePoseidon pipeline that is the offshore part of the ITGI. Other quantities of gas will be transported via the Natural Gas Interconnector Greece Bulgaria (IGB) to Bulgaria, which recently agreed to also interlink its systems with those of Romania.

Potential Offshore Crete

DEPA believes there is still more gas to be found in the Greek exclusive economic zone (EEZ), south of the coast of the Island of Crete, which could be fed into its proposed plan.

Noble Energy, which drilled the first exploration in Field 12 in Cyprus, plans to sends top officials to meet with the Greek Minister of Energy on the 28th of March in Athens in advance of a planned visit by Noble Energy's President in late May in order to discuss exploration south of Crete. Israel's Delek Drilling, Gazprom, Total and BP are also reported to be interested in exploration offshore Crete.

Challenges

Sachinis' plans for a Cyprus-Greece pipeline faces several major issues.

Firstly, the overall commercial viability for the exploitation of all natural reserves gas fields in East Mediterranean has to be established. That will take some time.

Secondly, no Greek or Israeli company has the know-how for such a large undertaking, therefore partnerships with major players such as BP, Shell, Exxon. etc., would likely have to be established in order to proceed.

Thirdly, the original Southern Corridor is a mature plan, fully backed by EU and US and constitutes as one of the cornerstone projects for BP and the Azeri state. There would undoubtedly be resistance to emergence of new sources of gas appearing out of Cyprus and Israel impacting the Shah Deniz consortium.

Fourthly, the expense of undertaking such a project is most certainly higher than those projected for the Southern Corridor. Moreover, the project is located in territory of considerable political risk: right beside Syria-Lebanon and within a short distance from Turkey which opposes vehemently such initiatives.

Lastly, DEPA is about to privatized and such a significant undertaking may impact how the company is viewed by prospective investors.

On the other hand, if East Mediterranean gas can be exploited at commercially sound prices and if international energy conglomerates show practical interest, then a new source of EU gas supplies maybe of great importance for the European energy security and can also assist into easing peripheral tensions in the region.

All depends on many political and economic parameters and changes of variables that can affect the course of investments one way or another.

In short, a new round negotiations concerning the Southern Corridor seems to be at hand, this time not related to the culminations between Baku-Ankara-Brussels but rather between Tel Aviv-Nicosia and Athens.