Greek-Turkish antagonism in the eastern Mediterranean is one of the region’s more unhappy and long-lasting stories.
In a sign however of the benefits of Turkish Foreign Minister Ahemet Davutoglu’s avowed foreign policy of “zero problems with neighbors,” despite Athens’ fiscal problems, its neighbor could soon be providing power to the islands littering Homer’s “wine dark sea.”
On 17 November Greece’s Energy and Environment Minister Giorgos Papaconstantinou said on the sidelines of the Atlantic Council Black Sea Energy and Economic Forum in Istanbul, “We have talked with Turkish officials previously on connecting Greek Islands to Turkey and we are still considering this. We have always wanted to connect the islands to mainland Greece, but there is a possibility that we might connect islands to Turkish grids.”
The Greek Energy Ministry’s new plan to interconnect into the Turkish electricity grid to fulfill the Greek islands’ electricity needs could break the current deadlock of relations between Turkey and Greece that have recently been stymied by the Republic of Cyprus’s recent offshore natural gas exploration in zones contested by Turkey.
Commenting about the Republic of Cyprus’s recent offshore natural gas exploration efforts with international energy companies, Papaconstantinou said, “I can see Turkey’s nervousness over this, but it will recede with time,” equitably adding that the decision by Turkey's state-owned Turkiye Petrolleri Anonim Ortakligi (Turkish Petroleum Corp., or TPAO) to sign a contract for onshore and offshore exploration with Dutch energy giant Royal Dutch Shell is “no threat to Greece.”
The TPAO-Royal Dutch Shell contract relates to exploratory drilling in Turkey’s offshore Mediterranean zones off the southern province of Antalya. Royal Dutch Shell will underwrite the transfer of a drilling rig to the exploration zone and the costs of exploration, which are estimated to run roughly $300 million in the 1.5 mile deep waters.
Seeking friends and potential investors amidst its ongoing fiscal crisis Papaconstantinou said, “Turkish companies can also take part in Greek energy tenders.”
Turkey’s Energy and Natural Resources Minister Taner Yildiz said that TPAO-Royal Dutch Shell agreement clearly indicates the West's growing confidence in Turkey and the country’s reliability, adding that the contract should not be perceived as a political message but rather, “The agreement is a sign of Turkey's determination in oil exploration.” Almost as an aside, Yildiz added that he had thanked Greek Minister Papaconstantinou for making timely payments on their energy debts to Turkey.
And the future may even see Turkish investors rescuing the Greek economy, or at least portions of it. As Greece’s fiscal woes continue, the Greek state-owned natural gas company, DEPA, is preparing for privatization. Under a proposed plan, the Greek government will sell up to the 65 percent of shares it currently holds in the company, with Hellenic Petroleum (ELPE) retaining the outstanding 35 percent. Regarding possible Turkish investment in DEPA Papaconstantinou said, “We have no discriminative rule against Turkish firms.”
A rapprochement over Aegean energy reserves could be a win-win for both Turkey and Greece. Turkey currently imports about 90 percent of its energy needs and the Turkish government is projecting that its energy import bill for 2011 will mount as high as $50 billion, accounting for two-thirds of Ankara’s current account deficit. Needless to say, energy from Mediterranean offshore sources would make government accountants more than happy.
Further possibly binding Athens and Ankara is the proposed Interconnector Turkey Greece Italy natural gas pipeline project. ITGI’s projected cost is $2-2.7 billion and is projected to have a capacity of 10 billion cubic meters a year, to carry natural gas from the second stage of Azerbaijan's giant Shah Deniz offshore field to Europe. ITGI, which is sponsored by Italy's energy company Edison SpA and DEPA, is in direct competition with both the Trans Adriatic Pipeline and Nabucco pipeline projects to transit Shah Deniz gas to Europe.
While nothing is certain in the eastern Mediterranean, it would seem as if mutual energy concerns are assisting in burying the nationalist fervor in both Greece and Turkey. Turkey as a financially flush transit corridor for Azeri gas, Greece as a vital hub for the onward transmission of Caspian natural gas to the energy hungry markets of Europe, providing an alternative to the increasing Russian domination of EU gas imports – stranger things have happened than the possibility of peace breaking out between the two nations whose culture and political power have shaped the eastern Mediterranean for half a millennia or more.
By. John C.K. Daly of Oilprice.com