Trans Adriatic pipeline deal shows promise for region

04/03/2013

The new gas pipeline could reduce gas prices and lessen the need for Russian energy.

By Andy Dabilis and Erl Murati for Southeast European Times in Athens and Tirana -- 04/03/13

photo

Greece Foreign Minister Dimitris Avramopoulos (centre), Italy Economic Development Minister Corrado Passera (left) and Albania Economy Minister Edmond Haxhinasto shake hands during Trans Adriatic gas pipeline project in Athens. [AFP]

An agreement by Greece and Albania to join with Italy in a three-way deal to support the Trans Adriatic pipeline to bring gas from Azerbaijan to Europe could raise employment and investment, but still faces a number of economic and political issues.

In an effort to lessen its reliance on Russian energy, the EU backed the Nabucco pipeline, also called the Turkey-Austria line, which bypasses Greece. But the plans were scaled back after Azerbaijan reached a deal under which Turkey would take some of the gas for Europe and build a section of the pipe across its territory.

Nabucco plans to transport 10-23 billion cubic metres of gas annually, 1,300-kilometres from the Bulgarian-Turkish border and then link up with a European pipeline network in Austria.

With the Nabucco and Trans Adriatic pipelines competing, the stakes are high as to which project will prevail in bringing needed gas supplies to EU countries.

"We are politically supporting a project of strategic importance for Greece, but also Europe's energy policy," Greece Prime Minister Antonis Samaras said after the Trans Adriatic pipeline signing ceremony in Athens last month.

The Trans Adriatic line will bring a 1.5 billion euro-investment to Greece and create 2,000 new jobs. It will "upgrade the geo-strategic role of the country in the coming decades," Samaras said, adding that it could indirectly create 10,000 jobs.

The pipeline will transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into Western Europe along an 800-kilometre outlet with a capacity of 10 billion cubic metres. It is run by a group including Norway's Statoil, Axpo of Switzerland and Germany's E.ON Ruhrgas.

The BP-led Shah Deniz consortium in Azerbaijan, which is overseeing the Caspian Sea gas field of the same name, should decide by June which is its preferred gas-pipeline provider to Europe.

"[The Trans Adriatic pipeline], if selected, will give another supply route for gas that will eventually lead to price decrease," Ioannis Michelatos, security and energy affairs specialist at the Athens-based Institute for Security and Defense Analysis, told SETimes.

"If Azerbaijan really has the quantities of gas needed for the long-term, then both projects could be a success, otherwise only one could proceed," he said.

Edmond Haxhinasto, Albania minister of economy, trade and energy, told SETimes that all Balkan countries will benefit from the Trans Adriatic line. "This pipeline construction will create opportunities to connect directly with other countries of the region," he said.

"This project has an enormous potential for the region," Haxhinasto said.

Theodoros Tsakiris, programme co-ordinator for geopolitics of energy at the Hellenic Foundation for European and Foreign Policy, said the inter-governmental agreement has given the Trans Adriatic line an advantage.

"[The Trans Adriatic pipeline] was recognised by most of the Shah Deniz partners as a more attractive pipeline project compared to Nabucco for an array of commercial and technical reasons," he told SETimes.

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Gjergj Simaku, energy expert and lecturer at the University Polis in Tirana, was more cautious.

"Until now, this project seems beautiful, but it does not specify what the price and market will be. In the north of Greece or in Albania there are few identified gas consumers," he told SETimes.

It will probably come down to the certainty of supply and cost, Michelatos said.

"The exact quantities of Azerbaijan's Shah Deniz field are not known … they can certainly supply Turkey and Greece, perhaps even the Balkans, but they will not be able to secure supply major EU countries like Germany, Italy, and others which need large supplies of gas every year," he said.

This content was commissioned for SETimes.com.
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