Azernews.Az

Greece believes the Interconnector Turkey-Greece-Italy (ITGI) pipeline is the best route to export Azerbaijani gas to European markets, Greek energy minister George Papaconstantino said after holding talks in Baku on Monday.

"The ITGI gas pipeline is the most optimal and comprehensive project for the consortium on Shahdaniz [Azerbaijan’s major gas field in the Caspian Sea], Azerbaijan, the European Union, and Greece," Papaconstantino told a news conference.

ITGI involves gas supplies from the Caspian region and the Middle East to the EU countries. It includes updated Turkish pipeline infrastructure and also ITG projects such as the Turkey-Greece junction pipeline and IGI. Its planned capacity is 11.8 billion cubic meters per year.

Azerbaijan is currently reviewing options for the exports of its gas. The resource-rich South Caucasus republic has been offered several projects to export gas during the second stage of developing the Shahdaniz field, which is to produce first gas in 2017 - Nabucco, ITGI and Trans-Adriatic Pipeline (TAP). The projects are part of the European Union-backed Southern Corridor aiming to diversify energy supply routes and sources for European nations. Oil giant BP has recently offered a new export route, which is to cross countries in southeastern Europe, including Bulgaria, Romania, Hungary and Croatia.

The Shahdaniz consortium is expected to pass a final decision on the issue by the end of November.

Papaconstantino said his visit to Baku aimed to convey the advantages of the ITGI project to Azerbaijan. "This is the best project economically and technically," he said.

According to the minister, one of ITGI’s main advantages over the other projects is its sooner realization.

"ITGI will be able to pump gas to Europe, particularly the Balkan countries, from 2012-2013. This means that Shahdaniz gas could be transported to Europe from 2017."

Papaconstantino said the ITGI project is in the strategic interest of Greece and Azerbaijan. "ITGI promotes the development of strategic relations between the two countries, as it turns Greece into a gateway for Azerbaijani gas [exports] to Europe."

He said the financial hardship facing Greece will have no impact on the implementation of the ITGI project.

"The financial difficulties we are currently facing do not make a difference, because investors will place funds if there are guarantees that consumers will pay," Papaconstantino said.

He noted that the project’s estimated cost is 1.5-2 billion euros, and 1 billion euros has already been committed by the EU. Also, part of the required funds could be provided by the European Bank for Reconstruction and Development (EBRD).

Papaconstantino said the Greek government is also ready to facilitate the ITGI project by taking various measures, including investments.

The minister said if the Shahdaniz consortium approves the ITGI project, Azerbaijani state energy firm SOCAR could be involved in building parts of the ITGI pipeline, could buy a stake in the Greece-Italy pipeline or participate in the privatization of Greek energy company DEPA.

"We can offer all these options to the Azerbaijani side," he said.

The Greek government in late May approved a privatization program which is expected to bring the country 50 billion euros in revenue by 2015. The state-owned share in DEPA is currently 65 percent, while the remaining 35 percent is owned by refining company Hellenic Petroleum S.A. The privatization will reduce the state share in the company to 34 percent.

DEPA CEO Harry Sachinis also said at the news conference that the ITGI pipeline is the best option to transport Azerbaijani gas to European markets in the initial stage.

Sachinis said work on ITGI will be quick and cost less. He said a feasibility study has already been prepared on the engineering work and operations to be carried out under the sea, referring to the Greece-Italy pipeline. Also, work has begun on issues concerning environmental protection.

Sachinis said ITGI is expected to pump 10 billion cubic meters of gas per year to Europe in the first stage. Initially, 1bn cubic meters will be transported to Bulgaria, while another 1bn cubic meters - to other countries in southeastern Europe, and 8bn cubic meters – to Italy and other countries.

The DEPA CEO said one of ITGI’s advantages is the prospect of its expansion.

"For instance, we could increase to 3bn cubic meters the volume of gas delivered to Greece and to 16bn cubic meters the volume supplied to Italy. In total, our gas export volume could be brought to 24bn cubic meters, which is a lot compared to other [pipeline projects]. Moreover, expansion work will not require very much funding -- all we need is additional expenses of 5 percent."

Sachinis said that if even more gas is available, the Nabucco project could be seen as the second stage of the ITGI project.

"We could interpret Nabucco as a continuation of this project [ITGI]. In other words, if the volume of gas increases, we can launch the Nabucco project phase."

Nabucco envisages gas supplies from the Caspian region and the Middle East to the EU countries. Azerbaijan and Iraq are considered as the main suppliers at the first stage of the project.

The Shahdaniz field holds estimated reserves of 1.2 trillion cubic meters of gas.

Shahdaniz shareholders are: BP (25.5 percent), Statoil (25.5 percent), NICO (10 percent), Total (10 percent), Lukoil (10 percent), TPAO (9 percent) and SOCAR (10 percent).