How will Azerbaijani energy projects help Greece?

The economic situation in Greece is deteriorating, literally, every minute. The country’s foreign debt continues to increase, and new agreements with lenders on financial assistance only entrap the country in debt.

In such a difficult situation, Greece needs to focus on developing strategic projects that will bring revenues and dividends to the country in the future. Azerbaijani projects can also be considered in this regard: a deal on purchasing a share by the State Oil Company of Azerbaijan in Greek DESFA natural gas transmission system operator and the project for construction of the Trans-Adriatic Pipeline (TAP) which is part of the Southern Gas Corridor.

Nevertheless, the new Greek government which took office in January 2015, initially ignored these projects. The government showed absolute passivity with regard to SOCAR-DESFA deal. This was followed by an attempt to revise the existing agreements and to reduce the share to be obtained by SOCAR to 49 percent. (This is while the tender, won by the SOCAR, was held for 66-percent share.)

Thereby, Greek government wanted to retain more than half of the shares in the gas operator.

Apparently, the new cabinet presumed that by retaining the major part of shares in DESFA, it will get more revenues from its operation. However, the Greeks forgot that investments in a project are made in accordance with the share and under the current conditions, they won’t be able to make more investments than SOCAR. This made the project even less advantageous and caused doubts about SOCAR’s participation in the project under these conditions. The expectations came true: SOCAR refused from making concessions and changing the existing agreements.

Greece had an uncertain position on TAP project as well. The government first expressed its commitment and interest in the project, but then hinted that it would like to get more benefits from its implementation.

In the case of DESFA, Azerbaijan which has already grew stronger with similar trials when implementing the Baku-Tbilisi-Ceyhan project, made it clear to the Greeks that no one is going to revise the international agreements and contracts after signing.

The current situation can push Greece to revise its views. The country’s parliament accepted the conditions of the creditors under which they agreed to allocate additional funds to Greece. The paragraph on privatization of state enterprises is among these conditions. This situation can push Greece to be more active in DESFA deal. The cost of the deal estimated at $400 million euros is no object to Greece.

In parallel to the news about possible acquisition of a share in TAP by Italy’s Snam company, there are also reports about the desire of Greek companies to obtain share in the project. Participation of one or several Greek companies in the project will naturally require certain investments from them. Nevertheless, in the future, the revenues from the operation of TAP will be even more.

Undoubtedly, the flow of funds to Greece’s private sector will have a positive impact on the country’s economic development. Namely for this reason, Greece should understand that Azerbaijani energy projects will help it.