Georgios Stergiou Chief Executive Officer of Desfa

Pipeline deals bring in gas from the East
As new connections are made with neighbouring gas grids, Greece’s own energy system is being extended to cater for growing demand

Greece took a step closer to becoming an international hub for the transportation of natural gas in November when the Greek and Turkish prime ministers inaugurated a new pipeline between their two countries.

The 285-mile link represents a critical first stage in the creation of a new East-West energy corridor that will eventually enable the transit of natural gas from the Caspian and the Middle East to European energy markets via the Greek system. Beginning in Karatchabep in Turkey and running to Komotini in Greece, the pipeline has a diameter of 36 inches and the capacity to carry 11 billion cubic metres (bcm) of natural gas per annum.

Next year, work will start on a 600-mile pipeline extending the corridor from Greece to Italy. Most of it will be built by Desfa, the owner and operator of the Greek Natural Gas Transmission System. The remainder, which will run beneath the sea, will be built by the Public Gas Corporation of Greece (Depa) and Edison. The pipeline is due to become operational in 2012, delivering 8 bcm of an expanded capacity of 11 bcm to Italy and the rest of Western Europe.

The EU is one of the world’s largest and fastest growing markets for imported gas. Azerbaijan and the rest of Central Asia is poised to become Europe’s newest main source of supply, alongside the North Sea region, Russia and North Africa.

Former Greek development minister Dimitris Sioufas says the pipeline and the interconnection of the electricity systems of Greece and Turkey are the two most important interstate projects between the two neighbouring countries, whose relationship has greatly improved in recent years.

As Greece seeks to utilise cheaper and cleaner sources of fuel, consumption of natural gas is rising, from 2.1 bcm in 2006 to around 3.8 bcm in 2007. Gas-fired power plants consume approximately 70 per cent of the total, with the rest feeding the residential, commercial and industrial sectors.

Greece’s main supplier of natural gas is Gazexport, a subsidiary of Russia’s Gazprom, which transports the gas via Bulgaria. The remainder has been coming from Algeria, from where it is supplied to the LNG terminal on the island of Revithousa in the gulf of Megara.

Unbundled from Depa last year and now operating independently, Desfa runs one of the most modern gas transmission systems in Europe, utilising state-of-the-art technology. One of Desfa’s primary objectives is to expand the network and transport gas to every region of Greece. Currently, it is planning new projects to extend the supply of natural gas to 12 new cities.

“Investors are welcome to contribute to these projects,” says Georgios Stergiou, Desfa’s CEO, pointing out that around 40 per cent of the budget for such projects can be financed by the EU structural funds. “We are expanding the network to new areas such as Evia and Peloponnese, and we have also implemented the construction of a pipeline connecting the aluminium plant in the area of Antikira with the main high pressure pipeline,” he says.

Analysts say that Greece, which is opening up its electricity market and ending state-run Public Power Corp’s monopoly, needs to invest around 8 billion euros on power generation to match growth. Energy companies are expected to invest more than 4.5 billion euros by 2010.

“There is enormous potential in the Greek market,” says Mr Stergiou. “We regularly move very close to the maximum power level and we have to buy electricity from our neighbours. Electricity needs to be produced by more gas-fired plants, which are one of the most efficient electricity production processes and contribute at the same time to the protection of the environment.”