Secure Gas Supplies Will Empower Balkan Integration| 25 March 2010 | By Dr. Theodoros Tsakiris and Professor Kostas Ifantis
But while the European presence, and equally importantly, the European prospect, play a critical role in reducing the potential for new conflicts, regional gas geopolitics, and in particular the perceived antagonism between the Nabucco and South Stream projects, are factors threatening to reverse this positive trend.
Given the rising importance of the area as the principal transit corridor for the export of Caspian and Middle East natural gas to Europe, it would be unfortunate if such a zero-sum game mentality again characterized the region’s geopolitics.
These same projects could also constitute a catalyst for regional integration if a series of small-scale interconnectors were constructed so as to create the necessary conditions for the reverse flow of natural gas throughout the region.
Such a development would constitute a major step forward in integrating energy systems and markets in the Western Balkans, diversifying regional import sources and routes while promoting the penetration of natural gas in the region’s energy mix. The Western Balkan states face two intertwined energy challenges. The security of gas supply is pertinent to their resolution.
Too dependent on coal:
Today, the region is too dependent on oil and coal in terms of its Total Primary Energy Supply, TPES, in particular its electricity generation. Contrary to average EU energy consumption patterns, which show a steady reduction in the use of petroleum and coal/lignite at the expense of natural gas, nuclear energy and renewables, the Western Balkans is moving in the opposite direction.
Pipeline Geopolitics – The ‘New Great Game’:
Although Southeast Europe as a whole is considered the most critical transit region for the diversification of EU natural gas imports away from Russia and the problematic Ukrainian gas transit corridor, the Western Balkans would have remained a mere sidekick of this “New Great Game” were it not for Gazprom’s South Stream project.
Neither Nabucco nor ITGI - the projects to connect Caspian Sea natural gas to Europe via Turkey - cross the Western Balkans. Neither Nabucco nor ITGI considered extending interconnectors linking their nominal combined transit capacity of 42 bcm/y to any of the Western Balkan states in close proximity. Nor was there any suggestion by the respective consortia developing these two major infrastructure projects to interlink the ITGI with Albania or FYROM, or Nabucco with Serbia or Croatia.
Apart from South Stream and a planned reverse flow gas interconnector of 2 bcm capacity between Serbia and Bulgaria, announced on March 2010, the only inter-regional projects that appeared to increase the level of market integration within the Western Balkans area are the Western Balkans Gas Ring Project and the Trans-Adriatic & Ionian-Adriatic Pipeline.
The Greek and Turkish Public Natural Gas Companies, DEPA, and Botas launched the now moribund idea for the Western Balkans Gas Ring Project in 2003. The plan was to construct several small to medium capacity natural gas interconnectors between the whole of former Yugoslavia, which could be fed with Caspian Sea gas via the ITGI.
Early in 2003 DEPA, Botas and their counterparts from all the former Yugoslav states, and Albania, signed a Memorandum of Understanding. But the project never moved forward. It became evident that there was not enough demand in the region and there was uncertainty over the availability of Caspian gas, an enigma that still bedevils both Nabucco and ITGI. Finally, both DEPA and Botas lost interest as a result of their participation in much more financially viable and nationally advantageous projects, such as ITGI and, or, Nabucco.
The Trans-Adriatic and Ionian-Adriatic Pipeline:
The second alternative that appeared to hold the promise of genuine market integration was the Trans Adriatic Pipeline, TAP, system and its eventual extension in the form of the Ionian-Adriatic Pipeline, IAP. The TAP, owned on a coequal basis by the Swiss-based utility company EGL and Norway’s Statoil, aspires to export around 10 bcm/y of Caspian and Iranian gas to Italy and Switzerland via Turkey, Greece, and Albania.
The 520km line aspires to utilize the Turkish pipeline system to Greece, which is already in operation and has a final throughput capacity of 11.6 bcm/y, to extend a private pipeline system crossing Greece (186km), Albania (200km) the Straits of Otranto (115km) and Italy (19km).
The cost of the line is estimated at around 1.2 billion euro. The TAP is thereafter projected to extend along the Adriatic coast from Albania to Montenegro, Croatia and Slovenia as an updated edition of the 2003 DEPA-Botas Western Balkan Gas Ring project. But the TAP’s additional vision, to expand through the Western Balkan markets as the Ionian-Adriatic Pipeline project, also lost steam following Croatia’s plans for a Liquified Natural Gas terminal, LNG, on Krk.
Dr. Theodore Tsakiris, an energy expert, and Kostas Ifantis, Associate Professor at the University of Athens, are members of the EKEM-CSIS Task Force “Transforming the Balkans”. Balkan Insight is BIRN`s online publication.