Of gas pipelines, of interconnectors and FSRUs

by Antonis D. Papagiannidis

Greece mulls over the recent re-definition of Turkey’s own diplomatic priorities: Ankara has been trying to once tie more the knot with the United Arab Emirates who have been conducting joint military aeronautical exercises with Greece; it has attempted to overcome the Saudi backup for Armenia in the Nagorno-Karabakh conflict, where Turkey aggressively sided with Azerbaijan; it is also re-building bridges to the Sisi regime in Egypt scaling back disputes and reining in Muslim brotherhood support, while at the same time it works to dispel Israeli fears that “Turkey aims to create a sea border the width of the entire Mediterranean”.

Since Athens has undertaken steady diplomatic efforts towards all these directions, there is a feeling of the geopolitical ground caving in. None of which compares to the recent shock that Greek diplomatic practice sustained with the US U-turn concerning the East-Med natural gas pipeline, that was supposed to cover up to 10% of European energy needs with Levantine Basin gas deposits, thus contributing to weaning the EU from Russian gas dependence. The East-Med pipeline that would link Israel, Cyprus and Greece with the Italian gas grid, also routing Egyptian natural gas (Egypt covers some 75% of the Levantine Basin deposits, compared to close to 20% and 5% for – respectively – Israel and Cyprus), had been designated as an EU “Project of Common Interest”. On that basis it has benefited of some 35 million euros funding for technical, economic and environmental studies for a quite demanding project. Since the US were supportive to the East-Med Gas Forum to which Egypt and Israel participate along with Greece, Cyprus, the Palestinian Authority and Italy, early signals that the project was in danger were disregarded.

Probably having some sort of early warning, Greek FM Nikos Dendias had distanced himself from the wider issue of Greece undertaking hydrocarbon searches of its own (for gas initially planned to feed also into the East Med pipeline, but has been somehow lost in translation); still, when an American non-paper was leaked canceling political support to the project (also invoking the lack of market/financial interest), here was quite a feeling of despondency in Greece. The main reason: the route of the EastMed pipeline would directly cut into the Turkish-Libyan proclaimed EEZ, which is a major item of geopolitical apprehension for Greece.

Trying to leave some space for a diplomatic version of “each cloud has a silver lining”, the U.S. non-paper included support for a different sort of energy-related regional projects: the electrical grid interconnectors that would bring “green” or assimilated power produced in the East Med region – one connecting Israel to Cyprus and Greece, the other taking the route from Egypt to Greece. Such projects have yet to prove their own feasibility, but – lo and behold! – the first one, the EuroAsia interconnector has seen its first leg (the Cyprus-Greece connection) receive formal EU approval. Such approval is supposed to free finance of some 750 mio euros – but it also puts a “European seal” to a route that also cuts into Turkish claims over EEZ delimitation in the region.

To prove another saying, “good things come in twos”, the long-discussed FSRU project in Alexandroupolis, to be connected to the Greek National Natural Gas Transporation System has reached the FID/final investment decision stage according to Gastrade that runs the project. LNG-based gas supply is thus supposed to be available to Greece and the wider Balkan region – up to the Ukraine (eastwards) or Servia (westwards) – before the end of 2023. Gastrade shareholders are the Greek Kopelouzos Group, GasLog Cyprus of Livanos shipping interests (20%), while Greek State-owned DEPA Trading and Bulgarian BulgarTrans Gas have also joined in (with 20% each). It could well be that the thumbs-up signal from the European Commission (last November) and the FID announced now have something to do with the strategic decision to have American LNG actively present in the natural gas economy of the EU and SouthEast Europe.