ECONOMY

Tsipras finds ally in Putin on Greek ambition to grow energy hub

Russian President Vladimir Putin endorsed plans by Greece to enhance its role as an energy hub for Europe as the region seeks new sources of natural gas.

Greek Prime Minister Alexis Tsipras outlined that vision in a meeting with Putin in Moscow on Wednesday. The two leaders raised the issue after the 28-nation European Union earlier this year backed a plan to tighten energy links among member states and reduce the bloc’s dependence on Russia.

“It upgrades the geopolitical status of Greece; it becomes a major transit country for the whole of the south of Europe and not only the south but maybe for central Europe,” Putin told reporters after the talks. “It will get good money from transit, we are talking about hundreds of millions of euros every year just for transit, just like that.”

The crisis in Ukraine has highlighted the need for Europe to cut its reliance on Russia, which supplies 27 percent of the bloc’s natural gas. Disputes between the two former Soviet allies led to disruptions in Russian gas supply via Ukraine in freezing temperatures in 2006 and 2009, affecting countries including Slovakia and the Balkan nations.

EU-Russia energy relations worsened in December, after Moscow-based OAO Gazprom halted work on the South Stream pipeline, designed to bring gas directly to Europe under the Black Sea. The announcement came after the commission called on nations involved in the project to ensure it didn’t breach EU rules.

Turkish Stream

Putin’s alternative to the $45 billion South Stream project is building a pipeline to Turkey and then shipping gas overland to Greece and on to the rest of Europe. He and Tsipras discussed the so-called Turkish Stream project.

Greece could generate revenue of 500 million euros ($539 million) a year from it, a Greek government official said. The energy route would start operating in 2019, he said.

“This new route would cover Europeans’ energy resource needs and enable Greece to become one of the continent’s main energy distribution centers, which would attract substantial investment in the Greek economy and create new jobs,” Putin said. “Ultimately, of course, this is a matter for our economic organizations and a sovereign decision for the Greek government.”

Tsipras, whose government has been locked in talks with euro-area creditors for more than two months as it seeks to unfreeze bailout aid, said he was interested in “exploring possible financing options” for a Greek pipeline that would take natural gas from the Turkish border. He cited the goals of bolstering Greece’s energy security and “autonomy,” as well as helping growth and the stability of the wider region.

Upgrading Relations

“We’re open to financing options that respect the EU and national legal framework,” he said. While the pipeline would “upgrade” Greece’s relations with Turkey, Tsipras said it would be “a Greek pipeline” and not Turkish Stream on Greek territory.

The focus in the EU is shifting to the Southern Corridor, a series of pipelines that would carry Azeri gas to Europe. A project led by BP Plc beat out the OMV AG-led Nabucco pipeline after both had vied for the same Azeri gas source. The 3,500- kilometer (2,175-mile) route from the Shah Deniz field would have initial capacity of 10 billion cubic meters a year, one- sixth of South Stream’s capacity.

BP and its partners Statoil ASA, Total SA and the State Oil Co. of Azerbaijan plan to start delivery in 2016. The fuel would flow to the Turkish-EU border and from there through Greece to Albania and Italy.

The European Commission, the EU’s regulatory arm, is currently analyzing the Turkish Stream plan for its “economic viability as well as regulatory and legal feasibility and consequences,” EU energy spokeswoman Anna-Kaisa Itkonen said in an e-mailed response to questions.

[Bloomberg]