RCEM: Views on Energy News

How much relief and consolation can Greece extract from the first-ever “State of the Energy Union” report, produced on Nov. 18 by the European Commission? With all due respect for its commendable motivation to enhance solidarity and drive toward a harmonious cohesion of national interests, it does not provide a clear-cut vision from where exactly would, for instance, South East Europe and in particular Greece receive its LNG and pipeline gas. The European Commission amended the Regulation № 347/2013 of the European Parliament and of the Council as regards the Projects of Common Interest (PCIs), originally adopted in October 2013 (the review and update are scheduled every two years).

The list of PCIs grants special privilege to certain energy infrastructure projects worthy of political and financial support of the EU institutions.

It comes as good news that one of the PCIs statuses was given to the interconnector between Greece and Bulgaria. The document calls for the “reinforcement” of this mutual inter-linkage. The project falls within the EU concept of “clusters” which are defined as integrated, dedicated and scalable transport infrastructure and associated equipment for the transportation, in this case, of natural gas.

The PCIS list mentions the interconnector better known as IGB, or Stara Zagora – Komotini, in the context of a “cluster infrastructure@ intended to source gas to the Central and South-Eastern European region. As such, the wider and more ambitious endeavour encompasses also a pipeline system from Bulgaria to Slovakia, currently known as “Eastring”, and a pipeline system from Greece to Austria, currently known as “Tesla”. Basically, they form part of a network of pipelines stretching from North to South, and backward.

Multiplying interconnectors within the European common energy space is a sound strategy. By definition, it creates a solid and reliable foundation for flexible operational use of gas flows, with the additional mechanism to respond to peak demand and force major. All in itself, interconnectivity fits well into the concept of the EU Energy Union and the priority attached to energy security.

However, once again, it leaves open the issue of the actual source of gas, in particular in the case of IGB. Bulgaria can hardly expect to become self-sufficient in terms of oil and gas in the foreseeable future, given the present stage of exploration of its offshore reserves. And let alone the chances of Bulgaria becoming one day a net-exporter of its gas produced domestically. Rumania can hardly count as a purveyor for the same reasons. The existing transit pipeline now delivering Russian gas will probably dry out after 2019 when the contract with Ukraine expires. No other gas supplier along the North-South route would emerge.

In this case, gas flow would probably come from South to North, with Greece in the capacity of a transit system operator. This is plausible with the expected arrival of American LNG uploaded at the two Greek terminals due to be operational by that time. Yet, there has been no firm commitment, neither to the available volumes nor to the final price of the commodity. For the moment, this is just one big uncertainty, with no solid data to make verifiable forecasts.

LNG prices convergence on the Asian and European markets fuelled expectations that this product would now start flowing to the continent in vast quantities. Yet, in the EU PCIs list more than half of LNG projects proposed by member states were eradicated, with the final result being that just 8 out of 21 received the approval. The rationale could have been either the drafts and blueprints were ill prepared, or the European Commission does not count too much on the American and Qatari LNG deliveries.

It leaves as the only option the pumping of Azeri gas along the Trans Anatolia Natural Gas Pipeline (TANAP). This is more or less guaranteed, although the 10 bcma earmarked for delivery along this route with the main destination being Italy is not something any wholesale buyer would bet on without certain apprehension. Besides, recent statistics released by Azerbaijan authorities for the 10 months of 2015 recorded a downfall of gas production by 2.7% to 24,5 bcm. It cannot be caused by a seasonal slump, traditionally happening during he cold months, because winter has not yet set in in this part of Europe. It comes as a bad omen at a bad moment.

The other option, written down in the EU PCIs list, is the possible pipeline from offshore Cyprus to Greece mainland via Crete, which is currently known as “EastMed Pipeline”. The official document coming out with the blessing of the European Commission sets forward a purely geopolitical goal in order to establish this supply route: “Removing internal bottlenecks in Cyprus to end isolation and to allow for the transmission of gas from the Eastern Mediterranean region.” Since 1974, neither the United Nations mediators, nor local pragmatic leaders on the island consistently failed to relieve Cyprus from these “internal bottlenecks”.

There are no objections whatsoever to the idea of an Energy Union based on fair play, social cohesion, respect for and acceptance of individual needs of each member state. But like it or not, being tightly and comprehensively connected to all neighbours does not ensure all by itself the reliability of supply.

Being Greek always meant to be open-minded, ingenious or creative at least. The Bulgarian Prime Minister Boiko Borisov who praises himself publicly for derailing the Russian Gazprom-sponsored South Stream, these days sings to a different tune. “I am in favour both of Nord Stream and (...) a gas hub in Bulgaria”, and then – “nobody can convince me that an additional gas source is bad for my country.” This quote is a definite signal that Bulgarians do not intend to lay all their eggs into one basket, and might be unscrupulous when it comes to ensuring their energy security.

Actually, the problem is that the national interests within EU are rooted in an ostentatious for the media and divisive for policy-makers issue: provision and insurance of energy security. At the end of the day, until now, the issue of energy security was reduced to the acceptance of the reality: there is a stark divergence of national interests among the EU states, from North to South and especially to South-East, which differ, in quite a natural way, in terms of energy availability, either from domestic sources or from outside suppliers.

This is where the rubber hits the road. Here it causes friction, tension, and covert desire to act out of national egoistical calculations. Sorry to say it, but this is only human nature, after all. Would Greece like to end up as Laocoon, strangled by pipelines and interconnectors, reverberating with echoes due to no gas inside?

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