Foolish Greece Now Joins NATO Gas War
By F. William engdahl
10 June 2016
Only eighteen months ago prospects for a major southern Europe natural gas pipeline from Russian gas fields across the Black Sea, into Turkey and on to the Greek-Turkish border was in negotiation between Russian President Putin and Turkey’s Erdogan. Turkish Stream as it was called, was proposed in talks in Ankara between Putin and Recep Tayyip Erdoğan in December 2014 after EU economic sabotage had forced Russia to cancel plans for its South Stream pipeline into Bulgaria and on to the states of South East and Southern Europe. Now Greece has foolishly decided to join NATO’s “gas war” against Russia by signing a far more costly agreement to build the so-called Trans-Adriatic Pipeline to carry gas from Baku’s offshore Shan Deniz II field across Greece, through Albania then under the Adriatic to Italy. European gas geopolitics are rapidly becoming as risky as its oil geopolitics.
On May 17, Alexis Tsipras, Greek opportunist-in-chief and Prime Minister, signed an agreement in Thessaloniki to inaugurate the start of construction for the 550 km Trans-Adriatic Pipeline (TAP) through Greece. Tsipras hyped the estimated $1.5 billion project to the media as “one of the greatest direct foreign investment projects carried out in Greece.” Present at the ceremony were European Union bureaucrats as well as high ranking officials from Greece, Turkey, Albania, Italy and Bulgaria.
Curiously enough, the US State Department was also present, although they are no direct party to EU internal energy agreements. Indirectly, ever since the dissolution of the Soviet Union in the early 1990s, however, Washington has been in the middle of EU energy strategies, attempting sabotage of Russia’s Gazprom at every chance. The essence of the EU “gas war” is the US effort, directly via Washington pressure and by NATO pressure, and indirectly via “friends” in the EU Commission, to weaken or outright sabotage Russian Gazprom exports to EU markets.
Because of EU “greenhouse gas” regulations, and Germany’s phasing out of nuclear power, the demand for natural gas to replace coal and other fuels in the countries of the European Union will rise dramatically as will its need to import the gas. In the next four years gas imports will rise from the present of 45% of total EU gas consumption to approximately 65% by 2020.
The Foolish TAP
The Trans-Adriatic Pipeline is a portion of a far more expensive and longer pipeline chain that should link the Azerbaijan Shah Deniz II offshore gas field to the EU, bypassing Russian gas options. TAP is to bring Azerbaijani gas from Shah Deniz-2 to EU markets through Greece and Albania. TAP shareholders include Azerbaijan’s state energy group, Socar (20%), BP (20%), Italy’s Snam (20%), Fluxys (19%), Enagas (16%) and Axpo (5%). Of the total length of TAP, 878 km, only 550 km will pass through the northern part of Greece, 215 km through Albania, 105 km through the Adriatic Sea and 8 km through Italy. The debt-strapped, economically depressed Greek government was forced to give the gas companies of TAP AG a 25-year tax break to TAP.
TAP will bring the Azeri gas by way of a far longer pipeline called Trans Anatolian pipeline (Tanap). Tanap is a 1,850-km pipeline that is supposed to carry 16 billion cubic meters annually from the BP-operated Shah Deniz II field in the Caspian Sea at an estimated cost of a whopping $10 billion. It would go from the Georgia-Turkey border to Turkey’s border with Greece. There it would join TAP, which runs across Greece and Albania and under the Adriatic Sea, on to a gas hub in southern Italy .
TAP and Tanap are part of the EU Commission’s so-called Southern Gas Corridor, the most complex gas value chain ever developed in the world according to the TAP AG consortium which now will build the Greek section. It stretches over 3,500 kilometres, crossing seven countries and involving more than a dozen major energy companies. If completed by 2020 it should deliver some 10 bcm/year of Azeri gas to the EU.
This past February, 2016 the same Alexis Tsipras had been party to quite another signing ceremony. A “Memorandum of Understanding” was signed on February 24 to develop a gas pipeline project between Greece and Italy, enabling the potential realisation of a southern route for Russian gas supply to Europe. The agreement was signed by Alexey Miller, CEO of Gazprom, Italy’s Edison CEO Marc Benayoun and Theodoros Kitsakos, the CEO of Greece’s DEPA public gas supply corporation corporation.
The Gazprom-Greek-Italian Poseidon was designed to present another option to bring Russian gas into southern EU states after Washington pressure on the Brussels EU Commission forced Bulgaria to abandon plans to land Russian gas in a project named South Stream, a vastly lower cost pipeline route than the TAP-Tanap-Southern Gas Corridor in December, 2014.
The South Stream pipeline was designed to carry 63 bcm/year of Russian gas across the Black Sea to Bulgaria, and via Serbia, Hungary and Slovenia, to Italy. By contrast, the TAP EU alternative would deliver a mere 10 bcm/year and even that is questionable. That’s strange economics for an EU that is in the midst of a severe economic crisis. The proposed Russian alternatives would have cost €15.5 billion to bring some 63 bcm/year and the US-backed TAP-Southern Gas Corridor, for construction costs of $45 billion will bring only 10 bcm/year.
The same month Russia announced abandoning South Stream, in December 2014, Putin and Erdoğan agreed to discuss another Gazprom alternative to solve the gas demands of South East Europe and Italy. It was dubbed Turkish Stream and would have brought Russian gas via a pipeline under the Black Sea through a short stretch in Turkey to the border of Greece. The shooting down by the Turkish Airforce of a Russian jet in Syrian airspace in November, 2015 led to a freeze in Russian relations with Turkey and the end at least for the time, of South Stream.
The estimated cost of Russia’s proposed South Stream, which Washington sabotaged, and of its alternative ,Turkish Stream, were both around €15.5 billion, one-third of the enormous $45 billion cost estimated for the TAP-Southern Gas Corridor. For Washington’s economic warfare strategists, including the State Department’s neo-con-in-residence, Victoria Nuland, cost is no object so long as the EU countries must pay.
The February, 2016 Gazprom Poseidon project envisioned a new option for Russian gas into Greece and southern Europe. According to reports in the Russian press, Poseidon could link in a new agreement with Bulgaria to bring Gazprom gas via Bulgaria.
Sergei Pravosudov, director of the Russian Institute of National Energetics, said the Bulgarian route was the most advanced option for shipping Russian gas.
New Greek ‘bailout’ to bloc Poseidon
Washington was quick to react to the new Russian gas import threat with its next round of gas wars. Behind the curtains of European politics, the place where most deals are done, Washington put enormous pressure on the Merkel government and other EU states to organize a new tranche of bailout money for Greece.
On May 25, Germany and other EU governments made public a decision to give Greece a new bailout tranche of €10.3 Billion. The Greek people, who under the Tsipras regime get only more austerity and cuts in their living standard, won’t see a penny of the money. It will go to service Greek state debt to the European Central Bank and other foreign creditors. Washington pushed the EU to make the bailout to keep Greece from getting closer to Moscow with the Russian Poseidon gas project, according to German media reports .
It seems to have worked. The day after signing the US-backed TAP agreement, Tsipras announced it was freezing talks with Russia on its Poseidon alternative . Washington seems happy. US Secretary of State John Kerry, in a congratulation to Prime Minister Tsipras, called TAP a “prime example of infrastructure that enhances European energy security.” By that he means security from Russian gas. The only problem is that the gas from Azerbaijan offshore fields is not there. Acute shortages of gas supply offshore Azerbaijan are forcing the Azeri government and its state oil and gas group, Socar to look at possible gas imports from…Russia’s Gazprom. Azerbaijan’s main source of gas for export from the giant offshore BP-operated Shah Deniz field is already contracted for export to Turkey and Georgia. BP says gas production will be stagnant for the next several years. No gas for Greece and Italy.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”