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Gazprom set to team up with Italy, Greece in Europe-bound natural gas deliveries

February 25, 20:35 UTC+3 Alexandrova Lyudmila

MOSCOW, February 25. /TASS/. Energy giant Gazprom, which has expressed its intention to cooperate with Italy and Greece in organizing Russian natural gas deliveries to Southern Europe via the ITGI Poseidon pipeline, seems to approach the project from its end without a clear idea of where it will begin: either as a renewed South Stream or Turkish Stream effort. However, experts believe that the South Stream gas pipeline project is most likely to be revived in the future, possibly, in a modified form.

Gazprom signed a memorandum of understanding with Italian energy firm Edison and Greek gas company DEPA on Wednesday on natural gas deliveries from Russia to the future gas pipeline ITGI, which will link Greece and Italy. For this purpose, the sides intend to use the results of the works carried out by Edison and DEPA under the ITGI (Interconnector Turkey-Greece-Italy) Poseidon project.

Poseidon is the marine part of the Southern Gas Corridor project from Turkey to Italy through Greece: the pipeline will run along the bed of the Ionian Sea to link the Greek and Italian gas transportation systems. The project, which had been discussed from 2005, was intended to transport Azerbaijani gas to Italy. But it actually ground to a halt from 2009 as Azerbaijan opted for the TAP pipeline for its natural gas deliveries. Now the ITGI project can regain its significance but in a new format.

As Gazprom CEO Alexei Miller told Kommersant business daily, the initiative of signing the memorandum on the ITGI Poseidon project "comes from our European partners."

According to Miller, "the expediency of the project’s implementation will be studied until the end of 2016 but we’ll necessarily need the European Commission’s official position on the support of this route for the project’s commencement."

In principle, the Poseidon gas pipeline can be an extension of both the Turkish Stream and the South Stream projects. Gazprom discussed the construction of these gas pipelines to abandon gas transit across Ukraine but both projects were put on hold.

Russia gave up the South Stream project over its obstruction by the European Commission and some European countries. The talks on the Turkish Stream gas pipeline project stalled even before an aggravation of Russia’s relations with Turkey and were halted all together after a Turkish fighter jet downed a Russian bomber over Syrian skies.

At the same time, some EU countries, which earlier participated in the South Stream gas pipeline project that was abandoned in 2014, first of all, Bulgaria, are now wishing to return to it.

After Gazprom froze the two southern gas pipelines, the Russian energy giant started talks on the second stage of the Nord Stream project (Nord Stream-2) with an annual capacity of 55 billion cubic meters with Northern European countries and involved BASF, E.ON, Engie, OMV and Shell in the consortium, which displeased Southern European countries.

"Gazprom is approaching the issue ‘from the tail,’" Head of the Analytical Department at the National Energy Security Fund Alexander Pasechnik told TASS.

"The Turkish Stream has been frozen, the South Stream is closed and the possibilities of resumption in both directions are under consideration. That is why, Gazprom is approaching the problem from the other end, without having the route’s starting point so far. To be more exact, the route’s starting point exists - this is the land infrastructure in the Krasnodar Territory and there are also pipes for laying the underwater stretch. What has to be clarified is where the pipe will reach the shore. There are few options: either Turkey or Bulgaria," the expert said.

The memorandum that has been signed is the Russian side’s success, the expert added.

"We show that we have support from Italy and Greece and we show to future transit countries that there is already demand for our natural gas. This is an incentive for the Bulgarian side to undertake new initiative to revive the South Stream," the expert said.

Meanwhile, Gazprom makes a larger emphasis on the Nord Stream-2 project via Germany in its strategy so far, Pasechnik said.

"It helps resolve the issue of diversification of Europe-bound deliveries bypassing Ukrainian transit. Gazprom has no categorical objections to the Ukrainian pipeline as was before: it is not ruled out that natural gas pumping through Ukraine will remain and simply pumping volumes will be reduced," the expert said.

"Only a non-binding memorandum has been signed," Leading Researcher at the Russian Institute of Strategic Studies Vladimir Blinkov told TASS.

"This is a sort of Gazprom’s trial balloon. It is not clear today, from which destination this will start. But in the current relations with Turkey, this will most likely be Bulgaria, which has already expressed its intention to return to the South Stream project. Moreover, the route will mostly likely run through Crimea now. This means the revival of the South Stream but in a modified form," the expert said.

"But in any case, it is necessary to agree with the European Commission, in the first place," he added.

"Gazprom is now displaying sufficient flexibility, whereas earlier it acted differently. In the case with the South Stream project, the energy giant used to believe that it would suffice to agree with participating states on a bilateral basis," the expert said.

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