A new page opens for Greece with the the commercial operation of the Liquefied Natural Gas (LNG) Hub in the northeastern Greek city of Alexandroupoli. Greece is becoming an energy hub and will be a factor of energy stability for the Balkans and Europe as a whole.
Greece’s emerging role in the LNG market
Greece will be key in creating a more interconnected and resilient natural gas market in Southeast Europe.
The floating storage and regasification unit (FSRU), known as the Alexandroupolis LNG terminal, sailed from the Singapore anchorage. It now permanently moors 17 kilometers (about 10 miles) southwest of the port of Alexandroupoli.
Shareholders of the FSRU, all part of the Gastrade company, each hold 20 percent of shares. Among them are Elmina Kopelouzou (20%), Gaslog (20%), DEPA Emporias (20%), DESFA (20%), and Bulgartransgaz, or Natural Gas Transmission Operator of Bulgaria, (20%).
The new project, partially funded by the European Commission, aims to lessen southeastern Europe’s reliance on Russian gas.
The project includes a network of submarine and land pipelines that transport natural gas into Greece. This is then distributed to consumers domestically, as well as to Bulgaria, Romania, North Macedonia, and Serbia. The web of pipelines extends further east to Moldova and Ukraine, as well as west to Hungary and Slovakia.
The economic impact of the project and its geopolitical significance
The European Commission has approved an investment exceeding €157 million for the first phase of the project.
By replacing coal and oil with natural gas, it is projected that €382 million will be generated in savings. Reduced CO2 emissions and fuel switching will benefit local economies, including that of Greece.
“We are a truly reliable gateway for many energy sources, and we are going to contribute to the supply and decarbonization of Greece and the neighboring countries…If we look all the way to Hungary, including Ukraine and Moldova, we can see the current input in long-term natural gas supplies from Russia in this area, including Greece, is approximately 20 billion cubic [meters],” said Maria Rita Galli, CEO of the Hellenic Gas Transmission System Operator S.A. (DESFA).
Greece’s goal is to become an energy gateway for Southeast Europe, supplying both natural gas and electricity through its LNG hub.
This project is also of great importance for Thrace, a critical region for Greece, adding geopolitical weight to the area. Analysts estimate that anything which increases the geopolitical importance of Thrace can serve as a diplomatic shield, especially against Turkey’s revisionist plans, which consistently threaten the region.
Criticism of the project
However, critics argue against the project due to its significant costs. A substantial decrease in the total volume of LNG Hub cargo has been recorded since June. This is mainly because the gas entering through the Turkstream pipelines is more affordable.
Two years after the start of the war in Ukraine and sanctions against Russia, the situation has changed regarding the demand for Russian gas. For example, on Revythoussa, Greece last June, the volume of LNG hub loads did not exceed 178,286 cubic meters. A year earlier, in June 2023, the total volume of LNG cargo was 369,275 cubic meters, marking a significant decrease. This reduction is due to both decreased demand and increasing flows of Russian gas imported through Turkstream, which is cheaper than long-term LNG contracts.
It is also noteworthy that the Southeast European Energy Institute in its “Energy Trends 2023-2024” report stated that, in the first quarter of 2024, the country’s total natural gas imports rose by 14 percent compared to the same period in 2023. Furthermore, according to that report, “in Greece, there was a 65 percent increase in Russian gas imports through Sidirokastro in 2023 compared to 2022, rising from 8.9 TWh in 2022 to 14.7 TWh in 2023.” This increase comes after a significant reduction (68 percent) in Russian gas imports between 2021 and 2022.
Despite these developments, plans for constructing new natural gas power plants in Greece do not seem to be changing. The question is whether these developments will affect electricity tariffs. While it is difficult to make precise predictions about future prices, current prices are likely to be higher. The evolving situation in the Middle East is adding further uncertainty.
