Gazprom CEO Alexey Miller and Greek PM Antonis Samaras (Source: ekathimerini)
Gazprom CEO Alexey Miller and Greek PM Antonis Samaras (Source: ekathimerini)

Gazprom Mulls for an Eventual South Stream Link to Greece

The visit of a high-level delegation from Gazprom headed by CEO Alexey Miller to Athens for talks with Greek stakeholders has led to an announcement concerning local and regional natural gas politics.

Following discussions with the Greek Premier Antonis Samaras, Miller revealed that his company still has plans to link the country with South Stream, although there was no mention of taking the pipeline all the way to Southern Italy. This implies that the Russian strategy is to use Greece as a potential LNG hub, supplied by South Stream.

When Gazprom announced plans in November 2012 to take out the Greece-Italy route from the pipeline, this further supported the general trend of Russian natural gas corporations such as Novatek to move towards the global LNG trade in a more dynamic fashion, since the Asian and EU markets are said to need substantial amounts of that gas over the coming decades, a strategy that Natural Gas Europe reported on at the time.

There is also the question of the Trans-Adriatic Pipeline (TAP), which is currently vying with Nabucco West for the transfer of Azeri gas to the EU. Greek media reported after the delegation's visit that in fact both projects could co-exist since they will transfer different sources of gas, potentially reducing prices at a pan-European level and at the same time they could open up a lucrative LNG market for the whole of Southern Europe. 

Talks between the two parties also revolved around the intention of the Greek government to request substantial deceases in the price of gas imported by Gazprom and in respect to the long-term contract, which ends in 2016. According to recent DEPA announcements, Greece is seeking a minimum 15 percent price cut in order to renew the contract for a minimum of 10 years.

The official Russian response regarding the DEPA-DESFA privatization was to request "fair treatment" by Greek authorities citing fears of political interference by other energy players or local business interests. Concurrently, the recent change of the head of the agency responsible for the privatization (TAIPED) resulted in a two week delay for the submission of the final binding offers, with a new date set for the 29th of April 2013.

TAIPED provided the opportunity to those involved to join in their final bid with other companies, aiming to attract more interest from European corporations, and since there is no development on this front, Gazprom and Sintez-Negusneft are left as favorites to win due to their higher offers and presumed more extensive business/gas plan.

Information from a variety of sources within the Greek energy community reveal the possibility that SOCAR and PPF-GEK will not submit a final offer for DESFA, thereby leaving Sintez as the sole competitor by the end of April. This information has not been able to be verified by the respective companies, which seem to prefer a low profile regarding their involvement in the competition.

A clear indication from the above is that Gazprom is still undecided and prefers to "wait and see" if it will suit its strategy to lay a pipeline through Greece and the decisive factor would be the outcome of its bid for DEPA.

Lastly, it is of great interest to view the month by month delays of the privatization process that seem to coincide with the announcement of the successful bidder for the Southern Corridor route, another assessment Natural Gas Europe made previously. Overall there is certainly a formation of a regional gas and political triangle between South Stream, Greek privatization and the Southern Corridor, in addition to newly discovered gas in the eastern Mediterranean. In that sense, a multilayered energy game is in full swing with tremendous interest for all key energy players in Europe.

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