South Stream expected to be high on agenda during PM’s Moscow visit

With Greek Prime Minister Costas Karamanlis scheduled to visit Moscow in mid-December, Greece and Russia are expected to focus on the latest energy pipeline linking the countries, the South Stream pipeline project, according to a leading expert in the sector. Constantinos Filis, head of the Russia-Eurasia Center at Panteion University’s Institute of International Relations in Athens, told Kathimerini English Edition in an interview that the success of Greece’s energy projects, such as the Burgas-Alexandroupolis oil pipeline, will depend on their competitiveness, which is in turn determined by fuel suppliers and not the transit country. The South Stream project, linking Russia with Italy through Greek territory, is the latest proposed project that will hook Greece up with international power networks. Apart from providing an economic boost, Filis pointed out that energy programs will provide more stability to the region of Thrace in northwest Greece, as any fallout between the two neighbors would have a negative impact on all stakeholders. The Greek prime minister is scheduled to visit Russia in mid-December. What developments do you foresee during this trip, particularly regarding Greece’s energy policy? There will be a reaffirmation of the strong ties that have developed recently between the two countries, as well as an exchange of views on important international issues. We might also see a discussion of military/defense cooperation. With regard to energy issues, the announcement of a more specific time frame for Burgas-Alexandroupolis may be on the cards, but I think the emphasis will be on South Stream, particularly given that just last week Gazprom and Eni laid the foundations for this project, but also because the Kremlin – for a variety of reasons, some of which are quite compelling – wants this project to move ahead. The opening of the pipeline linking Greece and Turkey and the Burgas-Alexandroupolis oil pipeline are being described by the government as placing the country on the energy map. How important are these deals on the international energy market? Greece’s geostrategic role will be enhanced by the Italy-Turkey-Greece pipeline, which, together with South Stream and the Burgas-Alexandroupolis oil pipeline, will make us an important link in Europe’s natgas and oil supply routes originating in the Caspian. With regard to energy and trade affairs in general – provided that all three projects are implemented – we will see a bolstering of Greece’s role and voice in Europe and the wider region. The viability and competitiveness of these deals will hinge on the extent to which they are commercially attractive, based on the quantities of energy that they deliver, the prices set for transported hydrocarbons, the reliability of product flows, and the share of the European/Western market they can wrest from the existing pipeline network and other, future projects. On the basis of current agreements, Greece has little say in defining the terms that would make these projects competitive on the global market. I would say that this will depend – as in the case of other transit countries – on the disposition of those who determine the rules of the game, that is, mainly the suppliers. There have been delays in the Burgas-Alexandroupolis pipeline despite the strong interest shown by Russian President Vladimir Putin. What are some of the reasons that could be holding back this project? We mustn’t overlook the fact that the negotiations have passed into the inter-company stage for some time now. This will be an even tougher stage than the inter-state stage because each company is primarily – if not exclusively – interested in securing its own interests, which are profit-oriented. So from here on in, we may even see disagreement between companies from the same country. My personal view is that any disagreements that arise will be overcome primarily via the express political will of leaders in Moscow and Athens. The pipelines are passing through Thrace, which is one of the poorest regions of the country. What kind of impact do you think the energy project will have on the district at an economic and political level? It will definitely contribute toward revitalizing depressed areas of Thrace, creating a significant number of new jobs during the construction phase and fewer permanent jobs when the pipelines become operational. It will also result in infrastructure projects for energy storage and attract investments. Consequently, we will see a broadening of development prospects in sectors such as construction and – quite possibly – refineries. Natural gas prices will probably fall locally, though this will ultimately depend on the quantities secured for transport by our country. Politically, we will see strengthened security for a politically sensitive region, while cooperation will be facilitated on a local level, mainly because any Greek-Turkish friction will entail mutual losses. Any falling-out between Athens and Ankara that is related to or impacts energy projects would compromise the credibility of both parties as transit routes, and if energy deliveries to Europe are slowed or interrupted, the resulting rise in energy prices for EU citizens would have negative repercussions for regional stakeholders. Greece is being called upon to maintain a delicate balance between Russia and the US regarding energy issues, such as choosing a supplier for the Italy-Greece-Turkey gas pipeline. How well do you see Greece performing in this new role? In recent years we really have seen Greece’s energy policy firmly orienting itself abroad. It is only through a continuation of this policy trend that Athens can hope to avoid an undesirable role in Russian-Western energy gambits. This will mean pursuing deals with major suppliers (in the Caspian, the Middle East or North Africa); deals that will shore up Greece’s position politically, while also optimizing potential gains from its role as an energy transit country. So as things stand, Greece will collect its transit duties. But if additional storage facilities and improved infrastructure are combined with effective bargaining with foreign partners, we can turn a real profit while also securing key-player status. To this end, Athens could follow Ankara’s example of concluding bilateral deals to secure hydrocarbons for its domestic market as well as for resale abroad. Turkey has a natgas deal with Iran so when the latter emerges from international isolation Ankara will have prime access to Tehran’s energy exports. Greece’s problem is its contractual obligations arising from its alignment with the West, which limits our potential for entering into agreements with states that are frowned upon by our Western partners. [email protected]