Russian energy giant Gazprom has announced that Greece has been removed from construction plans for the South Stream pipeline that is expected to start pumping gas to Western Europe in 2015.
Senior Gazprom officials told a press conference in Moscow this week that the decision was due to the fact that demand in the Greek market cannot cover the cost of the investment. “We are not going to construct a pipeline to be empty,” said Leonid Chugunov, head of the company’s Project Management Department.
He stated that his company has shelved plans to build the southern section of South Stream ending at southern Italy via Greece for the foreseeable future, making it clear the project only targets markets that are able to offer significant consumption prospects. That is not the case for either Greece or southern Italy. Should Greece need more gas, it could arrive via the existing interconnections with Bulgaria and Turkey, Chugunov said. He also distinguished the South Stream project from Gazprom’s interest in Greece’s Public Gas Corporation (DEPA), saying that regardless of who owns DEPA, the pipeline decision is about the Greek market.
Gazprom’s CEO Alexei Miller confirmed on Tuesday that construction on South Stream is expected to begin by year-end.
The plans for a Greek branch of South Stream came about as a result of the particularly good relations between Athens and Moscow during Costas Karamanlis’s premiership and were connected to his government’s positive stance in promoting the Russian-led Burgas-Alexandroupoli oil pipeline. Back then it was clear that the Greek leg of South Stream would not be based on financial criteria.
Still, energy sector sources argue that Gazprom’s interest in the Greek gas market means a return of Greece to South Stream’s future plans cannot be ruled out.