Ioannis Michaletos
(RIEAS Junior Analyst and Coordinator at the World Security Network Foundation Southeastern Europe Office)
Copyright: www.rieas.gr
Greece is a state characterized by a unique geoeconomic placement, right next to the energy producers of the Middle East, North Africa and the Caspian, whilst the Aegean Sea and the Eastern Mediterranean transfer a great share of the world’s annual energy needs. The country can be named as a small-middle sized producer & consumer and an expanding energy hub between the East & the West as it is going to be commented below.
Currently Greece imports more than 70% of its energy needs and the only reliable domestic source is lignite which accounts for some 85% of the internal electricity production. Overt eh past few years the incumbent administration has relayed plans of exploiting renewable energy sources such as solar and wind power where the country could excel by exploiting these abundant energy sources. The former is expected to draw investments worth 5 billion Euros by 2020, according to information provided by the Ministry of Development. Foreign companies specialized in this field-mostly from Germany- have already set up offices in order to take advantage of the new market to-be-created. On overall 7% of the country’s needs could be sustained over the next decade by this form of energy, although over the decades this percentage might exceed 30% due to Greece’s ample sunshine throughout the year. Wind energy can fulfill another 15% and wind parks are being constructed in various suitable location. If one adds biofuel, geothermic and wave energy; Greece has the ability to become a fully independent energy producer by the mid-21st century and reveal itself from the strain of energy imports.
The oil factor is a very important one, since it represents in Greece some 60% of the yearly energy consumption and it is imported, bar some minimum amounts being produced in the Kavala offshore oil field in Northern Greece. Natural gas is a fast expanding commodity, albeit for the time being its contribution is a mere 7%.
Window of opportunities
The Greek oil production is just 6,500 barrels per day and the consumption 450,000. As it can be understood it is impossible regardless of any investments to form a strategy that is going to be related with domestic production. Thus Greece has reached the point on which it needs to rely on ventures with foreign corporations and states so as to use its territory as a transit route for the emerging energy networks of the 21st century. The Burgas-Alexandroupoli pipeline agreement on the 15th of March was a first crucial step towards that aim. With a transport capacity of 30 million tons per annum (Initially) reaching 50 million, this particular pipeline greatly elevates Greece’s natural geoeconomic role in the wider Southeastern European region.
Firstly it effectively trespasses the Turkish Bosporus Straights and eases the exports of Eurasian oil to Western Europe. Therefore Greece becomes an important terrain on which European energy security depends on, a factor that translates to political clout to an extent in the modern world. The Russian side which owns 51% shares of the pipeline, through the corporation Lucoil is interested in investing in refinery capabilities in Greece. Already it operates a similar facility in Burgas and the plans as they have been transmitted in the Greek press, state around an interest in either constructing an industry in Alexandroupoli or buying a share in the Motor Oil industry which functions the second largest refinery in Greece. In any case the pipeline seems to ignite wider energy commercial interest in the Greek market and consequently transforms the role of Greece for that of a sole importer to a regional energy point.
Greece import 80% of its natural gas from Russia and the rest from Algeria, through a series of bilateral agreements. Currently the gas is being imported by Bulgaria (The Russian) and by LNG vessels (The Algerian). A most recent development in that field was the beginning of operations of the Greek-Turkish gas pipeline that was inaugurated in late November 2007. It transports Turkish owned gas with an initial capacity of 124 billion cubic feet with a total capability of some 406 billion. A quarter of these will be available for the Greek market whilst the rest will be exported to Italy via another underwater pipeline. The gas flowing through the pipeline is bought by the Turkish BOTAS company and it is assumed that it will be a mixture of Azeri, Iranian and Russian gas. In this case Greece extends its indirect geoeconomic influence in a wider geographical spectrum.
Finally the South Stream agreement that was signed in late June 2007, signals a major political and economic culmination. The Russian Gazprom and the Italian ENI agreed to invest 15 billion USD in order to construct a pipeline stressing from the Russian Black Sea coast to Bulgaria, Greece and ending to Otrando Italy. Should the pipeline completes its construction, in 2011; it will bypass USA leaning countries such as Ukraine and it cause a major rift between American and Russian geopolitical interests. From a financial point of view the investment seems very ambitious so as to provide satisfactory returns to the investors.
As far as Greece is concerned a pipeline transferring gas that will meet Italian and European needs is another beneficial development since it secure for decades to come a steady flow of gas to the country and it will add to the expanding energy posture of the country. Another smaller pipeline which is operational is the one transferring oil from Thesalloniki to the OKTA oil refinery in Skopje-FYROM. The industry is Greek owned since 2002 and virtually the energy market in the country meets its needs by Greece. A scheme which is under consideration by corporations and it is supported by the Russian side, is the connection between the Greek natural gas network and the exportation to Albania. The latter faces a severe energy deficiency since no real investments took place over the past generation and it seems probable that it will confirm its objective of joining Greece’s gas network over the coming year.
High hopes
The optimism for Greece’s energy related future is surely supplemented by the latest developments. Nevertheless it should be noted that quite a few of these projects are inexorably related to wider geopolitical advances and in particular concentrated between the triangle Russian-USA-Islamic relations and conflicts. The Greek Administration has ample choices in exercising its influence in between in order to extract benefits and at the same time assist towards the ending of energy dependency of the country. Future seems bright but political initiatives that will secure the deals signed are the uttermost priority. Otherwise the beginning of the first decade if the 21st century might end up to be as the one that provided high hopes for Greece in return for negligible practical results.