War in Ukraine accelerates Greece’s transition to EU energy gateway

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

Russia has so far supplied 90 percent of Bulgaria’s gas, but on April 27 it shut down Bulgaria after Sofia said it would not renew its contract with Russian gas giant Gazprom by the end of the year.

Poland said the same thing and suffered the same fate.

†[Russian President Vladimir] Putin didn’t want it to look like he’d lost customers, so he kicked them out early,” said Mike Myrianthis, an oil industry veteran and analyst.

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

“For a few days now, Bulgaria has already been out of the [Russian] pipeline system and completely 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, head of the Greek Energy Forum, a think tank.

However, what makes the IGB strategically important is that it could soon become the means of replacing Russian gas across 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 for LNG imports off the coast of Alexandroupolis, in northern Greece.

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

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

Interest in the project extended beyond Bulgaria.

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

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

The president, Aleksandar Vucic, told the regional leaders’ meeting on May 3: “I was one of the skeptics who always said, ‘It won’t happen’ … Now that we see that it is ready to start, I can say that we are really grateful and we are willing to receive relatively large amounts of gas.”

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

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 capacity is currently barely able to meet Greek demand.

But the demand for non-Russian gas in the region has soared that the consortium building the Alexandroupolis FSRU, Gastrade, applied for and obtained a permit for a second FSRU.

The war in Ukraine was the main catalyst for both increased demand and higher prices.

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

Yet another FSRU is in conceptual development stage off the coast of the eastern Greek port of Volos, to be sponsored by ExxonMobil and Gulf investors.

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

“Greek LNG terminals will not only be able to fully cover the Greek market, but also displace a significant proportion of Russian natural gas to the Balkans,” said Greek Prime Minister Kyriakos Mitsotakis.

“Moscow’s recent natural gas blackmail now makes this cooperation not only necessary, but, I would say, urgent,” he said.

Mitsotakis believed that the projects that are in the advanced stages of planning or construction would be able to extract about 21 billion cubic meters (bcm) of gas per year. Over the next three years, Greek consumption is expected to rise to about half that amount, leaving about €10 billion a year for export to the Balkans.

The IGB can only transport 5.5 billion cm per year, but that could change if Greece sees demand for LNG outside the Balkans.

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

“It is clear that there will be a second pipeline, 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 10 bcm per year,” he told Al Jazeera.

Compressors could potentially double that, making IGB a rival to Turkish Stream, the Russian-built pipeline crossing the Black Sea to feed southeastern Europe.

Greece has also planned a separate interconnector with North Macedonia, and old Soviet-era pipelines that used to carry Russian gas southwards are being turned around to carry LNG northwards to Bulgaria and North Macedonia.

But the boldest use of Russia’s infrastructure against Moscow is yet to come, Myrianthis said.

A consortium led by Gazprom has just constructed a new pipeline that runs through Bulgaria and Serbia to reach Hungary. Moscow intended it to be an extension of the Turkish power, which pumped 15 billion cm of Russian gas a year 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 Russia’s gas infrastructure.

“EU sanctions [will at some point stop] Russian gas flows in and the gas from Alexandroupolis can flow through IGB and into this infrastructure. This is the geopolitical interest [of IGB]’ said Myrianthis.

Greece is able to play the gas pipeline role thanks to the last major Russian gas crisis of 2009, when Russia cut supply to Ukraine in mid-winter, leading to shortages and power cuts across southeastern Europe.

That was when the European Commission started funding the so-called “Southern Gas Corridor”, which led to the construction of the trans-Adriatic pipeline bringing Azeri gas through Greece. That was also the moment when Gastrade applied for a permit for the FSRU of Alexandroupoli.

The concept of a southern energy corridor is being expanded.

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

“Undoubtedly the geopolitical significance of [Greece] is rising,” said Thrasy Marketos, visiting professor of Eurasian geopolitics at the University of the Peloponnese.

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

Since Putin declared war on Ukraine, the EU seems to have declared war on its energy policy.



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