US embassy cable - 05ATHENS2870

UNCLAS ATHENS 002870 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG, GR, NATGAS 
SUBJECT: NATURAL GAS DEVELOPMENTS IN THE GREEK ENERGY 
SECTOR. 
 
1. (U) Summary. On November 4th, GoG Minister of Development 
Dimitris Sioufas signed an agreement between the Greek public 
gas utility (DEPA) and the Italian Gas concern Edison, for a 
212 Kilometer underwater natural gas pipeline to be built 
across the Ionian Sea.  The joint venture is one of 5 key 
trans-European Energy Networks (TEN) funded by the EU, and 
will link Greece with Western Europe as an energy hub for 
South Eastern Europe.  On the domestic front, the GoG has 
submitted new draft legislation to the Greek parliament with 
the intent to introduce significant new market liberalization 
changes to the Greek natural gas industry in the coming years 
and bring Greece into compliance with EU directives. End 
Summary. 
 
Pipeline Diplomacy, the Italian Connection 
------------------------------------------ 
 
2. (U) On November 4th, Sioufas signed the MOU between DEPA 
and Edison for the 212 Kilometer, trans-Ionian underwater 
natural gas pipeline.  The 300 million euro project will have 
an annual capacity of over 8 billion cubic meters (bcm) and 
will be constructed by Poseidon S.A., a joint venture between 
DEPA and Edison created for the construction of the pipeline. 
 Construction is scheduled to begin in early 2007 and be 
completed in 2010.  The Italian portion of the project is the 
final piece of a 3-phase trans-Caspian pipeline project in 
Greece designed to bring natural gas from the Caspian region 
to Western Europe.  The other two phases, which should be 
completed in early 2007, are the Greek-Turkish pipeline which 
runs from Western Turkey into North-Eastern Greece and the 
trans-Greek portion of the pipeline that augments the 
existing natural gas infrastructure of the country.  It is 
worth noting that Turkish Minister of Energy and Natural 
Resources Mehmet Guler was also present at the ceremony and 
that Sioufas referred to him as "my close friend and 
colleague." 
 
New Legislation for the Natural Gas Market 
------------------------------------------ 
3. (U) While the international aspects of the Greek natural 
gas market continue to evolve, significant changes are 
underway on the domestic front as well. On October 31st, 
Sioufas delivered new draft legislation to parliament 
pertaining to the liberalization of the Greek natural gas 
market.  The legislation essentially outlines three phases: 
Phase one, states that the gas market will be opened for 
electricity and thermal energy providers by November of 2006. 
 Phase two, with a milestone of November 2008, allows for 
major commercial concerns to choose gas suppliers in the 
markets outside of the Attica, Thessaly, and Thessalonkiki 
prefectures.  Finally, phase three will open the natural gas 
market for all consumers in November 2009. 
 
Comment 
------- 
 
4. (U) The open gas market in 2009 does not pertain to the 
customers in Attica, Thessaly, or Thessaloniki, whose 
prefectures issued exclusive licensure to DEPA subsidiaries 
that do not expire until 2015.  With the overwhelming 
majority of the Greek population located in these three 
prefectures, the actual openness of the market until 2015 is 
questionable. In the Attica market, (greater Athens area) the 
joint venture between Cinergy (under acquisition by Duke 
Energy) and DEPA will not be effected by the new Legislation. 
 End Comment 
RIES