Project proposal to get Caspian gas to Italy via Greece and Turkey

SOFIA (Combined reports) – Italy’s utility Edison has been considering building a natural gas pipeline together with Turkey and Greece that would carry Caspian Sea gas to Italy’s growing market, a company official said yesterday. Elio Ruggeri, business development manager at Edison Gas, told an energy conference in Sofia that the 800-kilometer (488-mile) pipeline could start pumping 2 billion cubic meters of gas to Italy in 2008-09 and gradually increase this to 8 bcm by 2014. Greece would import 3 bcm of gas a year out of the pipeline’s total annual capacity of 11 bcm to be fully reached in 2014, said Ruggeri. He said Edison had recently completed a preliminary study on the project, called Interconnection Greece Italy (IGI), after signing an agreement last year with Turkey’s state gas company Botas and Greece’s state Public Gas Corporation (DEPA). In February, Greece and Turkey signed a deal to build their first ever joint $250 million pipeline transporting gas, which will ultimately channel the energy source from the Caspian Sea region to Europe. «Edison and its partners, Botas and DEPA, believe that the IGI project would probably be one of the most realistic ways to bring Caspian gas to European markets,» Ruggeri said. He said the IGI project aimed mainly to feed Italy with gas. Italian annual gas consumption is expected to exceed 100 bcm in 2010, when the country might have to import 90 percent of its gas due to declining domestic gas output, he said. Italy liberalized its gas market in January this year. The European Union wants fully to liberalize gas markets by 2006. Ruggeri said the project, on which a final financial and technical assessment is to be completed next year, would link Greece’s Komotini and Italy’s port of Otranto. Turkey has been having its own difficulties in importing natural gas from Russia. Yesterday, Turkey announced that negotiations over the price of natural gas imported from Russia have broken down and both sides are to seek international arbitration. Turkey cut imports of Russian gas through an undersea pipeline between the two countries in March, shortly after the conduit was inaugurated, after the two sides fell out over the formula to be used in the calculation of payments. «Time is needed to examine mutual offers and find a point of compromise,» the Turkish Energy Ministry said in a statement. Russian energy officials had resumed talks with Turkish counterparts in Ankara on Wednesday, following a first round of negotiations last week. The statement said that «in parallel to the talks,» Turkey’s state-run gas company Botas had started procedures for international arbitration in response to a similar move by its Russian counterpart, Gazexport. Turkey this year was supposed to buy 2 bcm of gas from Russia through the so-called Blue Stream pipeline, which runs from the southern Russian gas plant of Izobilnoy under the Black Sea to the Turkish port of Samsun. The amount was to be increased to 16 bcm per year over several years. Turkey faces financial penalties if it does not resume imports next month. The Blue Stream deal is currently being investigated by a Turkish parliamentary commission that is looking into allegations of large-scale corruption. The financial terms of the 1997 deal are secret. (Reuters, AFP)

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