Greece Helps Europe Diversify its Energy Supply Through New Infrastructure and Resources

Europe is diversifying its energy supply in an effort to fortify its energy security. Greece is key in this diversification process, as it sits right in the middle of several of Europe’s upcoming pipelines and recent gas discoveries. Dr. Kostas Andriosopoulos, a renowned expert in energy geopolitics, explains how he sees the country’s current situation from his vantage point of president of the Hellenic Association for Energy Economics.

Dr. Kostas Andriosopoulos is president of the Hellenic Association for Energy Economics and a professor of finance and energy economics at ESCP Europe Business School in London. He is also the school’s executive director of the Research Centre for Energy Management and academic director of the full-time executive masters in energy management. Dr. Andriosopoulos holds a PhD in Finance from City University London, an MBA and MSc in Finance from Northeastern University, and a BA in Production Engineering and Management from Technical University of Crete.

Europe – through the EU’s Third Energy Package and other energy security initiatives – is working on diversifying its gas supply, given than upwards of 70 percent of European gas is currently supplied by only two countries: Russia and Norway. German Chancellor Angela Merkel has shown great interest in developing the Southern Gas Corridor to deliver gas to Europe from the Caspian. Last month in Azerbaijan, she discussed energy issues, including improving the infrastructure that transports gas from Azerbaijan to Europe via Turkey. During the visit, German energy giant Uniper and Azerbaijan’s state oil company, SOCAR, signed a deal to improve the energy efficiency of oil and gas production in Azerbaijan.

This comes as the Caucasus nation is planning to launch the second stage of a gas pipeline from the Shah Deniz field to Europe. Shah Deniz II is projected to produce 16 billion cubic metres (bcm) of gas per year starting in 2020, with 10 bcm set to go to Europe.

Still, the European gas market remains way too dependent on just a few – and some geopolitically controversial – players, at the same time that its indigenous gas production is decreasing (after the Netherlands decided to stop production at the Groningen field, the largest single gas field in Europe).

Against an increasingly energy-scarce backdrop, Southern Europe, and its increasingly rich region of resources, may be the Union’s saving grace.

“South East Europe again is at the heart of the discussions when we are looking at the European gas system”, explains President of the Hellenic Association for Energy Economics Kostas Andriosopoulos, “because it’s not only TAP [the Trans Adriatic Pipeline], it is also the Southern [Gas] Corridor which is under way and is actually being built”.

“It is a very important project, it allows diversification of supply, it allows for greater competitiveness in the system”. Indeed, there are a number of new pipeline projects and new hydrocarbon fields coming online in and around Southeast Europe, all of which Andriosopoulos says are essential to creating diversity of choice when it comes to how Europe is powered.

Europe consumes an average of 350 billion cubic metres (bcm) of gas per year. Thanks to hydrocarbon discoveries in the Mediterranean, the bloc will have more indigenous gas reserves and access to new resources owned by allies like Israel. This will allow it to lower its heavy reliance on Russia, who sells the bloc at least 200 bcm annually. Copyright: Valeriy n Evlakhov/

Nord Stream 2, for example, will connect Russia to Germany – although this is somewhat contentious given Europe’s already huge reliance on Russia for gas. In any case, “we will need to collaborate and work closely with the existing major supplier, which is Russia, because just last year we had record supplies from Russia,” Andriosopoulos, an eminent expert on energy geopolitics, commented, assuaging some concerns.

There’s also TurkStream, which will supply Russian gas to the Turkish gas transportation network, as well as “a plan for [a] second line now which will have the additional capacity to supply Europe from the Turkish borders via the Greek borders and the European market”, explained Andriosopoulos.

Beyond this, the Gas Interconnector Greece-Bulgaria (IGB) Pipeline will link the Greek and Bulgarian markets, which will provide more interconnection in the region, something that is “extremely important” to secure Europe’s energy supply, Andriosopoulos noted.

The East Med pipeline, which is classified as a Project of Common Interest for the European Commission, is another vital project for European energy security. The pipeline will cross from Israel and Cyprus into Greece and Italy and will be able to transfer an estimated 9 – 12 bcm per year. However, this project is still in the works, as it relies on the ongoing Mediterranean hydrocarbon explorations and discoveries – like Cyprus’s Aphrodite field and Israel’s Leviathan field.

While Andriosopoulos supports the potential behind the East Med pipeline, “We need to identify more resources that can be put into work for this pipeline so that they can sell the gas to the European markets”, he remarked. “At the moment, it is not a bankable project”.

There is credible hope that more discoveries, including in Greek territory, will be made in the near future – and that liquefied natural gas (LNG) could play a greater role in Europe’s energy mix in the coming years.

“LNG is coming in to support all of these elements”, said Andriosopoulos. And, fortunately, Southern European countries are already highly developed in this sector. Greece has the Alexandroupolis LNG project, which will allow imports of LNG in the near future, and an LNG terminal at Revithoussa.

Greece will join many of its Southern European neighbours in its efforts to become a leading LNG supplier for the continent. Spain, for its part, has a highly developed LNG industry that has been in operation for the past four decades. “Spain has the largest capacity of LNG imports among all European countries”, Andriosopoulos said. “They have seven operational LNG import terminals at the moment”.

Italy also boasts extensive experience with LNG. Snam, the Italian transmission system operator, for example, is leading the process of privatising Greece’s gas TSO, DESFA, “which includes an operational LNG import terminal in Revithoussa”, explained Andriosopoulos. The privatisation is being done in coordination with a consortium of big energy players, including Spain’s Enagás and Belgium’s Fluxys.

When it comes to DESFA, “I think Greece has a lot to gain from [consortium members’] participation in the asset here,” he said with a sense of optimism.

Stacked up against its neighbours, Greece could become the region’s leading gas hub, thanks to the infrastructure it is developing (like TAP and IGB), its two LNG terminals (Alexandroupolis and Revithoussa), and promising gas reserves (in Crete and the Ionian Sea).

“Greece can really play a key role, a leading role in terms of the gas trade around the greater Balkan region”, Andriosopoulos definitively stated.

And that could mean much greater energy security, through diversity of supply, for Europe in the future.

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