BUSINESS

State Department’s energy envoy sees Greece as potential gas entry point

VASSILIS NEDOS

TAGS: Energy, Interview

Amos Hochstein, the US State Department’s special envoy on energy, has been a regular visitor to Athens in the past few years and in his most recent trip this month he met last week with Prime Minister Alexis Tsipras.

With the Trans-Adriatic Pipeline (TAP) deal already signed, the terminal station in Alexandroupoli in northern Greece in the final stretch and the Greece-Bulgaria interconnecting pipeline (IBG) under way, Hochstein tells Kathimerini that Greece could become the entrance point for natural gas coming from the US and the Eastern Mediterranean.

The American official believes that the South Stream pipeline is a political scheme that will only benefit Russia and calls for a stop to plans for the North Stream II pipeline, arguing that it will have a negative economic and political impact on counties like Ukraine and Slovakia.

You have been visiting Athens quite often. What is the purpose of your current trip?

I believe that there’s a bigger picture of energy security in Europe that has an urgency we need to address and I have also believed for a long time that Greece can play a significant role, a leadership role, in being part of the solution for the broader region in Europe. In so doing, it would also benefit itself by supporting the economy in Greece. That has been my belief all along for the last couple of years and I’ve been trying to work with my friends here and around the region to make it a reality. I think that we’re getting very close.

What about the liquified natural gas (LNG) terminal at Alexandropoli, the FSRU, TAP and IBG? A few months ago, during his last visit to Athens, Secretary of State John Kerry said that there would be American investments involved. Is there something more specific to talk about?

There is not something very specific to talk about yet. There’s been an American involvement in TAP because the US government has championed this project from Azerbaijan, through Turkey and Greece and Albania and inside Italy. I’ve spent much more time on this one project than any other project I’ve ever worked on. Even though there are no American companies in that project, we have still made this a US government priority. That’s why I was here in Thessaloniki for the groundbreaking of TAP. When it comes to the floating storage and regasification unit (FSRU), this is an idea in Alexandropoli that we have been pushing for a very long time. I believe that it could have American gas coming to it, because it would be ready by the time that we’ve just begun to export.

Would that be around 2020?

It depends when some of the parameters are fixed. But it could be done earlier than that. If the FSRU is ready, I would say that could take two years from the final decision by the investors to do it. I think you asked about TAP and the FSRU and the IGB: these are all interconnected and the more we see it as different pieces of one bigger puzzle, the more likely we will be to see success. TAP is no longer a question of if but when it will be complete. We made so much progress in the relationship between Greece and Bulgaria, and the US is working hard with the EU to make IBG a reality. That has allowed the FSRU economics to improve and has encouraged foreign investors to come in and express interest in investing. And ultimately that’s the bottom line. That’s how Greece benefits. Not just because gas will flow through Greece, but because it becomes an interconnection point where investors come in and bring money from the outside to invest inside Greece, and see Greece as an energy entry point into Europe. I believe it will grow from there.

Do you believe that Alexandropoli can function as an entry point for natural gas from the East Mediterranean, Israel, Cyprus, Egypt?

Yes, 100 percent. We’re in a unique timing. The US starts to export gas. Israel starts to export gas... Israel is in the final phase of approvals and it will begin to develop the Leviathan gas field. Egypt is developing the Zohr Field. These are very large gas fields that have will have to be exported. If Egypt has LNG and wants to find buyers in Europe, and Greece has the LNG facility in Alexandropoli, it becomes a very attractive place to interconnect into Europe. For that you obviously need the FSRU to happen and we need the IGB to happen. So those are the two parameters that we need to have and that is why there is a linkage between progress on both.

So all those are viable projects, contrary to other projects that you believe are not as viable as you have recently stated...

Which one?

South Stream.

The Alexandropoli LNG Terminal together with IGB and TAP make sense economically and commercially, and is good politically too. South Stream benefits its builders politically. But only politically. It makes no economic sense. That is the difference between the two projects. That it works for you geopolitically is good. But not if it’s at the expense of economics and commerce. Those bargains don’t last. So I’m not very worried about it. Because at the end of the day, when people will examine that project and will realize that it is all about politics, then it becomes a dangerous project.

There is a similar situation in northern Europe. Some EU member states oppose the North Stream II project, Greece included. Can what you are saying about the South Stream be applied to the North Stream as well?

North Stream II is a very interesting case because a significant portion of EU member states, nine member states, wrote a letter to [European Commission President Jean-Claude] Juncker objecting to the project. There is a fundamental energy security problem in Europe and fundamental inequity inside Europe when it comes to energy. When we’re talking about energy union and unity in Europe, it doesn’t exist. It’s a goal. North Stream II as it is currently configured doesn’t support the goal of energy union or unity at all. It also doesn’t support energy security in Europe. You have two halves of Europe. You have one half that is dependent on one supplier of energy and doesn’t have a free market in energy, and another half that already does have that. Building North Stream II at the moment will keep that imbalance for the next several decades. So, the Commission has to address the concerns that are raised by member states. And I think they have really good reasons to be worried. It would also have a terribly negative impact on Ukraine and Slovakia who rely on the transit fees for a significant part of their budget. Just to take that away overnight would be quite dramatic and have a big impact not only economically but also politically on Ukraine and Slovakia. I think that the US look at it like: “what do we do about this project itself?”. And what we can do is to ensure that we have a policy that no one country can do a project that would have such a negative impact on the energy security of the Union or the economic viability of the Union. These two conversations have to happen. Maybe it would be a good idea to pause North Stream II so that Brussels can reflect on the environmental, political, economical and security impacts, and not rush into a project that would have so many consequences in so many countries.

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