The war in Ukraine has caused upheaval in Europe's energy security. The disruption to Europe’s energy supply, meaning that continuing to rely on Russian energy is no longer acceptable, has prompted a major reorientation in the EU’s energy strategy. However, this relationship cannot be broken overnight. As Europe seeks alternative suppliers, the Eastern Mediterranean acquires new strategic importance. In addition to it, at the beginning of autumn, the commercial operation of the Greek-Bulgarian gas pipeline IGB is expected to start. The Greek-Bulgarian pipeline is going to connect Komotini with Stara Zagora and will be the second point of interconnection of the gas systems of Greece and Bulgaria beyond the existing station in Sidirokastro. The IGB, as it is planned to connect to the TAP pipeline, in combination with the interconnection pipelines of Bulgaria, Romania, and Bulgaria and Serbia, is expected to provide an incentive for the so-called vertical corridor, becoming this way the possible solution to the energy crisis which could emerge in the coming months. But the real question is whether things are as simple as they seem.
Resource war in Ukraine and EastMed project revival
During this period, proposals, considering the energy security of Europe, that have been "frozen" for years can suddenly move quickly. In response to the emerging crisis, the European Commission wants to reduce Europe's dependence on Russian gas. One element of the plan is to reduce aggregate gas demand, while another one is securing non-Russian reserves. In 2022, according to the Commission, the European Union should try to import an additional 60 billion cubic meters of gas, offsetting imports of 155 billion cubic meters from Russia in 2021. In an answer to this "opening for suppliers", as well as to the first proposal, several resources could be freed up in the Eastern Mediterranean. In Israel, the Leviathan field could double its capacity. In Cyprus, the Aphrodite field remains untapped, and two deposit discoveries, Glafkos and Kalypso, require more drilling to confirm the availability of their resources. There are, in other words, identifying potential resources that could be developed under the right conditions.
However, it is difficult to directly boost supplies from the Eastern Mediterranean. The only way to get to Europe is through the liquefied natural gas (LNG) facility in Egypt. Extra gas could be exported if Egypt and Israel could pump more from existing fields, especially after upgrading the pipeline to allow increased exports from Israel to Egypt in 2023. Furthermore, the sending of natural gas from Aphrodite to Egypt is the most technically and commercially mature proposal. If Europe relaxes its` funding for fossil fuels, that gas could be in Europe in a few years. However, a solution must be found in terms of revenue distribution and compatibility with the European climate agenda.
At some point, the obstacles East Med faced due to the fact it enjoys political support, but finds it difficult to make commercial and technical progress, caused the attractiveness of the proposal for a pipeline to Turkey. In fact, some prominent analysts wonder whether the time is coming for Turkey-Greece-Israel cooperation to transport gas to Europe. According to them, one scenario is for the transfer of Israeli gas to Turkey, but it will have to go through the Lebanon-Syria EEZ, which seems unlikely, or Cyprus, but that is more complicated, as many parts are involved. The other scenario is for the gas to start from Israel, go to Turkey, and then to Greece, from where it will be channeled to the rest of Europe. Another scenario is the possibility of Turkey-Greece-Cyprus-Israel cooperation through the EastMed pipeline. But the discussions on this pipeline took place mainly at the political level. Additionally, the lukewarm stance of Greece-Cyprus on the construction of EastMed is causing concern.
The Balkans perspective
The study, construction, and operation of the IGB Project have been undertaken by the Company ICGB AD, based in Bulgaria, and shareholders in the Bulgarian State Company Bulgarian Energy Holding (BEH) (50%) and IGI Poseidon (50%), in which the DEPA and Edison. The project has a budget of 220m euros. It will connect the countries of the central Balkans with the Caspian gas and the TAP pipeline. At the same time, it will provide access to liquefied natural gas LNG, either through the Revythousa station or through the new terminal of Alexandroupolis, in the specific countries that are currently supplied exclusively by natural gas through pipelines.
The pipeline will constitute, together with the rest of the energy infrastructures that are being launched, together with the connecting axes with North Macedonia, with Italy, a reliable natural gas transportation network to the markets first and foremost of the Balkans, secondarily of the same of Europe, while diversifying its sources of supply. They thus would strengthen the energy and logistics security of all connected countries. Apart from its energy dimension, the IGB could also be a "conduit of values", conveying the message of national security and Balkan solidarity. Being an important part of the European energy infrastructure it improves the connection of the countries of south-eastern Europe with the Southern Corridor of natural gas supplies. The project also underlines the strategic importance of northern Greece and substantially improves the vertical interconnection of the Greek system with the markets of the Balkans and Eastern Europe.
Serbia and Bosnia and Herzegovina have expressed interest in the Alexandroupolis LNG terminal and other forms of energy supply diversification after the war in Ukraine began, as officials fear that gas supply from Russia could be halted. North Macedonia is still negotiating on a 10% stake and it is planning to launch a public call by the end of September for a contractor for its gas interconnector with Greece. Bulgaria had 2.13 TWh in its sole gas storage facility in Chiren as of July 9, which translates to 37% of capacity. The level is comparable to one year ago, but Russia stopped the supply in April.
The European Union obliged member states to fill up at least 80% of their capacity by November 1st and to 90% by the beginning of the winter season in the following years. As to Serbia, Serbian President Aleksandar Vucic announced in late May a new three-year gas supply contract with Gazprom that calls for the annual delivery of 2.2 Bcm of Russian gas to Serbia. The deal was to be inked in June in the capital of Belgrade, but the Russian delegation scheduled to attend the ceremony was forced to cancel their visit when Serbia’s neighbours closed their airspace to the delegation's aircraft.
However, the country is working to diversify its gas-supply options and reduce its reliance on Russian imports, despite its close political and economic ties to Moscow and its refusal to join in sanctions against it. The new gas interconnector will connect the city of Niš with the Bulgarian capital Sofia creating the possibility for Serbia to get access to natural gas supply from LNG terminal in Greece, and also from TAP and TANAP gas pipelines which are part of the Southern Gas Corridor. It is estimated that next year Serbia will be able to get at least 30 to 40 percent of its gas from other suppliers, instead of from Russia thanks to the interconnection between Serbia and Bulgaria.
However, for gas to reach the country at all, through the Serbia-Bulgaria interconnection, apart from the Serbian section of the Niš-Dimitrovgrad gas pipeline, a pipeline from the Bulgarian side to Sofia should also be built. Furthermore, analysts indicate, that capacity of the interconnector between Greece and Bulgaria, through which blue fuel should reach the gas connection Bulgaria-Serbia, is small, only three billion cubic meters. Bulgaria's annual consumption is 2.4 to 2.6 billion cubic meters, and theoretically, they will use the gas they get for their own needs, which means that only 400 to 600 million cubic meters would be left for Serbia.
While work is ongoing on an interconnector between Serbia and Bulgaria, the country is looking also at potential gas connections with regional neighbors Macedonia, Croatia, and Romania. According to the words of the Serbian Energy Minister, these pipelines form an integral plan for diversification of Serbia`s supply routes and will enable sufficient quantities of natural gas to be delivered to Serbia from various directions and along the existing Balkan Stream, as a continuation of the TurkStream.
Mihajlovic also said a planned interconnector with North Macedonia would present another option to increase Azeri gas imports. The link could give Serbia access to gas from the Trans Adriatic Pipeline. A potential pipeline from Croatia could bring gas from that country's LNG import terminal on the Mediterranean island of Krk. Additionally, a link with Romania would enable access to a legacy gas pipeline that runs from Ukraine to Romania and Greece, and can operate in both directions.
New emerging alliances on the horizon
Europe obviously failed to prioritize energy security and has now found itself overly reliant on Russian energy and paying sky-high prices for power. France is dealing with this issue by renationalizing its largest utility in order to ensure the survival of nuclear power. Germany, which is arguably the country that has suffered most from energy security failures, may soon have to bail out its largest utilities. The French have approached the matter with admirable clarity. Germany, taking the almost opposite path, rejected nuclear power in its future after the Fukushima accident, and as a result, became energy dependent on Russian gas instead.
As part of its attempt to end its dependency on Russian fossil fuels by 2030, the European Commission has devised a patchwork strategy tapping into several alternative sources including the U.S., Algeria, Qatar and several African countries. Egypt is one of the routes the EU considers most reliable for exporting Eastern Mediterranean gas to Europe. In this context, the Eastern Mediterranean has emerged as a major component in the EU’s energy strategy. The key aspect of this involves boosting exports of Israel’s natural gas to European markets via Egypt’s LNG plants in Damietta and Idku on the Mediterranean coast.
This trilateral combination has the potential to leverage ongoing regional cooperation schemes around natural gas and to connect the Eastern Mediterranean more tightly with the EU’s emerging energy diplomacy. The establishment of the East Med Gas Forum, an Egyptian initiative bringing together producing and consumer countries of natural gas as well as industry players, supports long-term planning. A growing energy partnership between Israel and Egypt, whereby Israeli gas is exported to Egypt both for local energy consumption as well as reexport, combined with an agreement to bring future Cypriot gas to Egypt through an undersea pipeline and Egypt’s well-established LNG infrastructure, offers a readily available platform for the export of Eastern Mediterranean gas to global markets. In this way, the other options have lost their appeal.
With wholesale gas prices already at extremely high levels, in part due to Russia’s actions, the attack on Ukraine has prompted widespread debate over how to respond. Concerns over energy security are particularly acute in Europe, which is heavily reliant on Russian exports of coal, oil, and gas. With growing tensions over Russia’s threat to Ukraine, there has been speculation about how this will exacerbate the ongoing energy crisis and impact consumers in countries around the world. Of course, crisis brings opportunities, but a sense of necessity for a solution does not mean that all choices are equal. The possibility of prioritizing the proposals and their outcomes should be taken into account. Accordingly, success would depend on several factors, such as the technical maturity of the proposal and political support. Furthermore, the obstacles to a project must be overcome. Unambiguously, the diversification of supply reduces risk. But would the dependence on new suppliers be necessarily a low-risk decision? Energy infrastructure and supply are vital components of national security. Because ignoring the security aspects of energy can turn into an expensive mistake with geopolitical implications.