Greece, Turkey, Italy sign pact on gas pipelines

After months of negotiations, Greek, Turkish, and Italian officials have signed an agreement to build a pipeline system to transport natural gas from the Caucasus to Western Europe through Turkey and Greece by 2011.

By OGJ editors

HOUSTON, July 30 -- After months of negotiations, Greek, Turkish, and Italian officials have signed an agreement to build a pipeline system to transport natural gas from the Caucasus to Western Europe through Turkey and Greece by 2011.

Turkish Energy and Natural Resources Minister Hilmi Guler said the agreement will allow Turkey to buy at a cheaper price 15% of the gas passing through the Turkish sector of the proposed pipeline. Greece's Minister of Development Dimitris Sioufas described the project as "a work of strategic importance."

The project is a system of three pipelines: one linking Greece and Turkey that is already nearing completion, a 217-km underwater pipeline from Greece to Italy, estimated to cost €300 million; and a 590-km pipeline connecting the western terminus of the Greece-Turkey pipeline, in Komotini, Greece, to the eastern terminus of the Greece-Italy pipeline near the Greek port of Igoumenitsa at a cost of more than €600 million. Total investment earlier was estimated to exceed €1 billion and will be partly funded through the European Union's Fourth Community Support Framework (2007-13).

The Turkey-Greece pipeline will have a transport capacity of 11.5 billion cu m/year of natural gas. The Greece-Italy subsea pipeline is to have a capacity of 8-8.8 billion cu m/year. The difference is to be channeled into the Greek gas market, as well as Albania and the former Yugoslavian Republic of Macedonia, officials said. Bulgaria also has expressed interest in obtaining natural gas from Greece.

The Turkey-Greece link initially was scheduled to be completed in June but is now expected to begin operations in late August. Construction of the subsea Interconnector Greece-Italy (IGI) link is to start next June with completion slated for 2011. That segment is owned by the Italian utility Edison SPA, which will control 80% of the segment's capacity; and Greece's Public Natural Gas Corp. SA (DEPA) with 20%. An earlier agreement excludes third-party access to the underwater pipeline for 25 years to ensure the viability of the owners' investment.

Because of strong US pressure for Europe to diversify its expanding gas imports among multiple suppliers, the gas moving through the Turkish-Greek-Italian system will likely be of non-Russian origin. There is speculation that Azerbaijan may furnish much of the supply while a separate project, the South Stream pipeline, would bring Russian gas through Bulgaria to Europe. Earlier this summer, DEPA Chief Executive Asimakis Papageorgiou was in Azerbaijan to secure gas supplies to be available in 2012.

Greece and Turkey have ambitions to develop into energy hubs furnishing Europe with energy from eastern suppliers.

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