Thesis-Athina Sylaidi

European University of St. Petersburg
Department of International Programs
Master program of Energy Politics in Eurasia
An assessment of Greece’s energy security in the sphere of natural
gas since 2004
Sylaidi Athina
ENERPO, August 2014

1
Table of Contents
List of figures and tables .......................................................................................................3
Acknowledgements… ............................................................................................................5
Abstract …..............................................................................................................................6
Introduction ............................................................................................................................7
Chapter One: Literature review and key concepts .................................................................9
1.1. Defining energy security ............................................................................................9
1.2. Literature on energy security....................................................................................10
1.3. Literature on Greek energy policy............................................................................13
Chapter Two: The Greek Energy Sector..............................................................................16
2.1. Introduction ..............................................................................................................16
2.2. The role of natural gas in Greece‘s energy sector and economy..............................17
2.2.1. Primary energy mix 2004-2014......................................................................17
2.2.2. The share of natural gas in energy consumption by sector ............................21
2.3. Import dependency and Greek energy security........................................................23
2.3.1. Greek domestic energy production 2004-2014 ..............................................23
2.3.2. Greek energy import dependency 2004-2014 ................................................24
2.4. Key players in the Greek gas sector .........................................................................27
2.4.1. The role of DEFSA, DEPA, EPAs, and other energy companies ..................27
2.5. The Consortium of the Greek Gas Company ...........................................................30
2.6. Conclusion................................................................................................................33
Chapter Three: Security of supply.......................................................................................35
3.1. Introduction ..............................................................................................................35
3.2. Transit routes for Greece‘s gas imports....................................................................36
3.3. Ukraine, Romania, and Bulgaria as a transit route for gas imports from Russia......37
3.3.1. Supply disruptions via Ukraine in 2006 and 2009 .........................................38
3.4. The Southern Corridor and attempts by the Greek government to diversify the sources
and transit routes of Greece‘s gas imports.......................................................................43
3.4.1. South Stream ..................................................................................................43
3.4.2. TANAP...........................................................................................................45
3.4.3. TAP.................................................................................................................46
3.4.3.1. Greek Government perception ....................................................................48
3.4.3.2. About the Greek economy and entrepreneurship........................................48

2
3.4.3.3. Objections & Oppositions of other political and social parties...................49
3.5. A possible Greek participation in South Stream project ..........................................51
3.6. Conclusion................................................................................................................53
Chapter Four: The competitiveness of Greece‘s gas imports ..............................................56
4.1. Introduction ..............................................................................................................56
4.2. The price of Greece‘s wholesale gas imports in the context of European gas prices
2004-2014........................................................................................................................57
4.2.1. The price of pipeline gas imports ...................................................................57
4.2.2. The price of LNG imports..............................................................................60
4.2.3. Context of rising European oil-indexed gas prices 2004-2009, brief fall, and
then rising prices 2011-2014 ....................................................................................66
4.2.4. Context of European spot gas prices 2004-2014............................................69
4.2.5. Does Greece pay a reasonable price for its gas imports? ...............................76
4.3. The price of natural gas for consumers on the Greek gas market ............................76
4.4. The Greek economy 2004-2014 and the role of energy prices.................................81
4.5. Competitiveness of the Greek gas market................................................................84
4.6. Conclusion................................................................................................................86
Conclusion............................................................................................................................88
References ............................................................................................................................91

3
List of figures and tables
Fig.1. Energy efficiency Consumption by primary energy source, 2001-2011 ....................... 17
Fig.2. Final energy consumption by source, 2011............................................................................18
Fig.3. The final energy consumption per segment 2011(1a) and the gross energy consumption
per primary source of energy 2011(1b) ............................................................................................... 19
Fig.4. Energy Sector in Greece ..............................................................................................................19
Fig.5. Natural Gas Demand..................................................................................................................... 21
Fig.6. Natural Gas Consumption, by Sector....................................................................................... 21
Fig.7. Greek Oil imports, by supplier country................................................................................... 24
Fig.8. Contractual Quantities DEPA ....................................................................................................25
Fig.9. Natural Gas Supply by sector*, 1997 to 2009.......................................................................26
Fig.10. DEPA Group Structure ..............................................................................................................28
Fig.11. Greece Natural Gas pipelines...................................................................................................36
Fig.12. Gas import dependency in Central and South-Eastern Europe (2012) ........................ 37
Fig.13. Gas transit dependency in Central and South-Eastern Europe (2012)......................... 38
Fig.14. Supply cuts in Europe during the 2009 Russia-Ukraine dispute ...................................39
Fig.15. The evolution mixtures of natural gas in Greece, 2007-2010.........................................40
Fig.16. Natural Gas Imports, by Source .............................................................................................. 41
Fig.17. Projected Routes of Nord Stream, Nabucco and South Stream Pipelines .................. 42
Fig.18. Projected Routes of TANAP, Nabucco and TAP............................................................... 44
Fig.19. The Balkans–crossroads of gas pipelines–TAP..................................................................46
Fig.20. Index Price Imports of natural gas in Greece ......................................................................57
Fig.21. Natural Gas prices in Europe ...................................................................................................59
Fig.22. EU LNG Import Capacity.........................................................................................................61
Fig.23. LNG prices by country...............................................................................................................62
Fig.24. EBP and LNG prices in EU......................................................................................................62
Fig.25. Latest price snapshot .................................................................................................................. 63
Fig.26. Argus European des spot LNG................................................................................................ 63
Fig.27. Benchmark price snapshot........................................................................................................64
Fig.28. Natural gas import and spot prices in Europe .....................................................................67
Fig.29. OECD Europe gas supply, 2013 ............................................................................................. 68
Fig.30. Gas trading in EU and Continental hubs-OTC volumes.................................................. 69

4
Fig.31. Gas market size- Estimation of traded volumes on electronic platforms.................... 70
Fig.32. Traded volumes versus consumption on main European gas markets......................... 71
Fig.33. Wholesale gas price formation in EU.................................................................................... 71
Fig.34. OECD Europe consumption versus maximum supply..................................................... 72
Fig.35. Europe spot gas prices................................................................................................................73
Fig.36. Global Gas prices 2007-2011...................................................................................................74
Fig.37. The weighted average import price 2011- 2013.................................................................76
Fig.38. Electricity Production in the interconnected system, 2010 .............................................77
Fig.39. Natural gas prices in IEA member countries, 2010........................................................... 79
Fig.40. Natural gas prices in IEA member countries, 2010 (continued)....................................79
Fig.41. GDP growth 1950-1980, various countries..........................................................................80
Fig.42. GDP growth 1980-2000.............................................................................................................80
Fig.43. Real GDP growth 2001-2012...................................................................................................81
Fig.44. Greek debt compared to Eurozone average .........................................................................82
Fig.45. Greek government-debt crisis..................................................................................................82

5
Acknowledgements
This dissertation could not have been finished without the help and support from many
professors, research staff, graduate students, colleagues, friends and my family. It is my great
pleasure to acknowledge people who have guided, helped and encouraged me.
I would like to express my deepest gratitude to my advisor, Dr. Sharples Jack, for his
excellent guidance, caring, patience, and for providing me with an excellent atmosphere for
conducting the research. My research would be impossible without his help. I would also like
to thank all of my professors and especially Mr. Recordati Maurizio, Dr. Lomagin Nikita, Dr.
Vymyatnina Yulia for their constant guidance, personal attention, suggestions, endless
encouragement and full support during the academic year 2013-2014 of my postgraduate
study and research. Moreover, I would like to thank the Dean of International Programs Mrs.
Trofimova Maria and all the staff, who are working for international programs in the
European University for their confidence and help.
I would also like to thank all the ENERPO‘s colleagues, who like good friends were always
willing to help and give their best suggestions throughout my postgraduate studies.
Especially, I would like to thank Katherine Bennett, Koen Van Delft, Max Hoyt, Keri Hahn
and Lindsey Foster for their support and help during my thesis‘ writing.
I would also like to thank my parents, my brother, my grandparents and my friends, whose
support and constant encouragement helped me through the hard times of this program. My
deepest appreciation is expressed to them for their love, understanding, and inspiration.
Without their support, blessings and encouragement, I would not be able to finish this work.
Finally, through my life, work experience, studies, friendships and my family relations, I have
learned, not to be satisfied with the conventional ―want‖, but to fight, looking for the
―elusive‖ but desirable. My postgraduate studies and my successful graduation would have
been illusion without the support, confidence and help, first of myself and secondly of the
people mentioned above.

6
Abstract
The dependence of energy supplies and imports is a much highlighted issue, particularly
nowadays, as energy is a commodity which has entered very rapidly in our everyday life.
Thus, the issue of energy security has risen significantly; for example energy used as
―leverage‖ convergence of interests and alliances, or a source of controversy and conflict with
background global political, strategic and economic events curbed by strong superpowers-
countries of the international community. As result the supplier countries struggle for their
energy security of demand and the importer countries for their energy security of supply.
Greece is an importer country and thus we refer to asymmetrical dependency, shifting the
―balance of power‖ in favor of the other. A critical analysis of this argument requires
consideration of the political and energy relations between Greece and its suppliers in the last
ten years as, through that, we can see the level of the Greek dependency and how the Greek
energy policy has acted to bring prosperity, efficiency and sustainability to its market; aiming
at energy security of supply. Greece has a significant dependency of mainly Russian gas. In
conjunction Greece is an EU Member-State, therefore it is important to do an analysis of the
Greek energy policy in conjunction with the EU's energy policy and in the sphere of Greece's
diversification of gas supply and routes which aim to ensure its energy security.

7
Introduction
Greece, in order to cover its energy needs with respect to oil and gas, is relying almost
entirely on imports from third party countries-producers. The combination of high
dependency on fuel imports (65%) and their internationally-indicated prices describe the
pathogenesis of the country's energy system which leads to a negative impact on the external
balance and the general growth. This situation is particularly worrying in terms of energy
security of supply and competitiveness of the economy, as the country remains extremely
vulnerable to fluctuations in international prices of oil and gas while any geopolitical
development could easily disrupt the energy supply of the country.
The geographical position of Greece is particularly advantageous since its neighbours have
areas rich in both oil and natural gas. The main role is played by Russia, which holds a third
of the world's gas reserves and one tenth of oil. As Russia is the main gas supplier in Greece
and EU it is important to mention Greece's dependent relationships on Russian gas.
In conjunction with the EU-Russia relationship, which after the gas crises 2006-2009 and
recently because of unstable Russo-Ukrainian relations, caused the EU Member-States to
worry about their energy supply security; Greece, on the one side as a Member-State should
participate and espouse the relevant European provisions and legislation, on the other side it
must have a national target for the protection of its energy security of supply through
agreements and legislation of the Greek government. In the period 2004-2014, the turmoil of
the political and natural gas energy relationship between Russia and the EU, in addition with
the financial crisis in the EU but mainly in Greece, have revealed the importance of the role
and position of the Greek government. It is an important and critical period for the Greek
state as the Greek government has faced the country's economic downturn; causing a lack of
foreign investment, high -energy prices for the consumers in industry, household and
transportation sector. And the same time, it has to make significant agreements and take
decisions inextricably linked to the Greek and to the European energy policy; ensuring the
country's energy security of supply, mainly in natural gas. Thus, it is interesting to investigate
the energy security of an economically-vulnerable European country, in the context of EU
energy security and the role of Russia.

8
Energy security has many dimensions: long-term energy security mainly deals with timely
investments to supply energy in line with economic developments and sustainable
environmental needs. Short-term energy security focuses on the ability of the energy system
to react promptly to sudden changes within the supply-demand balance. Lack of energy
security is thus linked to the negative economic and social impacts of either physical
unavailability of energy, or prices that are not competitive or are overly volatile. In more
specific terms, it is the provision of affordable, reliable, diverse and ample supplies of oil, gas
and their future equivalents and adequate infrastructure to deliver those supplies to markets.
The question this paper seeks to answer is ―to what extent has the Greek government
succeeded in ensuring Greece's energy security in the sphere of natural gas since 2004‖.
Therefore it will be analysed, in particular, in terms of how the Greek government has acted
in the political and economic sector of the country with the aim of ensuring the country‘s
energy security of supply with gas at affordable prices and in an environmentally acceptable
manner. To be able to answer that question, initially, in the first chapter, the key concepts will
be given along with the definition of energy security according to global and Greek literature
review. In the second chapter, the energy sector will be analysed with emphasis on the role of
gas in the Greek economy and society. Additionally the role of the Greek Government and
the Greek company DEPA-DESFA in the gas sector will be analysed. In the third chapter, the
country‘s energy security of supply from 2004 until now will be referred to. This will be first
analysed -through the impacts of the supply disruptions via Ukraine and in Greece in the
years from 2006-2009; secondly through the Southern Corridor and by attempts from the
Greek government to diversify the sources and transit routes of Greece's gas imports
(TANAP-TAP-South Stream). Finally, in the fourth chapter, the competitiveness of Greek
natural gas imports will be addressed: the first part of chapter four will discuss the import
prices of gas and LNG; the second through the gas prices in the countries‘ wholesale and
retail markets; the third through the Greek economic process of 2004-2014 and the role of
energy prices on the market and the final part through the competitiveness of the Greek gas
market.

9
Chapter One: Literature review and key concepts
1.1. Defining energy security
Energy is a commodity that enters, directly or indirectly, into various sectors of modern
society. The absolute need for energy consumption in all social and economic sectors, along
with the strong interactions of international markets in today's globalized environment,
requires the development of an institutional framework for the adoption of a common energy
policy, under the implementation of its primary strategic objectives: First, security of supply
for energy coverage of all citizens and businesses; second, competitiveness for mitigating the
effects of the increasing prices of energy goods and third, sustainability with reasonable
power consumption through qualitative, rather than quantitative growth.
Through the Ukrainian-Russian disputes and the actions taken by Russia and its effect on
European countries, we can understand the way in which energy policy is determined and
constrained. Energy security is a multifaceted issue no longer restricted solely to the domains
of the viability of energy supply, price appreciation and preservation of the environment,
issues which are included in the ―energy policy‖ triangle (Percival, 2008:3).
The concept of Energy Security is defined by the IEA, as being ―adequate, affordable, and
reliable supplies of energy.‖ Energy efficiency, stock-holding, alternative fuels, substitution
options, diversification of supply sources, changing energy ―mixes‖ and spare capacity are all
important concepts in energy security thinking (Percival, 2008:3). Energy security includes:
security of supply and security of demand; reliability to meet the needs of the energy market,
with the most favorable conditions for the citizens; the need to create alliances and alternative
routes and smoothing mechanisms in times of energy crisis.
The energy-importing countries aim to secure their supply from the exporting countries and
the energy-exporting countries aim to secure their demand from importing countries. So there
are two forms of dependency; from one side the symmetrical dependency including the
impulse to improve relations between countries and the overall geopolitical climate; on the
other side, the asymmetrical dependency which shifts the ―balance of power‖ in favor of the
other. (Percival, 2008:5)

10
Also there is the interdependence. In this kind of relations coexists several concepts, such as
―resource nationalism‖, government bilateral agreements and energy as a political lever.
Specifically these elements are extremely evident by the EU-Russia energy relations and their
focus on the Ukrainian issue. As result, in the current global relations the countries are
embedded in energy-dominated relationships with a lot of problems.
1.2. Literature on energy security
In order to analyse the policy of Greece on the issue of security of supply in energy, reference
must be made to the previous literature on such an issue from a general perspective.
The literature on energy security suggests that different countries have developed different
strategies for securing their energy supply and its meaning varies from one country or one
context to another. Thus, universal definitions of energy security are less frequently attempted
than contextualized discussions of its various aspects or dimensions.
One of the most frequently quoted definitions is the ―availability of sufficient supplies at
affordable prices‖ suggested by Yergin (2006). It is preceded by the European Commission‘s
(2000) definition of energy security as the ―uninterrupted physical availability on the market
of energy products at a price which is affordable for all consumers.‖
The concept of energy security is defined in European-Commission Green paper of 29
November 2000 ―Towards a European strategy for the security of energy supply‖, as being:
―energy strategy is to ensure, for the well-being of citizens and for the proper functioning of
the economy, the uninterrupted physical availability of energy products on the market at an
affordable price for all consumers, whilst respecting environmental concerns and looking
towards sustainable development.‖
After a few years of this definition, the Commission (EC, 2010) defined energy security as
the ability to ensure that future essential energy needs can be met, both by means of adequate
domestic resources worked under economically acceptable conditions or maintained as
strategic reserves, and by calling upon accessible and stable external sources supplemented
where appropriate by strategic stocks.

11
Kalicki and Goldwyn (2005:9) define energy security as it is assurance of the ability to access
the energy resources required for the continued development of national power.
Barton Barry, Redgwell Catherine, Ronne Anita and Zillman N. Donald (2004:3) have
provided their definition of energy security as that of being ―the condition in which a nation
and all, or most, of its citizens and businesses have access to sufficient energy resources at
reasonable prices for the foreseeable future free from serious risks of major disruption of
service‖.
However, this definition of the energy security does not take into consideration the often-
large resident immigrant populations living in many nations-developing and developed
nations alike. Moreover, this human-focused definition fails to take into account the
environmental or sustainability aspects or even resilience concerns which are important issues
that need to be addressed when attempting to define the issue of the security of energy. It is
an undisputable fact that the access to resource is different from sustainable use. Furthermore,
it is a fact that access of the consumer to uninterrupted and affordable energy has become to
be an essential concept of the function of modern economies. Therefore, the definition of the
term appears to be viewed from a narrow angle, if in fact the long-term and sustainability
development conditions are not taken into consideration.
However, the uneven distribution of energy supplies among countries globally has led to
significant vulnerabilities. Opportunities for energy efficiency may exist over wide
geographical areas, for example by using renewable energies, instead of using conventional
energy sources, which are concentrated in a limited number of countries.
Therefore since there is no definition agreed on by all of energy security, it becomes
important to analyse the crucial aspects and characteristics constituting energy security. In
this respect, Martin William, Imai Ryukichi and Steeg Helga, have identified three facets of
energy security.
The first involves limiting vulnerability to disruption given the rising dependence on
imported oil from an unstable Middle East. The second concerns the provision of adequate
supply for rising demand at reasonable prices (energy efficiency) and the third, related to
environmental challenges, needs to operate within the constraints of sustainable development,

12
however uncertain and long term. Building on these facets, we can observe that these crucial
elements of access, supply, reliability and sustainability vary at different times and places.
Indeed, today energy needs balance with the management of complex infrastructures, a highly
increased market competition, a well-developed energy trade and environmental constraints.
Energy insecurity is defined by Bohi and Toman (1996), as ―the loss of economic welfare that
may occur as a result of a change in the price or availability of energy‖.
These definitions contain notions of ―availability,‖ ―sufficiency,‖ ―affordability,‖ ―welfare,‖
―energy products‖ (or ―supplies‖), and ―interruptions,‖ which are open to wide
interpretations. For example, Yergin (2006) discusses the different meaning of energy
security–within his given definition–for several different countries. This concept of variability
of the notion of energy security is also stressed by Mueller-Kraenner (2008), Kruyt et al.
(2009), and Chester (2010).
In its analysis of energy security, scholarly literature draws different boundaries for energy
systems and subsystems. These boundaries differ between how many and which fuels are
considered, as well as how far up and downstream boundaries are drawn within that system.
In terms of fuel-related boundaries, studies range from focusing on a specific fuel (generally
oil) (Kendell, 1998; Gupta, 2008; Greene, 2010); looking at all fossil fuels (Le Coq and
Paltseva, 2009); analysing the security of an electricity system (Stirling, 1994) or critical
energy infrastructure (Farrell et al., 2004) to evaluating the security of the whole primary
energy system (Neff, 1997 ; Jansen et al., 2004 ; Jansen and Seebregts, 2010). Within each of
these divisions, some studies focus only on the supply side while others integrate supply and
demand aspects and indicators.
Hence energy security is not a static concept. Primarily related to oil, it now implicates a wide
range of problems that imply different national, regional and international regulatory
responses. Indeed the IEA, originally concerned with oil security at its creation in 1974, now
deals with the three E‘s (energy efficiency, energy security and environmental protection)1
.
1
IEA, 2014. Shared Goals. [online] Available at:
<http://www.iea.org/aboutus/whatwedo/sharedgoals> [Accessed 5 August 2014].
See Ministerial Action on EIA Shared Goals, 4 June 1993, IEA/GB(93)41 and Annex ISee Ministerial Action on EIA Shared Goals, 4 June 1993, IEA/GB(93)41 and Annex I

13
With respect to the characteristics of energy systems that are associated with their security,
various studies propose and discuss different dimensions of energy security. The simplest
discussion uses two dimensions of energy security: the ―physical‖ and ―economic‖
dimensions (Kendell, 1998; Gupta, 2008). Another commonly used taxonomy is the
―availability‖ (i.e., physical availability of resources), ―accessibility‖ (geopolitical aspects
associated with accessing resources), ―affordability‖ (economic costs of energy), and
―acceptability‖ (social and often environmental stewardship aspects of energy) (Kruyt et al.,
2009). Other dimensional classifications include ―economic, environmental, social, foreign
policy, technical and security‖ (Alhajii, 2007) dimensions, as well as ―energy supply,
economic, technological, environmental, social-cultural, and military security‖ dimensions
from von Hippel et al. (2009) and others.
1.3. Literature on Greek energy policy
Considering that, Greece‘s energy needs are based mainly on imports we will analyze the
context of Energy Security in the prism of country‘s security of supply.
According to National Energy Planning Commission (2012:8) and Ministry of Environment
Energy and Climate Change2
the challenges for the national energy policy consist largely of
those of the European energy policy.
Thus, ―Priority and top goal of energy policy objectives is finding, securing and management
of energy resources, so as to ensure the safe, smooth, continuous and reliable energy needs of
the country, in all its territory, and the best conditions for its citizens.‖ The second objective
is to create energy reserves, alliances and alternative pathways to meet the needs of the
domestic energy market in times of energy crisis and consumer protection through application
of exogenous smoothing mechanisms, emergency destabilizing phenomena and trends. The
third objective is the sustainable development of the spectrum of the energy sector, in all its
forms, from production to end use through the prism of nature protection and environmental
conservation.
Also, according to the Deputy Minister Mr. Bouga John, the main axes on which the National
Energy Strategy is developed is energy security by diversifying energy sources and the
2
Ministry of Environment Energy and Climate Change, 2009-2014. Energy: Energy Policy. [online]
Available at: < http://www.ypeka.gr/Default.aspx?tabid=272 > [Accessed 5 August 2014].

14
parallel strengthening of the country's geo-strategic role in the region; the saving and rational
use of energy; and the environmental protection and sustainable development within and
international obligations of the country (ΔpistimonikoMarketing.gr, 2009).
Moreover, through the study of Eliamep (Hellenic Foundation for European & Foreign
Policy) and specifically of Proedrou Philipou (Lecturer in the Department of Political and
International Relations at City College, Thessaloniki, Greece) it can be concluded that:
Greece's participation in setting and adjusting the regulatory framework of the European gas
market aims to maintain the current rules favouring the central role of Gazprom as a supplier
of European, and Greek market. On a practical level, the Greek policy on energy security is
twofold. On the one hand, it alleges the perpetuating, quantitative and qualitative
improvement of the cooperation with the main supplier; and on the other had, it promotes the
policy of diversification of sources that will reduce dependence on Russian energy. The
energy security is not isolated from the wider geopolitical realities, but instead interacts with,
affects and is affected by security issues.
While the Greek policy on a regulatory and practical level is consistent with the country's
interests in the energy and security sector, is only one set of tactical moves. In other words,
these movements aim to create at a balanced import policy in order to avoid serious shortage
of raw materials. However, as such the import policy demonstrates the absence of a strategy,
Greece has natural resources that can contribute significantly to the energy mix, reducing the
need of imports from third countries producers (Proedrou, F., 2009:5).
By 2008, energy security of supply was sought mainly at European level but the recent
negative experiences indicate the need for forecasting and scheduling in a purely national
level and taking into account the international energy interconnections of the country (i.e.
natural gas and electricity).
Today there is a serious deficit, if not complete absence, of a national energy plan despite the
serious efforts made by PCA in 2006-2008 and most recently through the Ministry of
Environment Energy and Climate Change (YPEKA) (Stamboli, K.N., Xatzibasileiadi, I.,
Mazi, I., Theofilaktou, K., Sofianou, N. and Poinioti, A., 2013:25).

15
The occasional efforts of energy planning and strategy formulation without continuation had
prioritized the compliance with European objectives and expectations ignoring the Greek
reality, national needs and priorities. In spite of that, there is scope for coordination and
harmonization with EU‘s objectives, in parallel with the support and promotion of national
priorities. But without a basic national strategy and planning in the energy sector, in
contribution with EU‘s strategy, Greece can not make full use of domestic energy resources
and geopolitical opportunities that exist and will exist in the coming years in a wider
geographical area (Stamboli, K.N., Xatzibasileiadi, I., Mazi, I., Theofilaktou, K., Sofianou, N.
and Poinioti, A., 2013:25).
Finally, Dr. Antonis Metaxas (Lecturer in University of Athens, Guest Professor at the
International University of Greece), expressed the following estimate on the Greek energy
policy:
―The historical lack of a proper long-term plan for the Greek energy market
but also for a range inextricably affected by this individual policy sectors,
with a main subject, one could argue for that of the industrial development
of the country, tends to lead the state to the adoption of makeshift, short
sighted interventions and often of questionable effectiveness and
compatibility according the law. The lack of political courage and defined
plans for the effective confrontation of the electricity market with
competition, here is typical the continued existence of monopolistic
structures in essence into the domestic market for electricity and natural gas
produces inevitable consequence. We can also mention the apparent lack of
production plan of reconstruction: How can an economy in crisis recover if
there is no coherent policy and regulatory interventions appropriate to allow
the rationalization of the energy cost of the domestic industry even in
relation with the claiming intra-EU competition? This relates not only to the
obviously necessary punitive action for non-compliant, legal and regulatory,
pricing practices of quasi-monopolistic providers in the electricity and
natural gas, but also with further comprehensive interventions that will lead
to a rationalization of the energy cost of the Greek industry.‖
(Energypress.gr, 2014)
Having in mind the above, in the following chapters, we will proceed to analyse the Greek
energy policy of 2004-2014 which guides the energy security of supply.

16
Chapter Two: The Greek Energy Sector
2.1. Introduction
Natural gas is globally the fastest growing primary energy. It allows greater energy efficiency
than any other fuel in all production sectors and particularly in the electricity sector
(technology combined). Also, it incurs much less the environment than other fuels per-
derived energy (by 38% from coal, 28% from fuel oil and 24% diesel oil)3
. Additionally, it
provides greater flexibility, ease of use and general management from the other fuel in both
residential as to commercial and industrial applications.
Thus, natural gas is an innovative fuel for electricity generation in creation degree of close
interdependence of the two vital markets for electricity and natural gas. Still it is a necessary
reserve fuel, not only for the effective development of Renewable Energy Sources.
Furthermore, it is a fundamental element in the development of new major user sectors such
as automotive and future commercial production of innovative forms of energy, such as
hydrogen and liquid fuels. Finally, is the main marketing tool of the European target 20-20-20
and thus, of the Single European Energy Policy.
Greece was one of the last European countries to develop infrastructure import, transport and
consumption of natural gas due to geostrategic, economic and geopolitical events. Thus, the
introduction of natural gas in the energy balance of Greece launched with the establishment
of DEPA, 1988, as a development of the necessary infrastructure and all other aspects of the
gas industry.
The Greek energy market based mainly on domestic lignite production needed to meet the
needs of electricity and of oil and gas imports. Greece imports 100% gas to fill the need of
electricity and heating in both domestic and industrial sector of the country. In this way,
firstly, we will introduce the role of natural gas in Greece‘s energy sector and economy. Next
we will present the country‘s import dependency and Greek energy security. Moreover, we
will see the Greek gas sector and the role of the key players in the Greek gas sector in order to
3
Maximum efficiency of gas versus the comparable fuels, thus the percentages are larger in fact.

17
understand the coexistence of natural gas sector in the Greek economy and society and the
role of the Greek government.
2.2. The role of natural gas in Greece’s energy sector and economy
2.2.1. Primary energy mix 2004-2014
Greece is highly dependent on hydrocarbons4
, imported oil and natural gas (NG) as their
participation in the final energy consumption in the last decade (2001-2011) reaches an
average of 70% (Stamboli, et al., 2013: 3). Nevertheless, the use of oil in power generation is
expected to decline in the coming years due to the increasing penetration of NG in cities and
RES in island parts of the country especially with the completion of the planned electrical
interconnections.
In 2011 the share of oil was 62% reduced to some extent because of the crisis, while the NG
increased by 6%; while in the EU-27 figure for oil accounted for 40% (Stamboli, et al., 2013:
3). In terms of gross energy consumption oil and NG participate together with an equally high
rate of 63% for the year 2011. In Greece petroleum products cover energy needs by 98% in
transport by 47% in the residential sector, 31% in industry (from 39% 2010) and by 12% in
trade (Stamboli, et al., 2013: 3).
Natural gas, also imported 100%, is the rising fuel throughout that due to the "pure" form
(burning releases 50% less CO2 from coal) gradually replacing oil central heating of
buildings and domestic lignite electricity. The introduction of NG into the energy system of
the country began only in 1996 and in 2011 accounted for 14% of gross energy consumption
(Stamboli, et al., 2013: 5). The penetration of NG in the energy balance of the country is at an
accelerating rate because of the lower cost in most applications compared with oil and its
environmental assets. It is characteristic that in times of economic crisis, consumption of NG
increased from 3.0 bcm in 2008 to 4.5 bcm in 2011, i.e. an increase of 50% (Stamboli, et al.,
2013: 5).
4
due to increased use of oil in transport, but also the role they play as the primary fuel in power
system in the non-interconnected islands (e.g. Rhodes, Crete, Kos, Chios, Limnos, Mytilini Cyclades)

18
Table 1 shows the energy consumption by primary energy source for the period 2001-2011,
while the oil balance summarized in Table 2 below, which shows the consumption and
production of oil and products, imports and exports, gross and final consumption of
petroleum products.
Fig.1. Energy efficiency Consumption by primary energy source, 2001-2011
Source: Stamboli, et al., 2013: 4
NG
NG
Solid fuels
& Mineral
oils
Solid fuels
& Mineral
oils
Electricity
Electricity
RES
RES

19
Fig.2. Final energy consumption by source, 2011
The energy mix of the country depends on oil, natural gas, solid fuels (coal) and Renewable
Energy, i.e. hydro, wind, solar, biomass and geothermal (Figure 1(b)). In both the final and
the gross energy consumption 100% imported sources (crude oil products and natural gas)
dominate the energy mix to 68% and 63% respectively (Stamboli, et al., 2013: 3). The
domestic production of lignite, which is converted entirely into electricity, covers 24% of
final energy consumption while also imported coal (1.0%) covers basic needs of the industry
(Stamboli, et al., 2013: 3). So we see that almost 70% of the energy mix of the country
depends on imported fuels.
Solid Fuels Mineral Oils Natural Gas Electricity RES Heat

20
Fig.3. The final energy consumption per segment 2011(1a) and the gross energy consumption
per primary source of energy 2011(1b)
Fig.4. Energy Sector in Greece
Source: IEA Key World Energy Statistics: 2013, 2012, 2011, 2010, 2009, 2006 IEA October, crude
oil p.11, coal p. 13 gas p. 15
Household
Sector
Transport
Industry
Tertiary
Mineral Oils
Solid Fuels
Natural
Gas
RES
Electricity

21
2.2.2. The share of natural gas in energy consumption by sector (electricity generation,
industrial energy consumption, residential energy consumption, transportation)
In 1981, the indigenous production of natural gas started. The annual demand grew very fast,
at an average rate of 9.4% per annum between 2002 and 2008 (IEA-Greece, 2010). In 2008,
the demand for natural gas steadily increased and stood at 11.5 mcm/d (IEA-Greece, 2010).
Also, the transformation (electricity generation) represented roughly 70% of total gas
consumption (IEA-Greece, 2010). ―The sharp increase of gas demand, especially since the
mid-1990s, was primarily driven by growth in the demand for electricity and the subsequent
construction of new, gas-fired power stations‖ (IEA-Greece, 2010). Reflecting the economic
downturn, however, gas demand fell sharply by 15% from 2008 to 2009, reaching 3.1 bcm
(IEA-Greece, 2010).
However, in 2009, Greece‘s gas demand fell to 9.7 mcm/d, which was a 16% decline from
the previous year‘s level, while the daily peak demand was 16.3 mcm/d and 11.4 mcm/d in
the summer of 2009 (IEA-Greece, 2010). In 2009, electricity generation consumed 64% of all
gas, industry 22%, households 9% and services and transport 5% (see the follow Figure).
Natural gas demand is forecast to reach 16.2 mcm/d in 2015 and 19.6 mcm/d in 2020, which
will be a 68% and 102% increase over the 2009 figure, respectively (IEA-Greece, 2010). The
ratio of demand for electricity generation in total demand is projected to remain dominant at
around 65% in 2015 and 68 % in 2020, respectively (IEA-Greece, 2010). Greece‘s domestic
production of natural gas is negligible, the South Kavala gas field, located in the Kavala Gulf
of the Aegean Sea, produced merely 9 mcm in 2009 (0.02 mcm/d) (IEA-Greece, 2010).

22
Fig.5. Natural Gas Demand
Source: IEA-Greece, 2010
Fig.6. Natural Gas Consumption, by Sector
Source: IEA-Greece, 2010:13

23
2.3. Import dependency and Greek energy security
2.3.1. Greek domestic energy production 2004-2014
Energy production in Greece is dominated by the state owned Public Power Corporation
(PPC or DEI). In 2009 DEI supplied for 85.6% of all energy demand in Greece, while the
number fell to 77.3% in 2010 (Public Power Corporation S.A., 2010: 7). Almost half (48%)
of DEI's power output is generated using lignite, a drop from the 51.6 % in 2009 (Public
Power Corporation S.A., 2010: 8). The indigenous lignite remains the main fuel electricity,
engaging in gross energy consumption by 28%. Another 12% comes from hydroelectric
power plants and another 20% from natural gas5
. Between 2009 and 2010, independent
companies' energy production increased by 56%, from 2,709 GWh in 2009 to 4,232 GWh in
2010 (Public Power Corporation S.A., 2010: 7).
Greece has the largest reserves of lignite in Europe and further utilization required for reasons
of energy security and employment but because of quite stringent environmental conditions
laid down by the EU, the production costs from here on will grow. The large-scale
exploitation of lignite in Greece offers the country a significant competitive advantage in the
energy and technological level but must be done with the latest and most efficient
technologies.
In 2012, Renewable Energy Sources (RES) accounted for 13.8% of the country's total energy
consumption, a rise from 10.9% in 2011, a figure almost equal to the EU average of 14.1% in
2012.6
The RES are already contributing to increasing rates by 8.0% (2011) in gross energy
consumption (3.0% in the large hydropower PPC and 5.0% from other renewables). With the
exception of large hydro, the electricity generation from other RES subsidized through Feed
in Tariffs (FIT's) under the energy environmental policy of the EU, which has set a target
penetration of RES into the European energy balance to 20% by 2020. Due to the generous
grant of producer price growth of RES, particularly solar, has been rapid in the last three
5
Invest in Greece Agency, 2008. Energy. [online] Available at:<
http://www.investingreece.gov.gr/default.asp?pid=38&la=1> [Accessed 15 July 2014]
6
Eurostat, 2008. Share of renewable energy in gross final energy consumption %. [online] Available
at:
<http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tsdcc110&plu
gin=0> [Accessed 20 July 2014]

24
years (during the economic crisis) while, the potential for further penetration of RES in total
energy balance remains positive, despite the reduction in FIT's, from now on.
In 2013, according to the independent power transmission operator (ΑΓΜΖΔ), Greece
produced more than 20% of its electricity from RES and hydroelectric power plants. This
percentage in April reached 42%. Greece currently doesn‘t have any nuclear power plants in
operation; however in 2009 the Academy of Athens suggested that research in the possibility
of Greek nuclear power plants begin.
Greece has 10 mil. barrels of proven oil reserves as of 1 January 2012.7
Hellenic Petroleum is
the country's largest oil company (70%), followed by Motor Oil Hellas (30%). The Greek
government owns 35.5% of the capital of the Hellenic Petroleum and there is no government
control in Motor Oil Hellas. Greece's oil production stands at 7,946 bbl/d, ranked 90th, while
it exports 181,600 bbl/d (57th) and imports 496,600 bbl/d (25th)8
.
The country has four major refineries that have a refining capacity of 490,000 b/d, an amount
sufficient to cover the needs of Greece in oil, but also exported to third countries.
In Greece, exports of petroleum products increased by 57 %, 102 kb/d in 2004 to 160 kb/d in
2009. Thus Greece exported in 2009, exclusively to FYR of Macedonia 20 kb/d of crude oil.
Greece is also a net exporter of gasoline.
2.3.2. Greek energy import dependency 2004-2014
As we saw above, dominant energy source in the country is oil, which is 55% of the energy
balance and along with gas, it reaches 70%. In the Bay of Kavalla, there is a rudimentary oil
production (0.35 mb/y). For this reason, Greece imports nearly all the necessary quantities of
oil (410,000 bpd) and gas (4,2 bcm). In 2009, Greece introduced 554 kb/d of oil, which
consisted of 358 kb/d of crude oil, 53 kb/d NGL and raw materials, and 143 kb/d of refined
products.
7
CIA, 2014. The World Factbook – Greece. [online] Available at:
<https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html> [Accessed 15 July 2014]
8
CIA, 2014. The World Factbook – Greece. [online] Available at:
<https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html> [Accessed 15 July 2014]

25
Fig.7. Greek Oil imports, by supplier country
Table created by author, take the sources: ELPE and Protothema.gr, 2013
As we can see on the above table, for Greek oil imports significant sources are OPEC
countries such as Iran, Libya and Saudi Arabia, and the former Soviet Union (USSR).
After the cessation of petroleum trade with Iran, then the EU ban, the Hellenic Petroleum
Company9
, now obtain from Russia, proportionally vast majority of crude oil, which is
treated to produce fuel.
Specifically, in 2012, Greece imported 43.7% of crude oil from Russia, compared with the
corresponding rate 32% in 2011. From Libya 17.5% compared to 8.6% in 2011, Kazakhstan
14.4 % compared to 9.1% in 2011 and Saudi Arabia with 6.1% versus 6.1% also in 2011.
The remaining quantities of crude oil (9.1 % in 2012) came mainly from purchases of
individual loads (5.9% in Egypt and 6.9 % of the free market in 2011).
Moreover, in 2009, the bulk of imports of refined products, originated mainly by OECD
Europe, about 40%, and approximately 16% from Russia.
Greece began to import natural gas in 1997 and DEPA is the main supplier-importer of
natural gas pipelines and liquefied natural gas (LNG). Imports of natural gas, representing
9
The cessation of Iranian oil supplies from April 2012, due to the ban which imposed by the
European Union, meant for ELPE reorientation of their commercial policy burden on economic
outcomes, and increase the cost of supply, contributing in reduce of profitability.

26
approximately 100% of the total volume of natural gas consumed in Greece, while she
doesn‘t export gas.
For the Greek market-DEPA, Gazprom is the main supplier of natural gas with 60% of total
gas supplies. From an intergovernmental agreement in 1987 between ―Soyuzgazexport‖ (now
―Gazprom export‖) and the company DEPA, they entered into gas contracts to supply from
1996-2016. Thus, the majority of the imports originate from Russia and through the Greek-
Turkish natural gas pipeline, which was completed and opened in November 2007. Moreover,
29% of the gas is LNG from Algeria10
.
Fig.8. Contractual Quantities DEPA
Source Company Maximum Quantity
(bil Nm3
/ year)
Contract duration
until
Russia Gazprom 2.80 2016
algeria Sonatrach (LNG) 0.7 2021
Turkey BOTAS 0.7 2021
Total Annual Contracted Quantities 4.2
Source: DEPA
10
DEPA S.A., 2014. Natural Gas supply. [online] Available at:
<http://www.depa.gr/content/article/002003006/160.html> [Accessed 15 May 2014].

27
Fig.9. Natural Gas Supply by sector*, 1997 to 2009
Source: IEA, 2011: 70
2.4. Key players in the Greek gas sector
2.4.1. The role of DEFSA, DEPA, EPAs, and other energy companies
DEPA was founded in 1988 with the mission to introduce natural gas to Greece. DEPA is the
main supplier-importer of natural gas pipelines and liquefied natural gas (LNG) in Greece.
―The April 2010 reforms enabled new suppliers to enter the Greek natural gas market. As of
June 2011, 15 companies were registered as users of the national natural gas system: two
companies were registered as a natural gas suppliers (DEPA and M&M Gas which is owned
by Motor Oil Hellas and the Mytilineos Group); nine companies were registered as eligible
customers (including PPC and Aluminium S.A.); and four companies registered as third
parties (Edison, E.ON Ruhrgas, Prometheus and Statoil)‖ (IEA, 2011). ―The first delivery
of natural gas by suppliers other than DEPA took place in May 2010; they supplied 19% of
natural gas to Greece since the reforms until the end of 2010‖ (IEA, 2011). In practice, the
gas sector still remains dominated by DEPA and its subsidiaries.
Delegated Law 3428/2005, by Presidential Decrees No. 33 and 34 of 2007 (Government
Gazette 31/20.02.2007) established the Administrator of the National Natural Gas System

28
(ESFA) under the name ―National Transmission System Gas SA‖ (DESFA) and established
procedures for personnel transport by DEPA SA Manager.
The Greek law 3428/2005 (Government Gazette 313/27.12.2005) on liberalization of Natural
Gas market provided provisions for the creation of the wholesale market in the future, as there
was no such market yet. The Law transposed into the Greek legislation the Directive
2003/55/EC (European-Commission 2003) ―concerning common rules for the internal market
in natural gas‖ and the Directive 2004/67/EC (European-Commission 2004) ―concerning
measures to safeguard security of natural gas supply‖. On 30th
of March 2007, under this
legislative framework on the liberalization of the gas market the law established the National
Natural Gas System Operator (DESFA) S.A. and at the same time established a 100%
subsidiary company DEPA S.A. It was responsible for the expansion of urban networks and
the distribution of natural gas in domestic demand and consumers of industry, with annual
consumption less than 9.3 mcm/y11
. Thus, the National Natural Gas System (NNGS) was
transferred to DESFA, which includes the National Natural Gas Transmission System and the
LNG terminal station at Revithousa Island. So DESFA, as owner is granted full and exclusive
right to operate, manage, exploit and develop the NNGS.
DEPA and DESFA have been a single public company until now, but they have been tendered
out in the consortium separately. The entity is 65% Greek state owned, while the remaining
35% is held by Hellenic Petroleum Company (ELPE) (IEA-Greece, 2011). DEPA is engaged
in wholesale and supply of natural gas to major customers. Through its subsidiary DESFA
own the national gas transportation network and regasification terminals. In addition, DEPA
owns 51% of-the shares in the three local distribution companies (EPAs): Attica (Athens),
Thessaloniki and Thessaly- the companies on the retail sale and deliveries of natural gas to
small and medium businesses and private customers in Greece while private investors hold
the remaining 49% (DEPA)12
.
―The minority shareholder in EPA Thessaloniki and EPA Thessalia is ENI, while the
minority shareholders of EPA Attiki are Royal Dutch/Shell (25% of shares) and the
Agricultural Bank of Greece (24%)‖ (IEA Review, 2011). ―By law, DEPA may not sell its
11
DESFA S.A., 2014. Company‘s history. [online] Available at:
<http://www.desfa.gr/default.asp?pid=155&la=1> [Accessed 10 May 2014].
12
DEPA S.A., 2014. Gas Distribution Companies (EPA‘s). [online] Available at:
<http://www.depa.gr/content/article/002001004002/60.html> [Accessed 15 May 2014].

29
majority share in EPAs. EPAs receive natural gas from DEPA and supply it to customers in
their concession area. In line with EU Directive 2003/55/EC, EPAs have been granted a30-
year derogation from Third-party access in their concession areas‖ (IEA Review, 2011).
―Future distribution companies may derogate from TPA for 10 years (extendable to 20 years
subject to the European Commission‘s approval). Only DEPA is authorized to form new
EPAs. Recently, it established three more EPAs in 2011, in the regions of Sterea Ellada,
Central Macedonia, and Eastern Macedonia and Thrace, through partial private investments
and an international tender‖ (IEA Review, 2011).
Fig.10. DEPA Group Structure
Source: IEA, 2011: 73
So DEPA, through DESFA, holds the existing natural gas infrastructure consisting of the
main high pressure pipeline and the exclusive right to import and supply of natural gas in
Greece. In addition, it is the sole owner and manager of the National Network Trans System
Operator (TSO) in Greece, LNG System Operator (LSO), as well as the local Distribution
System Operator (DSO).

30
2.5. The Consortium of the Greek Gas Company
Within the many privatizations, which take part in Greece in order to meet its obligations
towards its creditors, are the privatization of DEPA and DESFA. Through these efforts the
Greek government seeks to benefit €1.2 bill.
Law 4001/2011 that entered into force in August 2011, transported the Third Energy Package
into the national legislation and provided for ownership unbundling of DESFA S.A. from
DEPA S.A. However, the above law was subsequently amended in December 2011, by a
Governmental Legislative Act, to allow for either model, Ownership Unbundling or ITO, to
be followed in this case (according to investors‘ interests in acquiring one or both of the
above companies). Finally, December 2012, DESFA S.A. submitted an application to
Regulatory Authority of Energy (RAE) to be certified as an Independent Transmission
Operator.
Initially, in March 2013, Russia was in an advantageous position as the only candidate for the
purchase of Greek company DEPA. Thus, Gazprom was seeking more favourable conditions
for participation in the privatization process and asked to obtain guarantees for the solution of
the current debt (380 mil. to the company) from its Greek consumers and customers. Also,
they did not want to pay the guarantee of participation of 20% of the total transaction amount
(as there was the possibility due to the opposition of the EU and to the antitrust Regulatory
requirements of the EU to block the agreement and withheld the guarantee fund of the
transaction) (EurActiv.com).
The Greek government on the other hand, to resolve the disputes, reduced the guarantee fee
for Gazprom from 20% to 10% and promised via the Hellenic Republic Assets Development
Fund (HRADF) to compensate the Greek consumers of DEPA in the event that the debt has
not been settled. Thus, Gazprom offered to pay for the company €900 mil. to register as
bidder of DEPA (EurActiv.com). Another candidate was the company M&M Gas (a
consortium of Greek enterprises Mitilineos Oil and Motor). However, the possibilities to win
the competition were small, since that company offered to pay only €550 mil.
(EurActiv.com).

31
Finally, Gazprom didn‘t apply for participation in the privatization of DEPA, reporting that
there weren‘t sufficient guarantees for any deterioration in the already difficult economic
situation of the Greek company until the end of transaction. As response, the Hellenic Fund
for the privatization (HRADF) claimed to have obtained all the necessary guarantees and to
be committed to compensation for the deficient account of Greek consumers in the amount of
€180 mil. until the end of 2015 (EurActiv.com).
Therefore the reasons for the withdrawal need to be found outside of Greece. The European-
Commission and U.S. were strongly against the Russia–Greece transaction. Obviously,
Gazprom has received some warnings that this acquisition could then be annulled in the
context of European energy market of the EU and competition law. Since the Russian
company is already in legal battle with EU in the Court of Hague (monopolistic strategy, non-
uniform tariffs per country (but tailored to the degree of dependence of), as well as a number
of other complaint).
Moreover, the Greek media reported that the reason for non-participation of Gazprom in the
consortium of DEPA was based on unresolved differences of the future price of gas for Greek
consumers (as the RU gas is costing Greece about 30% more expensive than the average in
the European-Union and the Greek Government claimed price reduction through the
acquisition of DEPA).
So, the consortium failed when Gazprom refused to submit binding offer. Instead of that,
―Sintez‖ (by Leonid Lebedev) suddenly offered for DEPA and DESFA as a package, a
maximum amount of €1.8 bill ($2.36 bill). This amount exceeded by far its own capital of its
capitalization Sintez, so would be required to cooperate in any way with Gazprom, as well as
the company itself had hinted at.
Simultaneously, there were also other candidates such as the State Oil Company of
Azerbaijan (SOCAR). It made an offer of €400 mil.($525 mil.), having the ability to acquire
31% of DESFA's stakes from the Greek state and the total package of 35% of the Hellenic
Petroleum company, leaving 34% of DESFA's stakes in the ownership of the state
(EuroActiv.com).
The Greek government, which was besieged eagerly from Gazprom to acquire DEPA,
rejected a package deal on the DEPA and DESFA with Sintez. The Fund Asset Development

32
Board unanimously expressed their satisfaction with the terms of the SOCAR's offer.
However, it has been updated twice about continuing interest Sintez in a package deal; on
June 21st
it was announced that the SOCAR has won the bid to acquire control of (Public Gas
System) Greek DESFA. SOCAR was the ultimate winner, as the Russian company Sintez had
not submitted a binding offer in the final round. Thus, SOCAR as sole bidder submitted a
final binding offer to DESFA by default (as the only remaining opponent) against 17-plus
companies from 12 countries took part in the competition. Thus, on 11 June 2013, the
SOCAR won the tender for the acquisition of 66 % of DESFA against the offer of €400 mil.
(Tsibanoulis&Partners Law Firm, 2013).
For Azerbaijan, this has been a decisive incentive to choose the Trans-Adriatic Pipeline
(TAP) gas route through Greece to Italy, with regard to the preference of Nabucco-West route
to Central Europe, on 28th
of June 2013.
From Azerbaijan‘s perspective, the control of DESFA means for the first time it had an
entrance into gas transportation and in distribution companies in the territory of the EU.
SOCAR holds dominant market share in Georgia and significant market share in Turkey, it
would seek to turn Turkey into a major transit country for natural gas of Azerbaijan through
the project Trans-Anatolia Gas Pipeline (TANAP). According to the President of SOCAR,
Rovnag Abdullayev, the company currently holds 17% market share in Greece, but it cannot
control the retail consumers directly yet. Finally, by DESFA, Azerbaijan allocated natural gas
to retail gas market in Greece and beyond.
The European institutions have legislated for the sake of efficiency in favour of the separate
purchase of energy companies and public infrastructure companies. This underlines the ban
of the foreign company, the country's main supplier of gas, to own the country's transmission
system. There is a possibility to become a dominant player in the market, with the restriction
of competition and transparency as to the cross-subsidization of activities.
It‘s not the same for Azerbaijan, as with this purchase, SOCAR owns 66% of the unique
Greek gas company including and the grids of Greek pipelines. In additional, TAP becomes
the most important EU supplier and maybe the main supplier of Greece, in future.
Recently, after a year, the EU Commission, instead of its support during the consortium of
DEPA-DESFA, express objections about this agreement (referred to third energy packet) and
the DG Energy requested that SOCAR divest its stake in the Greek company from 66% to

33
49% thereby losing full control (Natural gas Europe, 2014). So, the agreement has frozen in
front of the EU‘s political and economic turmoil and the negotiations will continue.
2.6. Conclusion
Greece has a gas import dependency of 100% and in 2011 accounted for 14% of gross energy
consumption (Stamboli, et al., 2013: 5). In 2009, electricity generation consumed 64% of all
gas, industry 22%, households 9% and services and transport 5%. Natural gas is the rising
fuel throughout that due to the ―pure‖ form gradually replaces oil central heating of buildings
and domestic lignite electricity. In conjunction with that, the penetration of NG in the energy
balance of the country is at an accelerating rate because of the lower cost in most applications
compared with oil and its environmental assets; and bearing in mind that the natural gas
demand is forecast to reach 16.2 mcm/d in 2015 and 19.6 mcm/d in 2020, which will be a
68% and 102% increase over the 2009 figure, respectively (IEA-Greece, 2010). Also, the
ratio of demand for electricity generation in total demand is projected to remain dominant at
around 65% in 2015 and 68% in 2020 (IEA-Greece, 2010), while the production costs of
lignite from here on will grow. Lignite will be more costly and less efficient; therefore we can
understand the significant importance of natural gas in the energy sector of the country. In the
possible reduction of lignite and oil, Greece will significantly increase its gas imports, so in
this point it‘s important to do an analysis of the security of country's gas supplies.
Compared with most countries of the EU, and many other countries outside the EU, the Greek
energy balance lags both in terms of an enlarged and balanced composition of the energy mix,
since it is dominated by a fuel, and the high degree of energy dependence (65%) and the
limited geographical diversification of imported Natural gas (70% of the fuel imported from
Russia). The unilateral direction to today's energy balance with effortless and thoughtless
exclusion of essential forms of fuel such as e.g. coal, domestically produced hydrocarbons,
nuclear energy, has deprived the creation of a balanced energy mix, which is a prerequisite
for the creation of conditions of energy security.
In conclude, as we saw through this chapter, in Greece, DEPA-DESFA is the main gas import
company and until recently is 65% Greek state owned, while the remaining 35% is held by
Hellenic Petroleum Company (ELPE) (IEA-Greece, 2011). With its turn, the gas company

34
owns the three EPA (51%), which control the retail prices for the consumers. So, we can see
the immediate link between the Greek Government-DESFA/DEPA-EPA and thus, the
significant important role of the government in gas sector. In contribution to that, natural gas
plays an important role in the energy mix of the country and its consumption grows
significantly, requiring immediate attention and investigation of the Greek Government
according to be an efficient environmentally and economically fuel for the country and its
consumers. Finally, the Greek government has to balance the energy mix of the country
according to bring better and safer conditions on the price system and on the issue of Greek
energy security.

35
Chapter Three: Security of supply
3.1. Introduction
For many years, 83,4% of European gas imports were coming from only three countries,
Russia, Algeria and Norway, while mainly transported through a pipeline controlled by two
or three key countries (Institute of International Relations, 2013: 20).
The EU, foreseeing both the ever increasing energy needs, particularly in the gas sector, and
the relationship of dependence with Russia, considers ―independence‖ from Russian control
in the Caspian region. Therefore, for the better protection against the economic and
geopolitical uncertainty, which creates the above monopolist situation, the EU countries seeks
mainly the last two decades as a possible diversification of both suppliers and transit of
natural gas to their territories. In other words, the EU is looking for new energy routes and
resources outside the Caspian region, both because of their geographical proximity and
because natural gas production.
Soviet design and inspiration transferred the majority of the gas in both Russia and the
countries of Central Asia to the European territory. Especially after the 2006 and 2009 crises
between Russia and Ukraine over gas prices, problems and supply interruptions experienced
by many European countries made Europe understand with greater clarity and urgency of the
risk of double monopoly control over imports, namely that on the supply and on this transit.
Since then, the policy of diversification in the energy sector is one of the most important
objectives of the EU, the main objective being independent of Russian control access to rich
reserves of natural gas in Central Asia and the Caspian Sea.
As a European Member-State, Greece and its energy policy is linked immediately with EU‘s
energy policy aiming natural gas diversification and energy security. Greece began to import
natural gas in 1997.The gas market in Greece is as an immature market which is still largely
controlled by the national government. The gas market has gradually opened to competition
since 2005.
In this chapter, we will analyse the Greek energy security of supply aiming to understand how
reliable and stable it is, so far. So, firstly we will see the transit routes for Greece‘s gas

36
imports, emphasized on the transit route for gas imports from Russia via Ukraine. And,
secondly we will analyse the Southern Corridor and attempts by the Greek government to
diversify the sources and transit routes of Greece‘s gas imports, according to understand the
process of the Greek energy security.
3.2. Transit routes for Greece’s gas imports
There are three entry points for the natural gas transportation system of Greece and the Greek
Public Gas Corporation-DEPA, is the only company which has signed three long-term import
contracts.
The first entry point (with a maximum import capacity of 5.8 bcm/year but cannot excide) is
at Promahonas, located on the Greek-Bulgarian border, via which imports 2.8 bcm of natural
gas from Russia, under the contract with Gazexport. It is imported by a pipeline through
Ukraine, Moldavia, Romania and Bulgaria to the Greek market, annually until 2016 (recently,
they have expanded their contract up to 2016 for another 10 years, of about 2 bcm) (IEA,
2010).
The second entry point (maximum capacity 6.7 bcm/y) is at Kipoi on the Greek-Turkish
border and under the contract with Turkish BOTAS imports of about 0.7 bcm annually until
2021. This point connects the Greek national natural gas transmission system with the
corresponding Turkish transmission system and enables 1bcm of gas imports from the Middle
East and the Caspian region (IEA, 2010).
The third entry point is the LNG terminal located on the island of Revithoussa in the Gulf of
Pachi and under the contract with Sonatrach (Algeria) imports of about 0.7 bcm LNG
annually until 2021. Also, it has a technical capacity of 4.55 bcm, which brings Greece‘s total
technical import capacity to 9.15 bcm per year, (IEA, 2010).

37
Fig.11. Greece Natural Gas pipelines
Source: DESFA
3.3. Ukraine, Romania, and Bulgaria as a transit route for gas imports from Russia
Being located in a strategic location for the delivery of Russian, Caspian, and Middle Eastern
gas supplies to Europe; and according to diversify its supplies and routes aiming country‘s
energy security; Greece is involved in international gas pipeline projects, such as the Greek
branch of South Stream, Interconnector Greece-Bulgaria (IGB) and Trans Adriatic Pipeline
(TAP), as Interconnector Turkey-Greece-Italy (ITGI), recently effectively losing the Southern
Corridor pipeline race to the rival Trans Adriatic Pipeline (TAP) project.

38
3.3.1. Supply disruptions via Ukraine in 2006 and 2009
Russia was the largest single supplier to the EU in 2012, providing 36.5% of EU gas imports13
(Sharples and Judge, 2014). This gave Russian gas a share of 24.2% of total EU gas
consumption. According to recent reports Russia‘s share of European gas consumption
reached 30% in 201314
(Sharples and Judge, 2014).
The dependence on Russian gas imports is highly differentiated by region and between EU
member states. The average level of gas import dependency (79.1%) and the average share of
Russian gas in consumption (53.5%) for Central and South-Eastern Europe are both
significantly higher than the EU averages (see Table 1). Therefore, these states are more
vulnerable to disruptions in Russian gas deliveries to Europe.
Fig.12. Gas import dependency in Central and South-Eastern Europe (2012)
Source: Sharples and Judge, 2014
13
EU-28 gas import dependence at 65.8% of consumption in 2012.
14
It includes Turkey (where Russian gas accounts for more than half of total gas consumption), the
figure for the EU-28 is likely to be slightly lower than 30 %.

39
Fig.13. Gas transit dependency in Central and South-Eastern Europe (2012)
There are highly differentiated impacts in the suspension of gas transit via Ukraine on
different European states. In Greece particularly, it had an effect of 80% gas cut and as result,
booked more LNG supplies and switched gas power plant to oil (see Table 4).

40
Fig.14. Supply cuts in Europe during the 2009 Russia-Ukraine dispute
In March 2013, 208.7 mcm/day of Russian gas flowed via Ukraine, out of total Russian gas
exports to (non-Baltic) Europe of 383.1 mcm/day (Sharples and Judge, 2014). Therefore,
transit via Ukraine accounted for 54.5% of Russia‘s gas exports to (non-Baltic) Europe this
time last year (Sharples and Judge, 2014). There existed 89.5 mcm/day of spare capacity on
the non-Ukrainian routes, leaving 119.2 mcm/day (equivalent to 43.5 bcm per year) that
would be non-deliverable in the case of a shutdown of Ukrainian transit (Sharples and Judge,
2014). While figures for March 2014 will differ somewhat, this gives a clear indication that a
supply shortfall due to disruption on the Ukraine route couldn‘t be entirely compensated for
through alternative transit routes for Russian gas.
Greece covers 50%-60% of its market‘s natural gas needs from Russia through the Greek-
Bulgarian pipeline, which is supplied by the network, that passing through Ukraine, Romania
and Bulgaria. This means that of the 11 to 12 mcm/d, consumed in Greece, (note: in days with
low temperature as today) more than 5.5 mcm depends on a smooth flow through Ukraine

41
(Floudopoulos, 2014). From the LNG station in Revithoussa can meet the needs of full
consumption for a period of six to seven days.
The sources of natural gas in the Greek market during the years 2007-2010 differed. In 2009,
Greece had 3.6 bcm (9.7mcm/d) of total natural gas imports, roughly three-quarters of which
were supplied by pipeline and the remaining portion was imported in the form of LNG (IEA-
Greece, 2010). However, the share of Russian gas in total gas imports has gradually declined
from 85% in 2005 to 57% in 2009, due to the increase of imports from Algeria and Turkey
(Azeri gas). Natural gas supplied from Algeria and Turkey accounted for around 22% and
20% of the total gas imports in 2009 (IEA-Greece, 2010). The imports were implemented
with short-term supply agreements, both from DEPA and other users‘ ESFA.
Fig.15. The evolution mixtures of natural gas in Greece, 2007-2010
Source: RAE
Although Greece has no underground gas storage facilities, in March 2013 the country had
11.4 mcm/d of spare LNG import capacity, compared to its gas imports via Ukraine of 6.56
mcm/d. So, Greece has the option of utilizing their spare LNG import capacity.
The country‘s only gas storage facility is located at the LNG terminal on the island of
Revithoussa. The combined storage capacity of the two LNG tanks in Revithoussa is 130000
Russia LNG Turkey

42
bcm of LNG, which is equivalent to 80 mcm of natural gas (IEA- Greece, 2010). The full
capacity of this storage facility equates to 8 days of average gas demand and 5 days of peak
gas demand in 2009 (IEA-Greece, 2010). Around 10000 m3 of the storage is reserved for
short‐term balancing and security of supply purposes.
However, in each case, when problems occur in the feed taken extraordinary measures and
limited or even zero consumption of power plants which constitute about 60% of total
consumption. The electricity needs covered by lignite, hydro and petroleum plants. In
practice, the daily consumption is limited between 4 to 5mcm, i.e. the consumption of the
PSC (households, small business) and industry (Floudopoulos, 2014).
Consequently, the Revithoussa can cover all the needs for a period of 12-14 days. Note that in
case, that there will be problem of supplying Russian natural gas, reasonably is probable that
the flow of gas from the Turkish border (approximately 2.5 mcm) will be stopped completely,
as has happened in the past in similar cases, when the Turks keep meeting their own needs gas
from alternative sources (Azerbaijan, Iran) (Floudopoulos, 2014).
In conjunction with the above, as the country has a dependency of Russian gas supplies 60%,
considering the gas crises and supply interruptions 2006-2009 and currently the unstable
relation between Russia-Ukraine, aiming at security of supply, it needs to diversify from the
transit route that supply gas from Russia.
Fig.16. Natural Gas Imports, by Source
Source: IEA-Greece, 2010:14

43
3.4. The Southern Corridor and attempts by the Greek government to diversify the sources
and transit routes of Greece’s gas imports
3.4.1. South Stream
South Stream pipeline is a Russian project, as Nord Stream (which already has overcame
from 2011), aiming to increase the supply of gas to bypass the unstable Ukraine and its
neighbours and carrying Russian gas to the heart of Europe without political obstacles. After
the 2006 and most after 2008-2009 gas crises between Russia–Ukraine increased the need
from Russian perspective to secure its energy supplies to European countries.
Particularly South Stream operated from South Stream Transport AG and National project
companies. So, as formally presented line pipe will be from Anapa (Black Sea) to Varna,
Bulgaria. From there we continued to Serbia-Croatia-Slovenia-Hungary-Austria-Italy.
Moreover, the planned capacity of the gas pipeline will be 63bcm and 2380km. According to
calculations, the pipeline begun in late December 2012 and the first gas estimated will start
from the Anapa region in December 2015.
Fig.17. Projected Routes of Nord Stream, Nabucco and South Stream Pipelines
Source: BBC News

44
This supplier pipeline will create a lot of jobs and will have the largest capacity, the cost of
this project estimated to $39 bill15
(Marson, J., 2013) and will have increased a lot of political
considerations and mostly recently through the political and economic crises in Ukraine and
the conflicts between Russia–Ukraine has increased the uncertainty of the creation for the
project through the European uncertainty to Russian supplies and the implementation of West
and mainly US.
With an overview of the following facts-stages we can see how the project has come across
until now. So, in 2006, Gazprom proposed the construction of a second section of the Blue
Stream pipeline beneath the Black Sea to Turkey, and extending this up through Bulgaria and
Serbia to western Hungary. In 2007, the South Stream project was proposed through
Bulgaria, Serbia, Hungary and Slovenia to Austria and through Greece to Italy. In January
2008, posted the consortium of South Stream AG-Gazprom and Eni. In April 2008, Greece-
Russia signed intergovernmental agreement corporation, construction and operation the
Greek part of South Stream. In 2009, the gas companies from each country signed agreement
for the construction of the pipeline.
In June 2010, Gazprom and DESFA agreed to form a joint venture to design, finance,
construct and maintain the gas pipeline in Greece. The capacity and the completion date of
the Greek section of South Stream remained to be confirmed. As of January 2011, the final
investment decision on South Stream remained to be taken. The EU and Russia are
negotiating on a single regulatory regime for the pipeline.
In September 2011, the shareholders agreement signed between Gazprom (50%), Eni (20%),
Électricité de France (15%) and Wintershall (15%) for the establishment of the project‘s part
South Stream Transport AG under the Black Sea16
.
Finally, in 2012, Greek government refused to attend the conversation with Russia and
European Commission, supporting that it isn‘t in Greek interest. In addition, Gazprom has
shown that the 2007 agreement between Karamanlis-Putin was economic ―sacrifice‖ for
Russia, having already Russian gas passing to Italy (Northern Italy) is about 17 bcm
industries in Northern Italy, while consumption Greece is in total 2.9 bcm.
15
The offshore and European sections of the pipeline are forecast to cost €16 bill ($21.53 bill)
16
South-Stream, 2014. Project Structure. [online] Available at: <http://www.south-
stream.info/en/pipeline/structure/> [Accessed 25 May 2014]

45
3.4.2. TANAP
With the shift of the Nabucco project (3900 km) to Nabucco West project (1300 km) the
eastern section, which was to have run from Azerbaijan across Georgia and Turkey to the
Bulgarian border, was abandoned. Instead, the Trans Anatolian Pipeline (TANAP) came by
Azerbaijan and Turkey (Weiss, 2013). It is a proposed natural gas pipeline from Azerbaijan
through Turkey to Europe and it will transport gas from the second stage of the Shah Deniz
gas field. The launch of TANAP has been coordinated with start of the Shah Deniz II gas
drilling project in the Caspian Sea, with commercial production set to begin in 2017.
The pipeline which is estimated to have an area of 2000 km expected to cost US$7 bill and
funded from Turkey and Azerbaijan. The construction is planned to start in 2014 and to be
completed by 2018 (Socor, V., 2012). The capacity of the pipeline will be 16 bcm of natural
gas per year at initial stage, and would be increased later by 23 bcm by 2023, 31 bcm by 2026
and at final stage 60 bcm to be able to transport additional gas supplies from Azerbaijan and,
if the Trans-Caspian Gas Pipeline, from Turkmenistan (Socor, V., 2012). At the first stage 10
bcm of Azeri gas will be sold to Europe and 6 bcm to Turkey (Socor, V., 2012). Its capacity
would be increased by adding parallel loops and compressor stations according to the increase
of available supplies. So we can see that this pipeline has the possibility to achieve the
capacity of 31bcm that which offered by Nabucco.
Fig.18. Projected Routes of TANAP, Nabucco and TAP
Source: Geopolitics.com

46
The pipeline extends from Georgian–Turkish border to Turkish European border. The exact
route of the pipeline it is not clear. However, it was announced that one branch from Turkey
would go to Greece and the other to Bulgaria. It was expected to be connected with Nabucco-
West or Trans Adriatic Pipeline. Thus, TANAP had signed memorandum of understanding
with Nabucco-West (March 2013) and with TAP (2012) (to exchange technical and other
strategic information) (Badalova, A., 2013).
With the signature of the TANAP deal, there was established for the first time a direct
pipeline link from the European Union to the Caspian Sea. This move was welcomed by the
European Commission as a major step towards completing the Southern Gas Corridor project.
3.4.3. TAP
The Trans Adriatic Pipeline (TAP) is part of the EU‘s ―Southern Gas Corridor‖ strategy, a
series of planned routes aimed at diversifying sources of energy imports for European
countries.
The Trans Adriatic Pipeline AG Company established with the purpose of planning,
developing and building the TAP natural gas pipeline, registered on 13th March 200717
.
In June 2008, the manufacturing consortium signed a memorandum of cooperation with the
Greek authorities for the construction of the pipeline from Thessaloniki to the Greek-
Albanian border18
. Later, at the initiative of Athens, the three countries involved decided in
September 2012 to proceed with the signing of a tripartite interministerial agreement, which
reflected even in a first stage the political will of Greece, Albania and Italy to support the
construction of TAP19
.
In November 2012, TAP shareholders20
: AXPO of Switzerland (42.5%), Norway‘s Statoil
(42.5%) and E.ON Rughas of Germany (15%) and the Shah Deniz partners (as they had been
17
TAP-AG., 2014. TAP project development schedule. [online] Available at: <http://www.tap-
ag.com/the-pipeline/project-timeline#4> [Accessed 20 August 2014].
18
19
20
Nowadays, TAP‘s shareholders are SOCAR (20%), Statoil (20%), BP (20%), Fluxys (16%), Total
(10%), E.ON (9%) and Axpo (5%).

47
established by then): BP (25.5%), Statoil (25.5%), SOCAR (10%), NIOC (10%), Total
(10%), Lukoil (10%) and TRAO (9%) concluded the Shareholder Agreement defining how
the TAP Joint Venture would be governed with members of the Shah Deniz Consortium, if
TAP is selected by Shah Deniz in 2013 (Reuters, 2012). Furthermore, in February 2013, the
three governments (Greece-Albania-Italy) signed a formal intergovernmental agreement
which incorporates the TAP priorities of policy21
.
Finally, the decision to abandon Nabucco was not taken in Brussels, but in Baku. On 28th of
June 2013, Shah Deniz Consortium selected TAP as the preferred transportation route for
Caspian gas to Europe22
. The pipeline developers plan to begin construction in early 2015 to
be ready for the first gas from Shah Deniz by 201923
.
Fig.19. The Balkans–crossroads of gas pipelines–TAP
Source: research.seenews.com
The reserves of Shah Deniz field are estimated at 1.2 tcm and the TAP will transport natural
gas from the Shah Deniz II field in Azerbaijan, via Greece and Albania, and across the
Adriatic Sea to Southern Italy, and further to Western Europe. Allowing, thus gas to flow
directly from the Caspian region to European markets.
The project has a budget of €1.5 bill and is designed to expand transportation capacity from
10 to 20 bcm/year, depending on supply and demand (Institute of International Relations,
2013: 33). The pipeline route will be approximately 870 km in length: Greece 550 km-
21
22
TAP-AG., 2014. TAP project milestones. [online] Available at: <http://www.tap-ag.com/the-
pipeline/project-timeline/tap-project-milestones> [Accessed 20August 2014].
23
TAP-AG., 2014. TAP project milestones. [online] Available at: <http://www.tap-ag.com/the-
pipeline/project-timeline/tap-project-milestones> [Accessed 20August 2014].

48
1bcm24
, Albania 210 km-1bcm, offshore Adriatic Sea 105km, Italy 5 km-8bcm25
(Institute of
International Relations, 2013: 20). Also, TAP is designed to support physical reverse flow of
up to 80% of the carrier's capacity and provides the ability to build gas storage facilities in
order to secure energy supplies in the event of business interruption of gas deliveries.
3.4.3.1. Greek Government perception
The Greek government says the TAP project will upgrade the Greek geostrategic position, as
‗‘connect country‘‘ who through this pipeline will transport gas from the Caspian Sea to
Western Europe, implementing on EU's security of supply. The intergovernmental
partnerships operate, as a driving force for regional economic integration and development in
the Adriatic and South Eastern Europe. They will contribute energy and further economic
development and deepening of bilateral relations between Albania and Greece (IGB26
).
Furthermore, the enforcement of Greece-Azerbaijan relations, an appreciable power in the
energy industry, but also a Muslim country with close ties with Turkey (despite their
differences), shows that the country's foreign policy is not possessed of dogmatism and
obsessions. While giving position of Greek intent, in view of Greek operations in the Eastern
Mediterranean, where it's also strong the Muslim element.
Moreover, most important is that in a very difficult period, due the economic crises (as
proved by this project) practical trust that three large companies that form the consortium of
TAP, from Germany, Norway and Switzerland, will improve the investment climate for the
country at a time when investment is the only way to break the vicious cycle of austerity and
recession.
3.4.3.2. About the Greek economy and entrepreneurship
Based on estimates of the Institute for Economic and Industrial Research (FEIR), the joint
venture TAP AG and the Environmental and Social Impact Assessment (ESIA), in 50 years
24
Its construction estimates to begin in mid-2015 with duration of 3.5 years, expected to open in 2019.
25
TAP‘s highest elevation point will be 1800 m in Albania‘s mountains, while its lowest part offshore
will be at 810 m of depth.
26
Interconnector Greece-Bulgaria

49
(2019-2069) lifetime of the project , the Greek public will benefit about €1.2 bill (pp.
disregarding the added value that will occur, which is estimated at €18 bill).
Moreover, it‘s a huge investment which will create 2,000 direct and 10,000 indirect jobs,
giving substantial relief to the major problem of unemployment (Albanian Correspondent,
2013). Also, it offers growth prospects and business activity in a purely technical field, as
well as providing support services. In addition, tax revenues attract additional investments in
other sectors (indirectly related to energy)-albeit temporary-engaging local subcontractors and
suppliers. Finally, it will arise indirectly, social and economic benefits, the use of domestic
industrial products and motivating domestic construction companies etc. (Albanian
Correspondent, 2013).
3.4.3.3. Objections & Oppositions of other political and social parties
As with any major project, there is no lack of objections and oppositions which relate to the
impacts on areas that pipeline will traverse and to the doubts about the benefits that will flow
to the country. Instead, the company TAP AG replied to them in a condescending manner.
As officially announced, the Greek public will participate in the construction of the TAP
consortium with 5%, which would indirectly generate revenue 320 mil. in depth for 15 years.
Also, competent agencies of the region and authorities reports that the aim of the pipeline is
the transport of gas as transit pipeline from Azerbaijan to Western Europe, as result it will not
flow gas in the Greek market and will not reduce prices (IEA-Greece review, 2011: 76).
Although, in the [consortium] noted that, if it's necessary, the company in consultation with
the Greek government, will consider installing connection points with the national system in
the next design phase. This issue has caused the public to consider that the Greek government
will not take advantage of the opportunities given by the passage of the pipeline from the
region and will continue to play the role of ―energy traffic wardens‖. This has come under
significant speculation due to lack of transparency which characterizes the Greek policy.
Moreover, according to the ESIA of the consortium TAP AG, which relies on the study of the
FEIR, have not been specified offsets and the Transit fees will be paid only to the Ministry of
Financial. Also, there is no commitment that the workforce of the construction works, study
and supply of materials and construction of the project will consist of Greeks.

50
During these 3 years-project for the construction of pipeline, the project will require, in large
extent trained and skilled workforce. It is likely, therefore that the demand for unskilled
labour will be relatively low. As a result, there will be minimum benefits if only local
business receive commissions.
However, administration-scientific bodies and representatives of workers are expressing
reservations about the creation of jobs positions. From one side, the demand for unskilled
labour at local or regional level, along the route, are expected to be relatively low and from
the other side the salary of the expected jobs that possibly will create through the construction
of this project according to the basic salary of the country, in nowadays, will be very low-
€500.
Thus, according to the report in May of FEIR for the pipeline, the Permanent jobs that will be
created after the completion of construction of the pipeline will be only 100! As the creation
of jobs in investments that the final product does not exported, does not offer development in
the country.
Also, there are Environmental–Ecological risks, because of that the pipeline will traverse
certain areas that have a high ecological value. Although the consortium bound that will adopt
the best solutions for the protection of ecosystems, Carriers of agricultural-rural development
and the Chambers are asking the rerouting of the pipeline at several points (while they are
recognizing the crucial importance of the project).
They have strong objections as the passage of the pipeline will require 20,000 acres of land-
80% of which relates to rural land. Thus, they support that the project degrades and devalues
areas of high productivity and the primary sector in general, as agricultural sector in Greece
equals 5.2% of GDP vs. 1.8% EU average.
Mainly, there are adverse effects, such as: Loss of high productivity farmland (reduction of
land value, low compensation, rising costs of production of primary products etc.) and cannot
be estimated the rural income that will be lost without integrating the agro-economic-study.
From the public health perspective, the potential impact of the project relates 100,000 people
within 17km, due to the increase of nitrogen oxides from 19.5% to 70%. However, the
impacts are greater.

51
The Greek opposition states that this particular pipeline is not subject to a specific energy
planning. ―Our country with the responsibility of the current government failed or declined to
utilize the transit gas pipeline (TAP)‖ (Ethnos.gr, 2013).
The restriction of Greece, as a host country without to claim shareholding in the construction
company of the pipeline (is no public or private Greek participation) while Turkey
participates through its state energy company TPAO and the same claims Albania meaning a
lot for the Greek government's energy policy system (Ethnos.gr, 2013). Also, the unanimous
rejection of the ESIA of the consortium from the provincial council is a strong basis for
negotiation in the hands of the Greek government.
3.5. A possible Greek participation in South Stream project
From the other side, a possible Greek agreement with Russia for the South Stream project
could bring to the country a safer transit route of Russian gas and thus the ensuring of its
energy security.
Initially, the Greek companies are not active on the Russian business market in having
subsidiaries, representative offices, branches, etc., but only in importing energy products from
Russia (statistics of bilateral trade in Greece-Russia). The Greek companies principally
supplied energy products from Russia is DEPA for gas (Exclusive costumer under relevant
interstate natural gas supply agreement) and Hellenic Petroleum for petroleum products. The
involvement of other Greek companies, except DEPA and ELPE, is small and involves only
small quantities and petroleum products (Assessment of Greek Embassy in Moscow).
According to analysts and through an interview of Valentina Matvienko-head of the Council
of the Federal Assembly of Russia, Greece is one of the major partners of Russia in Europe
and is very important to deepen and expand the strategic partnership between the two
countries.
In particular, after the non-participation of Gazprom in the consortium and non-Greek
participation in South Stream, have created conditions for higher quality level of Greek-
Russian cooperation. Specifically, active political dialogue is conducted, there are permanent

52
working contacts between the leaders of the two states; there is cooperation between
ministries and operated the intergovernmental commission for economic cooperation.
Still, referring to the interest of Gazprom for participation in privatization of DEPA and non-
mutually satisfactory preparation of legal terms, which was necessary, pointed out that these
issues should be resolved bilaterally. Given that Greece is a member of the European Union
should agree with its partners in terms of privatization, however the final decision is in the
hands of the Greek government, without political pressure, but on the basis of the best deals.
Thus, Gazprom aside from participation in privatization of DEPA had very serious intention
to invest very significantly in the development of the Greek energy cluster. Gazprom, as the
largest gas company in the world intends to change the gas supply system in Greece and the
construction branch of the South Stream through Greece and reduce the price of gas to
Greece. The Gazprom is also ready to participate in the construction of power stations to
produce cheapest electricity. Gazprom's plans have great importance for the Greek economy,
new jobs, and modern development of the energy sector in Greece. For Gazprom, this means
deepening energy cooperation Russia-Greece, which are strategic partners. The construction
part of South Stream through Greece, considered, prosper if the investment effort of Gazprom
in Greece and mature the political conditions of the country, without anything to be
considered accomplished.
Of course, the currently non Greek participation in the Russian pipeline doesn‘t exclude the
future country‘s participation. Recently, in a meeting of the Greek government and of
Gazprom‘s CEO Alexey Miller in Athens, the Greek government expressed its desire to
revive plans to build the South Stream gas pipeline‘s branch to Greece frozen by the Russian
gas monopoly. ―The partnership dynamic with Gazprom could become even stronger with the
construction of the branch of South Stream to Greece, securing in this way a new, modern
and safe supply route for Russian natural gas to Greece,‖ Greece‘s Energy Minister Yiannis
Maniatis told Miller in his speech at a conference south of Athens.
In conclusion, one could say that Greece's participation in the Russian pipeline will entail
significant changes in the Greek market and economic prosperity in the country. First, it
could reduce Greece's import gas price and thus the domestic gas prices. Secondly, the bypass
pipeline-South Stream, through Thrace, would benefit in the best neighbourhood with the
neighbouring country Turkey. At the same time it would be an initiation of the national

Thesis-Athina Sylaidi

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Viewers also liked

Viewers also liked (17)

Similar to Thesis-Athina Sylaidi

Similar to Thesis-Athina Sylaidi (20)

Thesis-Athina Sylaidi