DEPA exec: Southern gas corridor still needs ITGI

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The selection of the Trans-Adriatic Pipeline (TAP) project for the Italian pipeline portion of the Southern gas corridor is only a "provisional decision", says Harry Sachinis, chairman and chief executive of the Public Gas Corporation of Greece (DEPA). In an exclusive interview with EURACTIV, he insists that TAP lacks the necessary licences ITGI has. 

Azerbaijan recently announced it has selected he Trans-Adriatic Pipeline (TAP) project for the Italian pipeline option of the project to bring gas to Europe from the Shah Deniz II offshore field. The other competitors in the Southern gas corridor – the Turkey-Greece-Italy Interconnector (ITGI) in which DEPA is a shareholder, Nabucco and British Petroleum – hope to obtain the 10 billion cubic meters per year from the offshore Shah Deniz II field. A decision is expected in summer [more].

Harry Sachinis spoke to EURACTIV Senior Editor Georgi Gotev.

What is new with ITGI, the Interconnector Turkey-Greece-Italy project, since the recent news that the Shah Deniz II consortium has given its preference to a competitor, the Trans-Adriatic Pipeline (TAP) pipeline, for the offshore section to Italy?

Thank you for giving me the opportunity to give you the information from firsthand. Let me explain what the ITGI system is in general. It includes also IGB -the interconnector Greece-Bulgaria, known as Stara Zagora-Komotini – and then IGI which is the interconnector between Greece and Italy. The idea is – in terms of timeline – IGI to be completed in 2014 and for it to actually carry early Caspian gas before the gas from Shah Deniz II becomes available, and also carry LNG gas that would come from our Revithoussa LNG terminal in Greece. This is very important because as we have seen from the press in the past couple of months, the region has suffered a crisis of gas supply. The reasons are the weather, but also because of other reasons like the fact that this winter Turkey proved to be unreliable, as it stopped providing the gas system in Greece.  

And the interconnectors are independent from the bid for Shah Deniz?

Yes, because we are talking way before Shah Deniz II. Shah Deniz II is going to have the first gas in 2018 but the area can’t wait for solutions until then.

Now about Shah Deniz II. As we know there are four pipelines looking for which way the gas from Shah Deniz II will go. One of these pipelines is the IGI, part of the ITGI system. So the interconnection between Greece and Italy … can be ready before Shah Deniz II gas is available. Because of commercial issues and one might say for negotiation tactics, and because the suppliers have a share with TAP, they made a provisional decision – those were the words they chose – to proceed with that project.

But TAP does not have all the necessary licences and approvals for it to be ready before the time that Shah Deniz II needs to make its final investment decision. And that’s a key thing because if that project is delayed because it doesn’t have the appropriate regulatory approvals, licences and intergovernmental agreements in place that ITGI has, that puts Shah Deniz II at risk of delay. So Shah Deniz II will have two options. One is to go through the northern route [to Austria], or come back to ITGI to actually resolve the commercial issues. And there is an important difference between these two choices. I believe – and I think this is shared by even the European Commission – that the link between Greece and Italy is extremely important for the security of supply of southeastern Europe, because in case of any disruptions for whatever reasons, the fact that there is a pipeline connecting Greece to Italy means that all of southeastern Europe can enjoy having this kind of back-up because you can bring back from Italy – reverse flow – or even from North Africa to Italy to Greece and to all southEastern Europe.

Yes but you can achieve this goal with TAP, it’s not only ITGI that provides this possibility.

You are absolutely right but you have to combine my two points. One point is that TAP cannot be ready for Shah Deniz II to make the final investing decision on time.

Are you offering your cooperation to join strengths with TAP?

I’m not going to comment on market speculation or what has been written. But if one looks at the combination of commercial capabilities and the strength of the routing and the approval that ITGI has, I think you know one may seem how one can resolve commercial issues and potentially also resolve all the timing issues and at the same time killing three birds with one stone, resolving the issue of security and supply in southeastern Europe.

The Commission has repeatedly said that many of the existing projects should combine strengths. Are you going to get a stake with TAP, what is your strategy?

One here has to take into account two things. TAP is a supplier project and just for Shah Deniz II gas. Shah Deniz is not necessarily the only supplier of gas into the area. I don’t want to say more about this now, but there needs to be a balance between suppliers and buyers – and maybe the combination of the commercial interest of the suppliers and buyers, and also with the quickest opening with the southern corridor based on the maturity of the ITGI projects based on the licences and intergovernmental agreements. There is some interesting space there, and as I said, combining that with another element that cannot be missed – especially after what we went through in our region for the last two months – the issue of security of supply. Because of the unreliability of Turkey, you need to have a linkage between southeastern Europe and Italy.

So you keep the cards close to your chest.

Wouldn’t you? [Laughter]

Look, as you can understand we are in the middle of a real game, a real negotiation and I'm not referring only to ITGI but to everybody – Nabucco, TAP, Shah Deniz II, whoever else is involved in bringing new gas sources into Europe. I think that this big negotiation that is moving to the most interesting time.

Is the fact that DEPA is one of the Greek [government] assets earmarked for privatisation, has it impacted of the decision of the Azerbaijani authorities to pick up the TAP option?

In terms of making their provisional decision, obviously having that uncertainty was an issue. But by far the key issue for the suppliers was the commercial issue, in terms of making more money for their gas. But in terms of DEPA, I should tell you that it has been doing extremely well.

We are having a second year of record profits that are going to be announced in a few days – officially. All the sectors of the group are performing extremely well, both the conventional companies, the distribution companies, pipeline company, everyone had a stellar year and were very pleased to report that. The indications are that there are some 20 very good companies interested in DEPA, also because it has a very strategic location. So I think this is going to be very interesting but of course there is the uncertainty of who is going to come.

Should Gazprom bid for DEPA? Are they allowed to bid?

Yes, they are free to bid. But I think the people who will bid the most interested in DEPA and who put the most money in, are people who actually see the opportunity to bring new gas into the market.

What is the time horizon for the privatisation?

This week the call of interest is going to be published. 

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