23-11-06 While European officials fret about their dependence on Russia for natural gas, a pipeline across the Aegean Sea could provide the EU with an alternative to those supplies and turn Greece into a regional power broker.
The 285-km (178-mile) link will deliver natural gas from central Asia to north-eastern Greece and help to diversify Europe's fuel imports by giving non-Russian gas its first direct western outlet.

When finished, the $ 320 mm Turkey-Greece Interconnector will link the long-time Aegean rivals through a 36-inch pipeline running from the Turkish town of Karacabey to the northern Greek town of Komotini. It will carry natural gas from Azerbaijan's massive Shah Deniz gas field and possibly other suppliers as well.
Julian Lee, senior analyst at London's Centre for Global Energy Studies, believes the pipeline's significance is “fundamentally political.”
“It is a tangible symbol of cooperation between Greece and Turkey on an economic level but it's also the first step in opening up a southern gas route to Europe from the Caspian,” Lee told.

In a bid to stave off reliance on Russian gas sources and pipeline networks, the EU -- whose post-war origins lay largely in energy cooperation -- is funding up to 40 % of the Interconnector costs. Another EU-Russia summit focusing on energy will be held in Helsinki in November.
The Interconnector is expected to solidify Turkey's emergence as an energy hub and highlight its strategic importance to the EU it aspires to join. Turkey already imports gas from Russia, via the undersea Blue Stream pipeline, from Iran and, soon, from Azerbaijan through the South Caucasus line.

Ambitious Turkish re-export plans include the Nabucco gas pipeline to Austria. And Nikos Stephanou, general secretary of the Greek Development Ministry, spoke of “the leading role of our country” in creating a Southeast Europe Energy Community during its first ministerial council meeting in Skopje, Macedonia.
Construction delays, however, are plaguing the Interconnector, the state-owned Turkish Pipeline Company (BOTAS) announced earlier. Originally scheduled for an end-of-year opening, the project is not expected to be operational before next summer -- an untimely reflection of slow progress toward Turkey's EU accession.

This latest setback coincided with an international gas conference near Athens, between distribution companies from Ukraine, Moldova, Romania, Bulgaria, Macedonia, Turkey, Russia and host Greece -- all major outlets for Russian gas.
The Interconnector's modest initial capacity of 3.5 bn cm will eventually rise to 12 bn a year, with about 8 bn of that exported to the rest of Europe -- once Poseidon, a 212-km (132-mile) undersea Italy-Greece Interconnector, comes on stream around 2010 -- forming the Southern Europe Gas Ring Project, with branch lines to the Balkans.

Along with the controversial Nord Stream pipeline being built from Russia to Germany, the southern Interconnectors aim to relieve pressure on the pipeline from Russia across Ukraine to Europe -- whose reliability was jeopardized last January by a bitter price row between the former Soviet nations that led to a temporary supply cut-off.
Channelling non-Russian gas into Europe may be “part of the rationale in many people's minds, but Turkey is already importing gas from Russia; perhaps more than it can use,” Lee said.

Wary of more summer blackouts and winter shutdowns, the EU has been scrambling to forge a viable 21st century energy strategy. The block will unveil an energy “road map” in January following its exploratory green paper last March, and has prioritized gas use from diverse sources.
Russia, the world's biggest gas and oil producer, accounts for more than 40 % of EU gas imports and 80 % of Greece's fast-growing gas needs, while its strong-arm tactics are making it an increasingly contentious market force.

NATO economic experts recently warned of possible efforts to establish a “gas cartel” that would reinforce Moscow's market dominance. The United States has accused Moscow and its state-controlled energy giant Gazprom of using pricing as a weapon against nearby states like Georgia and Belarus.
An EU-Russia energy summit in Lahti, Finland last October turned fractious, amid Russian refusal to ratify the 1994 Energy Charter Treaty designed to liberalize mutual access to markets and pipeline networks.

It's all part of a complex matrix of pipelines, compressors, terminals and unorthodox production alliances that shape the brave new world of energy security and connect central Asian producers with western consumers. But in the ongoing struggle for resource access, the network-reliant natural gas sector, long touted as cleaner and “greener,” is proving just as politically fraught as the volatile but more decentralized oil market.
Russia, currently in talks with Greece over a long-term gas contract, continues to press for access to the Greek Interconnector -- an issue that may arise during Greek Foreign Minister Dora Bakoyannis' pre-summit visit toMoscow.

Andreas Christodoulakis, a spokesman for Greek gas company DEPA that is helping build the Interconnector, said, “The Russians want to get involved very much, but there is no agreement up until now.” During an April visit to Athens, US Secretary of State Condoleezza Rice urged that Azeri gas take precedence.
Lee believes market compromise may prevail.
“What may happen is that Turkey can buy the gas from a variety of sources and then sell some of that into Greece with no specific deal.”