Greece strengthens geostrategic role as energy hub for Southeast Europe

Further strengthening its geostrategic role, Greece has inked a series of deals turning the country into a regional energy hub for Southeast Europe that will support Europe’s long-term energy security and position Greece as a future producer and exporter of hydrocarbons.

The deals signed this month in Athens include natural gas supply agreements with Romania and Ukraine, a long-term import contract for American LNG, and oil and gas exploration concessions west of Greece. The series of deals coincide with fresh U.S. and European efforts to curtail the use of Russian natural gas and expand a supply corridor stretching north from the Greek port of Alexandroupolis through Bulgaria, Romania and Moldova to reach Ukraine.

“Following the recent long-term agreement to supply LNG to Romania and Ukraine via Alexandroupolis and the Vertical Gas Transmission Corridor, Greece is strengthening its role as a key player in Europe’s changing energy map,” notes Eurobank Research in a report. “Although the deal will have little impact on Greece’s gas market in the short term, it marks an important step towards building the country’s position as a regional energy hub.”

In October, the European Council approved a ban on Russian gas imports that starting on January 1 will be phased in over the next two years. In anticipation of this, a joint venture, including Greek natural gas company DEPA, signed a 20-year LNG supply contract with Louisiana-based American Venture Global. Under the terms of the deal, Greece will import 700 million cubic meters of U.S. LNG with an estimated value of €26 billion starting in 2030, which will underpin planned investments in gas infrastructure in the region.

According to DEPA, Ukraine and Romania have expressed interest in buying up to 3.7 billion cubic meters of LNG over the 2030-2050 period. While this month, Ukraine’s Naftogaz signed an agreement with DEPA for the provision of natural gas for this upcoming winter starting in December.

The deal follows just days after U.S. oil giant ExxonMobil confirmed its intent to explore for hydrocarbons in the Ionian Sea – for the first time in 40 years – in collaboration with Greek energy giant HELLENiQ ENERGY and Energean. A month earlier, in October, an HELLNiQ ENERGY-Chevron consortium was selected as the preferred bidder for hydrocarbon exploration licenses in four offshore blocks south of the Peloponnese and Crete.

Separately, recent reports suggest that there is new interest from international investors, including from the U.S., for interconnectivity projects in the Eastern Mediterranean, including the key Greece-Cyprus-Israel subsea power cable, better known as the Great Sea Interconnector (GSI), being jointly pursued by all three countries.