Caspian Report - Issue: 08 - Fall 2014

THANOS DOKOS, THEODORE TSAKIRIS
108
Natural Gas Market Structure – Partially State controlled Actors 13
An increase in the market’s liquidity
as a result of the US shale gas revolution
pushed spot LNG prices below
European long-term contracts
prices, which in turn helped Greek
importers of LNG expand their business.
By 2013, private LNG imports
expanded to cover around 10% of
national demand thereby providing
the country with a considerable
margin of supply security. In the absence
of a strategic gas storage facility,
Greece will remain dependent on
the flexibility of its LNG importers
in facing the challenge of another
potential Ukrainian transit crisis,
which would entirely sever its Russian
imports.
In this regard, the realisation of
TAP and in particular the launch of
Azerbaijani exports from Shah Deniz
Phase 2 from 2019 will considerably
enhance the ability of Greece to cope
with future supply crises. Especially
if DEPA extends its BOTAS contract
beyond 2021, Azerbaijani exports
will add a fifth source of supplies
which would improve Greece’s negotiating
leverage with all of its
existing suppliers. DEPA’s 25-year
contract of 1 bcm with the Shah
Deniz and TAP consortia was signed
in September 2013 and marks the
most important and most tangible
success in Greek pipeline diplomacy
in more than a decade.
During the January 2009 Russian-
Ukrainian gas crisis, Greece managed
to cover its needs following the
loss of its Turkish imports by securing
two emergency LNG shipments.
In less than two weeks, LNG imports,
which before the crises had constituted
just 20% of total supplies, expanded
to cover almost 100% of demand.
It is unclear whether Greece
will be able to repeat its successful
management of the 2009 crisis during
the winter of 2014-2015, if Russia
cuts off European exports via
Ukraine.
The agreement and TAP’s link to
TANAP further enhances Greek-
Turkish energy interdependence
and cooperation, as well as increasing
DEPA’s flexibility in view of the
renegotiation of its principal supply
contract with Gazprom (due to
expire in 2016). The aggregate net
import price paid by Greek gas consumers
is likely to decrease, since
Shah Deniz gas is expected to be less
expensive than the Gazprom and
BOTAS contracts and considerably
more attractive than Sonatrach’s inflexible
LNG prices.
13.
Paparsenos, ibid.