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Bulgaria is an example of the instability that energy monopolies bring

25 February 2013 / 22:02:44  GRReporter
2776 reads

Victoria Mindova

Bulgaria may be taken as an example of how monopolies in the energy sector can bring instability into a country as stated by Matthew Bryza, who is the head of the International Centre for Defence Studies (ICDS) and former U.S. ambassador in the Republic of Azerbaijan. He spoke at the second energy forum in Athens, which this year is focused on the Transatlantic Pipeline and the opportunities its construction provides for the establishment of geopolitical stability in South-East Europe.

Bryza stresses that the monopolistic influence of Russia in the face of the public company Gazprom is still using non-market methods to maintain prices in the trade of natural gas, which requires Europe to find a way to diversify its gas supplies. The diplomat insists that Azerbaijan wants to launch its gas fields for consumption in the market not just to make the relevant profits but also to ensure the geopolitical support of Europe in the long term.

Deputy Minister of Environment, Energy and Climate Change Makis Papageorgiou stresses that Greece is improving the opportunities for Azerbaijan to prefer the Transatlantic Pipeline with the inter-state agreement signed between Albania, Italy and Greece. The three countries agreed two weeks ago to the conditions for the construction and operation of the Transatlantic Pipeline, which will carry Azeri gas from the Caspian Sea to Western Europe.

The evaluation of Hugh Pope, director of the International Crisis Group, is that the realization of the Transatlantic Pipeline is much easier than that of its rival, namely the Nabucco project. It costs less than two billion euro, which is one fifth of the cost for the implementation of Nabucco and its construction will take two to three years as opposed to the alternative option as stated by the specialist. Moreover, the Transatlantic Pipeline is smaller and will cross countries with already developed infrastructure to absorb the new supplies from the Caspian Sea.

However, energy experts are far from underestimating the degree of readiness of the rival project for the transfer of Azeri gas to the old continent to be implemented. According to Antonis Livanios who is the head of Energy Stream CMG GmbH, Greece & Germany, Nabucco West still has strong international connections and the strong support of Brussels.

"Now is the most critical stage of the southern route of the Caspian gas to Europe," says Livanios, stressing that it has been over 10 years since the European Union has been trying to increase the number of suppliers of natural gas in order to reduce its dependence on Russia.

40% of gas supplies to the European Union come from just one country - Russia. "Europe wants to strengthen its energy security by starting to obtain natural gas from Azerbaijan (Shah Deniz) at first and from Uzbekistan at a later stage".  

The advantages of the Transatlantic Pipeline over Nabucco are that it is cheaper, will be built only with private investment and the European Union will not have to provide funds for it. The additional credibility of the project is due to the companies that support the closer cooperation between the countries on which its implementation is dependant.

Gulmira Razayava from the Centre for Strategic Studies at the Azerbaijani presidency states that her country wants to become a close partner of the European Union. The final selection of the pipe that will deliver Azeri gas to Europe depends on the price of the amount each of the European customers is ready to order and on the volume of the demanded gas as stated by the expert. The parties that are interested in the Shah Deniz fields are the target market of the Russian South Stream project too. "However, we do not consider the South Stream a rival project," says Razayava, because the Azerbaijani fields are relatively small in comparison with the Russian ones and the two projects can be carried out in parallel.

The energy forum in Athens did not omit the issue of the privatization of the public gas company DEPA and its subsidiary DESFA. The experts have agreed on the idea that if the new owner of DEPA is related to the Azeri gas, this will tip the balance towards the Transatlantic Pipeline. "It is not easy to ignore the offer of Gazprom or another Russian company," states Livanios but stresses the need for paying particular attention to the composition of the shareholders of the company, which will purchase the public DEPA and DESFA.

Experts believe that there is more to be done in respect of the fields in the waters around Crete and the possibility of Greece itself becoming a significant factor in the energy market in Europe. Drilling is still in its initial stages and there is much speculation about the real capacity of the fields. "In Cyprus, there is norealistic dialogue about the fields in the region," says Hugh Pope. The real work in the fields is not expected to start unless the issue of the maritime border between Greece and Turkey is finally resolved. However, Prime Minister Antonis Samaras responded to the concerns expressed by the analysts that the two countries could and would find a peaceful and civilized way to resolve the differences related to the maritime border between the two countries.

The research to develop the local gas fields has been delayed for decades but now is the time to turn to them as stated by Makis Papageorgiou. "It is time for Greece to become a figure of stability and development of the eastern Mediterranean," he says, adding that the development of these projects will help Greece to regain much of the investor confidence.


Tags: EconomyMarketsGasPrivatizationAzeri gasGreeceRussiaGazprom
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