The Turkey-Greece-Italy corridor consists of three sections: the existing Turkish network of gas pipelines, which will be enlarged to allow the transmission of gas destined for the Greek and Italian markets; the project to connect the Turkish and Greek networks (Interconnector Turkey-Greece – IGT), which will go on stream in this year with a maximum transmission capacity of about 11.5bn cum/yr; and the project to connect the Greek and Italian networks (Interconnector Greece-Italy – IGI), which will have a transmission capacity of about 8bn cum/yr when operational in 2012.
The IGI pipeline will have a length of about 800km, 600km of which will be built by Desfa across Greece. The remaining section of about 200km will run subsea between Greece and Italy will be constructed by Poseidon, a 50-50 project joint venture between Edison and Depa.
“This intergovernmental agreement is a step of fundamental importance for the construction of a project that is highly significant for Italy and Europe as a whole. Three major countries recognize the strategic value of this new natural gas route: the IGI gas pipeline constitutes a key component for the development of an interconnection system that crosses all of Southern Europe,” Umberto Quadrino, Edison’s CEO, said. “This new infrastructure, coming on the heels of two other Edison projects (the Rovigo regasification terminal and the Galsi pipeline with Algeria ), increases the reliability of the European system and effectively promotes the diversification of supply sources. For Italy, this natural gas pipeline will be the first importation infrastructure developed independently of the traditional operator and, consequently, will significantly increase competition for the benefit of consumers.”
In consideration of the fact that the project has been recognized as a project of ‘European interest’ by the European Union, the Italian government, acting on the strength of a positive ruling issued by the EU on May 22, 2007, has granted Edison and Depa the right to use the pipeline’s entire transmission capacity, exempting them for 25 years from the obligation to provide access to the pipeline to third-party operators. Under an agreement executed by the two companies, 80% of the transmission capacity will be reserved for Edison, with Depa taking up the remaining 20%. In addition, Edison and Depa have agreed to expand the pipeline’s transmission capacity, which they will make available to third parties through an “open season” procedure.
The new agreement is seen as broadening the institutional framework that supports the development of the transit corridor established by an earlier agreement between Italy and Greece. The agreement also identifies the manner in which transit of gas through Turkey will be finalized, and establishes an intergovernmental co-ordination committee to oversee swaps of gas at the ‘Virtual Italian Swap Point’, thereby contributing to the establishment of an Italian ‘Natural Gas Exchange’.
In order to ensure a supply of gas for the new pipeline, Edison and Depa have already started negotiations with some producing countries in the Caspian Sea basin and with those that will be crossed by the pipeline. Applications for permits to build and operate the IGI gas pipeline have been filed in Italy and Greece. In Italy, local and regional administrations have expressed significant interest in this project, and Edison has been working actively with them to define the best conditions for its development. The pipeline is expected to make landfall near the city of Otranto.
After strong US pressure to ensure that Europe get its growing gas imports from multiple suppliers, a visit to Athens by Azeri Economic Development Minister Heydar Babayev in July raised expectations that Azerbaijan could supply much of the project’s supply. However, a separate project, the South Stream pipeline, is being planned to bring Russian gas through Bulgaria to Europe, and in March Greece, Bulgaria, and Russia signed an agreement to build an oil pipeline from Bulgaria to Greece to carry Russian crude to the Mediterranean, bypassing Turkey. In July in Ankara, Mr Sioufas signed a protocol with Turkish Resources Minister Hilmi Guler providing for Greek purchases of electricity from Turkey at peak periods. Mr Guler signed the agreement which came after another deal with Iran last month to transport some 30 billion cum/yr of Iranian and Turkmen gas westwards to Europe.
