This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 ATHENS 000231 
 
SIPDIS 
 
DEPARTMENT FOR EUR/SNEC (STEVE MANN) 
 
E.O. 12958: DECL: 01/24/2016 
TAGS: ENRG GR GAZPROM NATGAS OIL
SUBJECT: GREECE'S EMERGING ROLE IN EUROPEAN ENERGY SECURITY 
 
REF: ATHENS 3264 
 
Classified By: Ambassador Charles P. Ries for Reasons 1.4 (b,d) 
 
¶1.  (C) Summary.  The recent dispute between Ukraine and 
Russia over the price of gas once again highlights Europe's 
vulnerable energy position.  Senior Greek officials have 
impressed on us their wish that Greece provide an important 
East-West corridor in the movement of gas and oil through the 
Turkey-Greece-Italy (TGI) gas interlink and 
Burgas-Alexandroupoli (B-A) oil pipeline.  Both projects are 
slowly moving forward, but without dependable gas and crude 
supply commitments, they risk remaining in the planning phase 
for some time.  Although the energy security logic of 
Burgas-Alexandroupoli -- creating a relatively cheap, 
politically secure (and relatively easily built) second 
pipeline-based alternative to the clogged Bosporus Strait -- 
is clear, crude owners have yet to commit the through-put 
necessary to make the project bankable.  On the TGI project, 
Greece, Turkey and Italy are committed to linking up their 
gas grids in such a way to allow for first-stage delivery of 
up to 8 bcm of non-Gazprom gas to Italy by 2010.  Washington 
can help move both projects along, in part through heightened 
public support, but also in part by pushing the key players 
to move faster and work better together.  End Summary. 
 
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The Turkey-Greece-Italy (TGI) Gas Interlink 
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¶2.  (C) TGI got its first real push in 2003 when Greece and 
Turkey signed an MOU to build a natural gas pipeline from 
western Turkey to northeastern Greece.  The project was 
significantly extended in November of 2005 when the GoG 
signed an MOU with Italy to extend the pipeline under the 
Ionian sea to Italy.  Construction on the 11-12 bcm 
Greek-Turkish section of the project began in July 2005 and 
is scheduled to be complete by the end of 2006.  Construction 
on the 8bcm sub-Adriatic link to Italy is scheduled to begin 
in 2007.  According to the Chairman of Greece's natural gas 
company, DEPA, Raphael Moisis, the remaining 3.5bcm could 
either be used entirely by Greece or exported to Balkan 
countries such as Albania. 
 
¶3.  (C) Our Greek contacts are optimistic that the TGI 
gaslink infrastructure can be completed by 2010.  Moisis says 
Greek infrastructure will be in place by that date, and that 
the Turkish gas grid already has a carrying capacity of 8 BCM 
which, with the addition of "some compressors", could deliver 
the planned 11.5 bcm to the line. The Turks are making 
progress on the necessary infrastructure, having already 
assigned construction of the Dardanelles portion and working 
now to assign the portion crossing the Evros river.  Work is 
also moving forward on the design phase of the Greece - Italy 
interconnect, which will be run by DEPA and Italian Edison. 
(Note: A significant portion of the funding for the TGI 
interlink will come out of the EU's Trans-European Energy 
Network (TEN), which considers TGI a "Priority Axis" project.) 
 
¶4.  (C) Although senior Greeks, from Development Minister 
Sioufas on down, are optimistic about the prospects for the 
TGI gaslink project, there are a number of speedbumps on the 
road to completion. Moisis has told us the overriding problem 
for TGI to reach its potential is nailing down a reliable 
supply of inexpensive gas from Azerbaijan.  Having a contract 
in place for the delivery of Azeri gas as soon as possible is 
a sine qua non for the project to attract necessary 
international interest and financing.  Greek officials claim 
that, although the Turks have ample supply, their gas, which 
comes largely from the Blue Stream line, is too expensive. 
The extant contract between Turkey's BOTAS and DEPA for the 
supply to Greece of 250 - 750 million CM of relatively cheap 
Azeri gas is only a small start on the path to assuring an 
adequate supply of Azeri gas.  Moisis says that, although the 
GoG wants to move forward quickly with the Azeris, the latter 
are not ready to get down to specifics. Both Sioufas and 
Moisis have stressed to the Ambassador that Greece would 
welcome U.S. and EU help in getting the Azeris to the table 
for a final deal. 
 
¶5.  (C)  One other potential roadblock, Russia, seems to have 
been mostly overcome.  Moisis told the Ambassador directly 
that Russia would like to stop or delay TGI, or at least fill 
it with Russian gas.  The GoG recognizes that any of these 
alternatives defeats the overriding goal of the project, the 
diversification of European energy supply. 
 
¶6.  (C) A long-running dispute between the GoG and the 
Russian Government over the construction of a major portion 
of the Greek pipeline from Komotini to Alexandroupoli has 
been resolved.  According to Moisis, this dispute had its 
genesis in the 1990s when the two governments agreed that, in 
exchange for allowing Greece to extricate itself from a 
number of take-or-pay contacts for Russian gas, the GoG 
agreed that the Russian-Greek concern Prometheus would get 
the job of building this section of the Greek pipeline grid. 
(At the time, Moisis explained, there was no thought of an 
East-West link to Turkey.  Rather Gazprom was interested in 
control of the downstream market of northeastern Greece.) 
Although DEPA pressed the GoG hard to bid out this part of 
the interconnector in order to assure timely completion, it 
lost the battle.  Moisis says that, while Russian 
participation is likely to make implementation slower and 
more difficult, it will not stop the project.  (Note: 
Ownership of this project leg will be held by DESFA (the gas 
distribution company to be spun off from DEPA later this 
year), not by Prometheus, eventually removing Russian 
influence from this part of the project.) 
 
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Burgas-Alexandroupoli Crude Pipeline 
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¶7.  (C) Greece's second major energy initiative, the 
Burgas-Alexandroupoli petroleum pipeline, has the potential 
to serve as another important alternative to Turkey's ever 
more crowded Bosporus Straits.  Under current plans, oil 
tankers in the Black Sea would offload Caspian crude at the 
Bulgarian port of Burgas, which would then be piped via B-A 
to Alexandroupoli in Greece, and there loaded onto up to 
VLCC-scale ships for delivery to final destinations, 
including North America.  Development Minister Sioufas made 
it clear in a January 24 meeting with the Ambassador he views 
B-A as a more significant project than TGI, and believes its 
300 km distance could be constructed within four years.  He 
says that the first phase of the project would create a 
capacity of 35 million tons of oil, with the potential to 
expand to 50 million tons in the second phase.  Sioufas likes 
to contrast B-A with the bruited AMBO project, which he 
argues is much more expensive and exposed to the complex and 
often unstable political situation in Greece's northern 
neighbors. 
 
¶8.  (C) Sioufas claims significant forward movement in laying 
the groundwork for B-A.  He notes his landmark April 2005 
meeting with Russian Energy Minister Christenko in Sofia, 
where the two joined with their Bulgarian counterpart to sign 
a protocol formalizing trilateral cooperation on B-A. This 
document sets up a series of regular inter-governmental 
meetings on the pipeline, the next one of which is scheduled 
to take place February in Greece and is set to consider key 
issues such as taxation and legal status of construction 
workers entering Bulgaria and Greece.  (Note: Participation 
in the meeting is to include Sioufas, Bulgarian Minister of 
Public Works Gagauzov, and Russian Energy Ministry Director 
General Yanovsky.)  The protocol also sets out regular 
meetings between the involved companies, including DEPA from 
Greece, and BNK-BP from Russia, which are currently working 
to establish an international company to take over pipeline 
construction.  Sioufas stressed to the Ambassador that he 
would welcome the participation of American companies in the 
project for their technical expertise and the added 
international profile it would give the project. 
 
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Greece Pushes Regional Energy Role 
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¶9.  (C) The GoG views its regional energy role in broad 
terms, both geographically and policy-wise.  As Minister 
Sioufas told the Ambassador, "Greece's geopolitical position, 
stability, membership in NATO, the EU, close relationship 
with the U.S., make it a perfect partner in promoting peace, 
stability and energy cooperation in the region."  Greece was 
a prime mover behind the March 4, 2005 signing of the 
Alexandroupolis Declaration by the Black Sea Economic 
Cooperation pact (BSEC), which committed the membership 
(including Albania, Azerbaijan Armenia, Bulgaria, Georgia, 
Greece, Moldavia, Romania, Russia, Serbia and Montenegro, 
Turkey and Ukraine) to move towards the full liberalization 
of their electricity markets.  Sioufas views the Declaration 
within the context of Greece's role in the South Eastern 
Energy Community, which officially came into being at the 
signing of the SEEC charter in October 2005.  Greece will, in 
fact, serve as the host to two of the SEEC's central bodies, 
the Regulation and the Power Boards. 
 
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Sioufas Welcomes Energy Cooperation with the U.S. 
--------------------------------------------- ---- 
 
¶10.  (C) Sioufas has put strong emphasis on his interest in 
energy cooperation with the U.S. to help Greece realize its 
role as an East-West energy transit country.  During his 
January 24 meeting with the Ambassador, Sioufas highlighted 
his excellent meetings in Washington at the Department of 
Energy last fall and reiterated his invitation to host 
Secretary Bodman in Athens.  The minister has also emphasized 
 
SIPDIS 
his interest in having U.S. energy companies participate in 
Greek energy projects and welcomed the offer of Commerce 
Department DAS Eric Stewart to host a group of Greek public 
and private sector leaders to meet with potential U.S. energy 
investors and/or infrastructure companies.  Both he and 
Deputy Foreign Minister Stylianides have in particular 
highlighted the positive role Chevron could play in B-A. 
 
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Comment 
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¶11.  (C)  The USG should encourage, both privately and 
publicly, Greece's energy transit initiatives.  These have 
the potential not only to increase Greek energy security, as 
well as Greece's ties with its Balkan neighbors and Turkey, 
but also to increase overall European energy security. 
Moreover, high-level public support is likely to get the 
attention of some essential actors: the Azeris, the Europeans 
and potential international investors. 
RIES