America has urged its NATO ally Greece to pull out of a Russian gas pipeline through Turkey that would allow Europe’s largest provider of natural gas to bypass Ukraine.
Politico reports that Amos Hochstein, the United States State Department’s energy envoy, has asked Greece to promote the European Union’s Southern Gas Corridor instead which aims to bring gas from the Caspian region to Europe via Turkey as well.
The United States argue that the completion of the Southern Gas Corridor would bring €1.5 billion in foreign investment to Greece, generate thousands of construction jobs as well as millions of euros in revenue over the next 25 years.
The Greeks are not convinced. After a meeting with Hochstein, Panagiotis Lafazanis, the energy minister for the ruling far-left Syriza party, said the Russian-sponsored Turkish Stream project still be “useful for our country.”
Russia canceled one Black Sea pipeline, called South Stream, last year, citing European opposition to the project. The European Commission had leaned on Bulgaria to pull out of South Stream in the wake of Russia’s annexation of Ukraine’s Crimean Peninsula and was investigating whether it didn’t violate the bloc’s competition rules.
European competition commissioner Margrethe Vestager recently launched another probe into Gazprom’s gas contracts. The company, Russia’s largest gas exporter, asks a higher price for its gas in former East Bloc countries that rely almost entirely on their former Soviet master for energy.
Experts doubt if the alternative Turkish Stream pipeline is economically viable. Gazprom’s profits have plummeted since the start of the Ukraine crisis convinced European customers to seek alternative supplies. It is believed Russia uses just 60 percent of its existing pipeline capacity. The reason for building a Black Sea pipeline is political. It would enable Russia to bypass Ukraine which transits roughly half of the natural gas the country sells to Europe.
Greek support for the Russian pipeline is seen as leverage in its negotiations with the rest of the European Union for a third bailout. The country is running out of cash and needs continued financial support from other countries to make ends meet. But Lafazanis’ Syriza party, which won the election in January, has rolled back many of the policy changes previous Greek administrations made in order to qualify for financial aid, including privatizations and welfare cuts. Most other European governments are reluctant to give Greece more money when it reneged on its promises to reform.
The Southern Gas Corridor is not without controversy either because it would shift Europe’s energy dependence from authoritarian Russia to authoritarian Azerbaijan and Turkmenistan.
Supply deals with the Caspian Sea states have yet to be finalized. The Trans Adriatic Pipeline, which is envisioned to become the final section of the network, has already been approved and will cross the north of Greece and Albania to terminate in Italy. It is supposed to start providing Europe with up to ten billion cubic meters of Azerbaijani gas per year by 2020.
The European Union as a whole now get just over a quarter of their gas from Russia.