Gas Supply diversification corridor for Europe - ITGI a step ahead

For years, the idea that Europe might get gas from the Caucasus and beyond, breaking Russia’s monopoly on East-West pipelines, seemed fanciful. Not any more. Things are changed and rather very fast.

On November 25 the Bulgarian council of Ministers approved the establishment, by IGI Poseidon SA and by Bulgarian Energy Holding EAD, of the Company named IGB EAD (Natural Gas Interconnector Greece Bulgaria EAD). IGB EAD will be responsible for the development, construction and operation of the new gas interconnection between the Greek and Bulgarian systems (the IGB project), being developed as a part of the wilder ITGI Project (Interconnector Turkey-Greece-Italy).

The IGB pipeline will significantly contribute to the enhancement of security of energy supply for South-East Europe, creating the possibility of accessing to diversified sources through diversified transportation routes. For its contribution to the regional security of supply, the IGB project is supported by the EU with a contribution of 45 million euro under the European Energy Plan of Recovery.

Edison, the Italian leading power and gas company, Depa, the Greek state gas company, and Botas, the Turkish state gas and oil transportation and gas trade company have signed on 17 June the MoU, which draws the framework for the transit through Turkey of the natural gas for the ITGI pipeline, the first European realization of the so-called “Southern Corridor”, recognized by the EU as “Project of European Interest” in the European Recovery Plan with a proposed financing of 100 million euro.

The MoU defines the general terms and conditions for the gas transit for the ITGI Project through Turkey. This includes usage of Botas existing capacity up to the Greek border for the gas requested by the ITGI pipeline.
The MoU strengthens the partnership among Edison, Depa and Botas in many ways, including the evaluation of participation of Botas in IGI Poseidon SA, a company equally owned by Edison and Depa and responsible of the construction of the offshore pipeline between Greece and Italy (namely the Poseidon pipeline), and, together and in parallel, the evaluation of participation by Edison and Depa in the necessary upgrades on the Turkish grid to enable the transit of gas volumes for ITGI.

“This agreement is a big step forward for ITGI because it completes the framework for the transit in Turkey and enables us to speed up the finalization of the gas contract with Azerbaijan”, said Roberto Poti, Executive Vice President in Edison. “ITGI is able to open in short term the Southern Corridor, thus enabling the export of Azeri gas production to Europe. The pipeline represents a strategic infrastructure which will significantly increase the European energy security as it will be the first link with the Caspian area where about 20% of world’s gas reserves are located”.

“This agreement extends and deepens our relationship with Botas and Edison, further leverages the existing Turkey-Greece Interconnector and creates the immediate opportunity to bring Caspian and Middle East gas to Europe through the existing infrastructure as well as through the planned ITGI pipeline, thus enhancing European energy security”, said Harry Sachinis, Chairman and CEO of Depa.

“With the signing of today’s MoU we once more underlined Turkey’s unique role for the interconnection of Eastern rich gas reserves with Europe’s growing demand”, stated Fazil Senel, Chairman and General Manager of Botas. “With the MoU our companies will go on developing possible transit options for Southern Europe within the framework of the intergovernmental Agreement signed by Turkey, Greece and Italy in June 2007. We give utmost importance to all such projects including the ITGI aiming to transit Turkey and we always stress the fact that Europe will be in need of all the gas to be carried by these complementary projects in the coming future”.

ITGI pipeline comprises the following sections: i) the national Turkish gas grid which will be upgraded in order to enable the transit of the volumes to Greece and Italy; ii) the Interconnection Turkey-Greece (ITG), a 36 pipeline connected in 2007; iii) the Interconnection Greece-Italy (IGI), to be built. It will have a transport capacity of 8 billion cubic meters of gas a year and 800 km long. The pipeline includes two sections: IGI Poseidon (200 km offshore pipeline across the Ionian Sea under development by IGI Poseidon SA, a joint venture by Edison and Depa) and IGI Onshore (600 km onshore, under development by Desfa, a company controlled by Depa and owner of the Greek Transmission System”.

The ITG represents a new route of supply for the European energy system, able to enhance security and increase the competition on the EU’s gas market. The EU acknowledged the strategic relevance of the ITGI as a project of European interest and included it among the Southern Gas Corridor Projects of the announced European Recovery Plan with a proposal of 100 million euro of financing. In any case, the costs of the Adriatic route are simpler regarding other similar projects.

The development of the IGB project further enhances the regional relevance of the ITGI System, that represents the most advanced and competitive option for swiftly opening the Southern Gas Corridor for the transportation to Europe of Caspian and Middle East gas. The ITGI project will increase supplies security in Southern East Europe (through Greece and Bulgaria) and in other European countries (through Italy).