Ukraine war speeds Greece’s transition to EU energy gateway

As Europe attempts to abandon Russian energy supplies, Greece is becoming a gateway for LNG because it is surrounded by sea.

an employee checks a pipe at the construction site of a gas metering station, part of the pipeline link between Bulgaria and Greece near the village of the Malko Kadievo, on March 18, 2022.
Greece is set to finish building a pipeline to Bulgaria that will end Russia's gas monopoly there and in southeast Europe [Nikolay Doychinov/AFP]

Athens, Greece – In about a month, Greece will finish building a pipeline to Bulgaria that will end Russia’s gas monopoly there and in southeast Europe.

Russia has supplied 90 percent of Bulgaria’s gas until now, but on April 27, it cut Bulgaria off after Sofia said it would not renew its contract with Russian gas giant Gazprom at the end of the year.

Poland said the same, and suffered the same fate.

“[Russian President Vladimir] Putin didn’t want it to seem as though he’d lost clients, so he threw them out early,” said Mike Myrianthis, an oil industry veteran and analyst.

Bulgaria is now looking to the Interconnector Greece-Bulgaria, as the new pipeline is called, to supply it with gas from Azerbaijan, which Greece receives via the Trans-Anatolian pipeline that traverses the Caucasus and Turkey.

“Since a few days ago, Bulgaria is already out of the [Russian] pipeline system and fully dependent on Greece [for gas]. That has never happened before. Greece has never been responsible for securing another country’s energy security,” said Michalis Mathioulakis, who heads the Greek Energy Forum, a think-tank.

What gives the IGB strategic importance, however, is that it could soon become the means for supplanting Russian gas throughout the Balkans with liquefied natural gas from the US, Qatar, Egypt and elsewhere.

On January 31, a consortium of Greek, Cypriot, Bulgarian and Italian companies announced that they will build a floating terminal to import LNG offshore Alexandroupolis, in northern Greece.

This floating storage and regasification unit (FSRU), which will re-vaporise liquefied gas, will connect to the IGB pipeline and start supplying it at the end of next year.

“I firmly believe that we are witnessing a new dawn in Europe’s energy independence,” said European Council president Charles Michel, at a ceremony to highlight the FSRU in Alexandroupolis on May 3.

Interest in the project has extended beyond Bulgaria.

North Macedonia, whose prime minister was also in attendance, was reportedly interested in becoming a shareholder in the FSRU.

With Russian gas supply now embroiled in the politics of its war in Ukraine, even Russia-friendly Serbia is intrigued.

Its president, Aleksandar Vucic, told the May 3 gathering of regional leaders, “I was one of the sceptics who always said, ‘It won’t happen’ … Now that we see it’s ready to start, I can say we are truly grateful and we are prepared to receive relatively large quantities of gas.”

Mathioulakis told Al Jazeera, “[Southeast Europe] will depend more and more on gas that comes from Greece, so its geopolitical footprint in the Balkans increases.”

Greece is becoming a gateway for LNG because it is surrounded by sea.

It has the only LNG import terminal in the Balkans as far north as Croatia, but its capacity can barely cover Greek demand at the moment.

But demand for non-Russian gas in the region has been rising so fast that the consortium building the Alexandroupolis FSRU, Gastrade, applied for, and received, a licence for a second FSRU.

The Ukraine war was the key catalyst both for higher demand and for higher prices.

Motor Oil Hellas, a refinery near Korinth in southern Greece, has been considering its own FSRU. Earlier this year, it conducted a market test petroleum industry circles said was highly successful, and an investment decision is expected this year.

Yet another FSRU is at a conceptual stage of development offshore the eastern Greek port of Volos, which would be sponsored by ExxonMobil and investors from the Gulf.

And Greece’s existing LNG terminal at Revythousa near Athens is being optimised to operate at capacity.

“Greek LNG terminals will be in a position to fully cover not only the Greek market, but to supplant a significant portion of Russian natural gas to the Balkans,” said Greek Prime Minister Kyriakos Mitsotakis.

“Moscow’s recent natural gas blackmail now render this cooperation not just necessary but, I’d say, urgent,” he said.

Mitsotakis believed the projects that are in advanced stages of planning or construction would be capable of bringing in about 21 billion cubic metres (bcm) of gas a year. During the next three years, Greece’s consumption has been projected to rise to absorb about half that amount, leaving about 10bcm a year for export to the Balkans.

The IGB can carry only 5.5bcm a year, but that could change if Greece sees demand for LNG beyond the Balkans.

“We’ll see over time how many EU countries will demand LNG gas from Greece through this system,” said Myrianthis.

“It’s clear that a second pipeline will be made, parallel to IGB … The route is now a given. The land has been appropriated so there are no bureaucratic hurdles. It will happen very quickly, so you can easily reach 10bcm a year,” he told Al Jazeera.

Compressors could conceivably double that, making IGB a rival to Turkish Stream, the Russian-built pipeline that crosses the Black Sea to feed into southeast Europe.

Greece has also been planning a separate interconnector to North Macedonia, and old, Soviet-era pipelines that used to bring Russian gas south are being reversed to carry LNG north to Bulgaria and North Macedonia.

But the most audacious use of Russian infrastructure against Moscow is still to come, believed Myrianthis.

A Gazprom-led consortium has just built a new pipeline traversing Bulgaria and Serbia to reach Hungary. Moscow intended it as an extension of Turkish Stream, pumping 15bcm per year of Russian gas into the Balkans.

The EU has banned Russian coal and is in the process of banning Russian oil.

Many analysts believed gas could follow, stranding Russian gas infrastructure.

“EU sanctions [will at some point stop] Russian gas from flowing in it, and the gas from Alexandroupolis can flow through IGB and into this infrastructure. This is the geopolitical importance [of IGB],” said Myrianthis.

Greece is in a position to play the role of gas conduit thanks to the last major Russian gas crisis of 2009, when Russia cut off supply to Ukraine in midwinter, leading to shortages and power cuts throughout southeast Europe.

That was when the European Commission began to fund the so-called “Southern Gas Corridor”, which led to the creation of the Trans-Adriatic Pipeline bringing Azeri gas across Greece. That was also when Gastrade applied to licence the Alexandroupoli FSRU.

The concept of a southern energy corridor is being expanded.

The EU announced this year that it will spend 657 million euros ($693m) to lay a two-gigawatt undersea electricity cable to import electricity from Israel via Cyprus and Greece to the EU grid. Greece will also be the conduit for a similar cable stretching from Egypt.

“Unquestionably the geopolitical significance of [Greece] is rising,” said Thrasy Marketos, a visiting lecturer in Eurasian geopolitics at the University of the Peloponnese.

“Russia has attempted to surround Eastern Europe through its energy needs in recent years … Putin understands Europe’s strategic energy security as a geopolitical game to divide Europe and promote his own policy.”

Since Putin declared war on Ukraine, the EU appeared to have declared war on his energy policy.

Source: Al Jazeera