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Newsletter Ιούλιος 2011

NETWORKING NEW MARKETS

Greece and Energy Security
On May 30-31, 2001 Greece was host to the "2011 Mediterranean Oil & Gas Conference" that examined the strategic role of energy in the next decade.

A key topic of discussion was the role Greece will play in developing energy diversity and security, primarily as a transit hub for pipelines transporting natural gas from the Caspian region to the markets of Europe.

Representatives from the major pipeline projects under consideration, Greece’s major energy companies as well as energy companies from the greater region, energy analysts and members of the government, all spoke on the challenges and opportunities on this next phase of the energy market’s evolution.

Deputy Minister of Environment, Energy and Climate Change, Mr. Ioannis Maniatis, spoke on 'Energy Pipelines and Geostrategy in Times of Crisis - The Role of Greece."  His remarks place Greece’s strategic interests within the developments of regional energy players.

The speech of Minister Maniatis:
 
"Ladies and Gentlemen,
 
Less than six months after the fall of regimes of Ben Ali and Mubarak in North Africa, we can say with certainty that the so-called "Arab Spring" is the most important geopolitical development not only this year but probably of the decade, from the terrorist attacks of September 11 until today.
 
The effects of these uprisings, which continue unabated in Syria, Yemen, and mainly Libya, cannot yet be clearly specified, the reason being that any policy change, in Egypt as well as in Tunisia, is an ongoing process and not a fait accompli.
 
For Europe and the U.S., which at the recent G-8 Summit of Dauville, decided to support both politically and economically the new governments that emerged from the uprisings in January-February 2011, the future of North Africa and also of the broader complex issue of "Arab democratisation" was directly linked to the energy security of these areas.
 
The reason is simple. North Africa, despite the lower oil and natural gas reserves available than the Gulf region, the Caspian and the former Soviet Union, was and is one of the main sources for the diversification of European hydrocarbons imports.
 
In 2010 Algeria, Libya and Egypt covered about 1/6 of European demand for oil and about 13% of final natural gas consumption. Libya alone accounted for 12% of total European imports of oil and 10% of Italian gas demand.
 
Although these exports are likely to be restored with a general political re-stabilisation, the European perception, that considered the extraction of hydrocarbons in North Africa as exports of low geopolitical risk, has now been revised.
 
This means that Europe must do everything in its power to maximise the utilisation of its own oil and natural gas reserves, giving priority to those areas of EU where there is a high hydrocarbon potential, as is the case of Southeast Mediterranean.
 
Within this framework, the confirmed and potential oil and gas reserves in Israel, Cyprus and Greece and the dynamics between the geopolitical and business interaction, can play a leading role in a coordinated strategy to reduce the import dependence of the EU on non-European sources.
 
Moreover, the crisis of Arab uprisings confirmed the strategic importance of Euro-Russian energy interdependence. The loss of Libyan gas exports to Italy was covered immediately from the increase of Russian exports. This highlighted once again the long-term reliability of Russia as a key partner/guarantor of European Energy Security, a reliability which will be strengthened further in the future through the implementation of the South Stream project, and also the Burgas-Alexandroupolis pipeline.
 
At the same time, the Arab Uprising also showed the need to accelerate the pace of the implementation of the other top European strategic choice, that serves the need to diversify the gas imports sources from the Caspian region.
 
It is clear that the implementation of the Southern Energy Corridor of Europe project must begin as soon as possible, based on the maturity and viability of projects. Europe needs the Southern Energy Corridor for its energy security.
 
This is what we emphasised in the extensive discussions we had with the President of Azerbaijan and the Azeri Minister of Industry and Energy Natiq Aliyev, during our recent official visit where we escorted the President of the Hellenic Republic Mr. K. Papoulias. The decision as to which pipeline will finally be selected can in no case be a political one, but it must be made with criteria of economic viability and technical maturity.
 
The position of the Greek government is that the work of ITGI is the most mature and realistic, affordable and well-positioned in relation to the Shah Deniz 2 deposit.

In addition, the construction of the pipeline has advanced significantly and the environmental impact studies for the passage from Greece have already been approved. The Agreement of Understanding, signed between DEPA and SOCAR, is another step towards the opening of the Southern Corridor.
 
Moreover, the route, after leaving Turkey, from the territory of only two Member States, namely Greece and Italy,  eliminates geopolitical risk, compared with other options.
 
The IGB is also in full progress.
 
The two pipelines ITGI and IGB are able to provide a total quantity 17 bcma of gas, contributing significantly to creating a competitive gas market in Southeast Europe.
 
The international financial crisis requires all participants in the "Caspian Game" to find a way to minimise the cost for the construction of projects worth several billion.
 
At these difficult times there is no doubt that the two most competitive projects are those of ITGI and TAP. Since these two projects target, to a large extent, the same markets and follow an almost identical course in Greek territory, a choice of synergies between them should be examined systematically.
 
Once the necessary additional quantities of gas are allocated to Europe from Azerbaijan, Turkmenistan and Northern Iraq, then certainly other projects —especially Nabucco—will also be able to serve Europe. In this way, alternative scenarios of the Southern Corridor are complementary and the companies involved can cooperate in a possible construction of a new pipeline in the region of Turkey. The end result will be a Southern Corridor with a medium term capacity of at least 40 bcma.
 
Last week in Brussels at the presentation of the South Stream gas pipeline, I had the opportunity to talk with Russian Energy Minister Mr. Sergei Shmatko. It is well known that as a country, together with other member states of the EU, we support the implementation of South Stream as an alternative route of energy security of Europe.
 
The pipeline provides a reliable form of transport of this natural resource, essential to the growing needs of Europe. Its implementation undoubtedly contributes to security of supply, particularly at a critical period of turbulence that affects the supply and the increase of domestic consumption needs. Its passage through Greece contributes decisively to the strengthening of the country’s geopolitical position.
 
The design of these pipelines is based on the corresponding upgrading of ESFA (National Natural Gas System) in national territory. By a Ministerial Decree, signed by me a few days ago, the Development Programme of the National Natural Gas System acquires an institutional status up to 2014. The total budget of the project is 1.3 billion Euros, of which 800 million is the budget of the Komotini-Thesprotia pipeline and 160 million the budget for the second upgrade of the terminal in Revithoussa. At the same time, links of the high-pressure pipeline to Aliveri and Megalopolis are about to be completed  in the next months to supply natural gas to the two PPC electricity plants under construction, of 420 MW and 810 MW respectively.
 
Regarding the development of the Burgas-Alexandroupolis pipeline, an issue which was also discussed with Minister Smatko, the recent positive intervention of the General Directorate for the Environment of the European Committee, for taking action on issues of trans border environmental assessments, is important.
 
We hope that, with the recent filing by the TBP company of the updated environmental study, there will be a positive reaction of local communities and public services in Bulgaria.
 
Ladies and Gentlemen,
 
In times of crisis like the present, instead of defensive and phobic inhibitions, we must make the best of the crisis by launching a new perspective and making full use of domestic mineral resources.
 
Over the past 15 years there has been no research in Greek regions, and thus there have not been any new hydrocarbon discoveries, although there were good prospects as shown from recent research in neighbouring states.

Today we are undertaking a series of initiatives, the main goal being to create a new institutional framework and a public body for research and extraction of hydrocarbons.
 
We are beginning these search activities by conducting seismic surveys of “non-exclusive data” (non-exclusive seismic surveys) in the Ionian Sea and southern Crete.
 
The aim of seismic surveys is to ensure the acquisition of high quality data in order to promote the relevant international licensing round for the exploration and utilisation of hydrocarbons, which will be announced in 2012.
 
We promote the development of a Management Information System (MIS) for the collection, classification, and storage of the significant wealth of geographical and alphanumeric data acquired during the research work of the last 30 years.
 
During our recent visit to Norway, and also with the visit of the Greek Prime Minister to Oslo a few days ago, the foundations were laid for a close Greek-Norwegian cooperation in this field.
 
We have already started the decoding of regulations and directives of the technical and environmental work for hydrocarbon exploration and exploitation, adopted by the Norwegian Petroleum Directorate and the Security and Protection Authority, so as to establish the corresponding clear and strict procedures that will be included in our national legislation.
 
Finally, I remind you that a few days ago the Greek government chose the Privatisation Advisors for the Underground Natural Gas Storage project in South Kavala, with an estimated budget of 400 million Euros, while at the same time in collaboration with the Italian Government we support funding  from the Trans European Networks, Ten–E, for the deposit’s development study.

Energy is the future.
 
The best way to avoid mistakes is free and democratic dialogue, in the sense of the City of the Ancient Greeks.
 
The equation of power is dialogue and work.
 
Thank you for your attention.