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Greece

Capital Athens
Time Zone EET (GMT+2)
Country Code 30
Mobile Codes 690,693,694,695,697,698,699
ccTLD .gr
Currency Euro
Land Area 131,990 sq km
Population 11.3 million
Language Greek
Major Religion Orthodox Christianity

Greece’s Energy Plans, Projects and Key Actors: 2011 and Beyond

By Ioannis Michaletos in Athens*

The energy sector in Greece is currently one of the key areas of the economy in which both the state and the private sector are planning investments, in spite of the country’s debt crisis and the consequential economic recession.

In the following Balkanalysis.com special business report we outline the main trends marking Greek energy planning today, including a focus on the key players and projects, along with some of the larger international aspects of these projects.

Regional Potential

Greece’s strong energy focus is largely due to the fundamentals of the mid- and long-term prospects of the Balkan region. This region is projected to have an annual 4-5% increase in energy consumption from 2012, for the next 30 years or so.

Coupled with the expanding Turkish economy of some 70 million consumers in need of massive electricity consumption, and the still underdeveloped market of Ukraine (more than 50 million people), it seems that the Greek energy planning outlined below is inexorably related to the promising Southeastern European energy demand on a multi-national level.

Renewable Energy Resources

In 2010, the number of solar energy installations in Greece tripled. It is projected that in 2011 some 200 MW of photovoltaic systems are going to become operational, in addition to 300 MW of wind parks.

In parallel, the Greek state has announced four international competitions for exploitation of the domestic geothermal energy resources (projects worth approximately 350 million euros) that are going to be completed by early 2012. At the same time, two small islands in the Aegean, Agios Efstratios and Lipsi, have already been announced as “green islands” due to their 100% use of renewable energy resources for local energy production. The state has plans to include dozens of other islands and mainland communities in similar projects in the coming years.

Furthermore, the Greek Ministry for Energy is managing a nationwide project to install 60,000 “smart electricity meters” for large-consumption users and 160,000 smart meters for low volume ones, under a joint program with the EU. This opens a new market for the industries that will supply these systems, which are spreading at a rapid rate across Europe.

Disengagement from Oil Consumption and Imports

Greece meets 55% of its domestic energy with oil; some 99% of it is imported, mainly from Saudi Arabia, Russia, Libya, Iran and Algeria. Greece currently pays around 5% of its GDP (estimated according to current world barrel prices). For the energy needs of its islands in the Aegean alone, Greece pays more than 500 million euros a year for oil consumption, in order to produce electricity at local power plants.

For this reason, the Greek state has unveiled a series of upgrades of the electricity networks connecting the mainland with the islands- a 365-million-euro investment. The new plants and installations on the mainland will thus be able to supply much greater volumes of electricity in the islands, thus reducing to a large extent the need for oil consumption.

In broad figures, the total investment need for this upgrade may be up to 3 billion euros through 2020. This cost will largely be covered by the EU and through investment loans by the EBRD, along with state subsidies and private investments.

An Oil Licensing Agency to Be Established?

By mid-2011, voting in parliament will happen for a law that would establish a new state agency; this body would be responsible for disbursing research and exploration licenses for oil in Greece.

Sources from within the Greek state energy circles note for Balkanalysis.com that, in their estimation, the potential hydrocarbon wealth that can be exploited reaches up to 500 million barrels- equivalent in today’s prices to over $50 billion. For the moment, a Greek company, Energean, produces around 8,000 barrels of oil from an offshore field in Northern Greece, and there are another four fields in a close range of short-term attention.

Natural Gas Expansion Trends

The national gas company DEPA is 65% controlled by the state with the rest of the shares belonging to the semi-state oil company ELPE (Hellenic Petroleum). The Greek government will privatize some 35-40% of the shares to a private strategic investor.

Throughout 2011, three more regional gas companies, 100% owned by DEPA, will become operational in Thrace, Macedonia and Central Greece peripheries in order to increase penetration of gas consumption in the country. Thereafter, strategic investors from abroad will be sought for these as well.

Regarding international natural gas projects, Greece and Azerbaijan recently signed a gas supply deal in mid-March, in which Greece will import directly 700 million cbm of gas. The culmination of the ITGI pipeline connecting Azeri gas to Italy through Greece and Turkey is proceeding too, with a timetable to be concluded by 2014, and for this pipeline to become the so-called “Southern Corridor” for the EU.

Greece is also cooperating with Bulgaria for the IGB pipeline that will carry gas to Haskovo from Greece; it will be used as a supplementary supply route for Bulgaria and, to a second investment degree, for Romania as well, should the plan deliver and mature over the next decade.

The IGB planning is related to the proposed creation by private Greek companies of a natural gas depot in the region near Kavala in eastern Macedonia. This 300-million-euro investment aims to secure quantities of approximately 500 million cbm of gas, to be used as a regional Balkan strategic reserve.

For the moment, this proposal is under review by the Ministry of Energy’s special committee and the governmental authorities dealing with the legal aspects of the case, since there is an entanglement of certain technicalities and bureaucratic obstacles regarding this investment.

Another major project is the South Stream one, where the main driving forces are Gazprom along with Italian, French and German companies.

Here, DEPA has already formed a joint venture with Gazprom relating to the Greek portion of the proposed pipeline. It aims to carry some 30 billion cbm to Italy through Bulgaria and Greece (its southern axis) and through Bulgaria-Serbia-Croatia-Slovenia (its northern axis).

Greek Energy Strategy Today: The Three Imperatives

At present, Greek energy planning seems to be following three general trends, which are in accord with larger EU-level policies and trends: an increase and diversification in renewable energy resources; the reduction of oil imports and exploitation of local hydrocarbon resources, and the increase in natural gas consumption and imports.

This process will significantly alter the country’s present energy status and will require substantial amounts of investments, along with importation of know-how and a whole array of supplementary services for the next generation. But the cost and effort will be worth it, if it can cumulatively guarantee a larger degree of energy independence and sustainability for Greece.

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