In the name of Caspian gas

The governments of Italy, Greece and Turkey have pledged to support the construction of the pipeline

The energy ministers of Italy, Greece and Turkey, Pierluigi Bersani, Dimitris Sioufas and Hilmi Guler, yesterday in Rome signed a package of agreements to support the gas pipeline project across the territories of these countries. The pipeline, consisting of three sections, will be launched in August of this year, and it will reach Italy by 2012. Project participants say they are focusing on supplies of Caspian and Middle Eastern gas. However, today the only real source is the Shah Deniz field in Azerbaijan. It is this gas that should be supplied to the Greek market in the very near future. However, Turkish Botas has not yet agreed with the Azerbaijani SOCAR on the terms of resale of gas to Greece on a long-term basis.

“By concluding this formal act, the governments of the three countries recognize the strategic importance of the gas transit corridor and undertake to support the activities of industrial entities involved in the project,” RIA Novosti quotes a representative of the Italian company Edison, participating in the project.

The gas pipeline will consist of three sections. The first is the expansion of the Turkish gas transportation system to supply Caspian gas in this direction. It will be built independently by Botas. The second is the IGT pipe (from the Turkish city of Karachabey to the Greek Komotini), which is almost built through the joint efforts of Botas and the Greek DEPA. The third is the IGI gas pipeline, which includes an onshore section in Greece (implemented by the Greek Desfa) with a length of 600 km, and the Poseidon gas pipeline (laid by a joint venture of DEPA and Edison) with a length of 212 km along the bottom of the Adriatic Sea.

The maximum throughput capacity of IGT will be 11.5 billion cubic meters of gas per year. It was previously reported that Botas is going to start selling Azerbaijani gas to DEPA in August at $149 per thousand cubic meters, purchasing it at $120 from SOCAR. By the end of the year, supplies may reach about 800 million cubic meters. Baku wants to convince its Turkish partners to cede to SOCAR the right to supply half of this volume, using a carrot and stick policy (cessation of supplies on unfavorable terms for itself, on the one hand, and a promise to increase its contractual obligations to Turkey, on the other). Under the current contract, the Azerbaijani company must supply Turkey with a maximum of 6.6 billion cubic meters of gas, which is not enough to fill the new gas pipeline to Greece and Italy.

The start of deliveries to the Apennines is planned for 2012. And IGI’s throughput capacity is planned at 8 billion cubic meters per year. By that time, the second phase of production (about 10 billion cubic meters) should begin at Shah Deniz, which could cover the needs of DEPA and Edison. It should be noted that the European Commission granted these two companies the exclusive right to use the capacities of IGI (80% Italian company, 20% Greek) as an exception to the rules for operating in the gas transportation market established as part of liberalization.

Alexey GRIVACHS