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The ITGI project: another alternative to Central European pipelines or a counterproductive form of competitivness?

by Michele Tempera

Abstract

In the last few years the European Union has been committed to diversifying the sources of energy it imports in growing quantities. Thus the EU is pushing for the construction of huge energy and infrastructure projects to link southern Europe with the Middle Eastern and Caucasus regions so as to reduce the EU’s exposure of to reliance on Russian and Libyan natural gas.
With this perspective in mind, on June 17th, 2010 Italy, Greece and Turkey signed a Memorandum of Understanding (MoU) that should lead to the joint construction of a natural gas pipeline called ITGI (Interconnector Turkey-Greece-Italy). When completed, this project will transport Middle Eastern and Caspian gas resources to south and south-eastern Europe. The link between that resource-rich area and energy-hungry Europe must be Turkey, as its territory stretches from Iran, Azerbaijan and Iraq to Greece and Bulgaria.
The 800 kilometre-long pipeline (with an estimated capacity of 10 billion cubic meters per year) has been under discussion between the directly interested states since 2002 with the active support of the European Union and its member countries. The purpose of the gas interconnector is to diversify energy (namely natural gas) resources and routes in an effort to upgrade the EU’s energy security. Another major aim is to avoid the transit area between Russia and the European Union, formed by Belarus, Ukraine and Georgia, which contain the pipelines that bring 20% of the natural gas consumed in the EU.
If carried out as planned, the ITGI will be completed by 2015, around the same time as other similar but bigger energy pipelines. However, time is not the only important factor: other complicated issues converge to hinder ITGI’s viability. There are two other critical issues: availability of supplies (in terms of routes and amount of accessible natural gas) and \ the simultaneous construction of the South Stream undersea pipeline from Russia’s Caspian Sea coast to Bulgaria and through the Balkans.
The countries selling natural gas for the ITGI can be, in order of fossil energy exporting relevance, Azerbaijan (the Caspian fields), Turkmenistan, Iran, Iraq and in fourth place Syria.
The lion’s share of natural gas resources should come from the Caspian Sea and therefore from the Azerbaijan and Turkmenistan waters.
This could pose problems due to the multiple customers buying natural gas from Baku and Ashgabat. This implies that a good share of the amount of available natural gas is already being delivered by those two countries to other destinations or other existing pipelines, like the BTC (Baku-Tiblisi-Ceyhan) for Azerbaijan or the recently opened pipeline between Turkmenistan and the Chinese Xinjiang. This situation greatly reduces the chances for ITGI natural gas supplies to be sufficient to ensure its practicability.

Original title: The ITGI project: another alternative to Central European pipelines or a counterproductive form of competitivness?

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