“We believe in renewable energy sources, and that’s why we won’t dig under the Mediterranean Sea for gas,” Greek Foreign Minister Nikos Dendias told a reporter for the Arab News newspaper during a visit to Saudi Arabia just under a year ago. The Athens chief diplomat asserted at the time that oil and gas production made no economic sense for Greece.
Now that sounds different. “We will turn our attention back to the domestic gas deposits around Crete and in the Ionian Sea,” Prime Minister Kyriakos Mitsotakis announced in the Greek parliament on Wednesday. “We have to determine which deposits are there and whether they can be used economically,” said the prime minister. The government will announce details next week, Mitsotakis said.
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This is a new movement in the search for oil and gas in Greece. Interest is focused on five sea areas: “Block 2” and “Ionio” west and south-west of the island of Corfu, “Block 10” off the west coast of the Peloponnese peninsula and two large areas west and south-west of the island of Crete. The companies Energean and Hellenic Petroleum have exploration and production concessions for the regions off Corfu and the Peloponnese.
The areas near Crete were secured by a consortium including Total Energies, Exxon Mobil and Hellenic Petroleum. Oil and gas deposits are also suspected east of Crete and in the Aegean Sea. But the areas are taboo. Greece and Turkey agreed a standstill agreement there in 1976 because of the dispute over the demarcation of the economic zones.
Market value of Greek hydrocarbon: Over 300 billion euros
The Greek government had already started to award production concessions in the west of the country, in several sea areas of the Ionian Sea and south-west of Crete during the sovereign debt crisis in 2014. The then Prime Minister Antonis Samaras put the market value of the usable Greek hydrocarbon deposits at “more than 300 billion euros” to the Handelsblatt. Expert estimates were even in the order of 465 billion euros.
Seismic investigations from 2017 and 2018 indicate natural gas deposits of around 280 billion cubic meters off Crete alone. That would be fifty times Greece’s current annual consumption.
However, exploration progressed slowly, partly because of objections from environmentalists, partly because of doubts about economic exploitation at the oil and gas prices at the time, but also because politics has focused more on renewable energy sources in recent years. Some concessionaires withdrew altogether.
Now the government is pushing. According to market experts, drilling could begin in 2025 or 2026. However, experience has shown that it should take at least another three to five years before funding begins. According to government circles, if the concessionaires continue to hesitate with exploration, the state could revoke the permits and give them to other interested parties.
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Natural gas plays a major role in the Greek energy mix. 540,000 of the more than four million private households heat with gas. In the winter months, around 50 percent of the electricity comes from gas-fired power plants. However, Greece had significantly reduced its dependence on the supplier Gazprom even before Putin’s attack on Ukraine. While last year 45.5 percent of gas imports came from Russia, according to Prime Minister Mitsotakis in January 2022 it was only 33 percent.
The country is expanding its liquid gas terminals
This was made possible because Greece increased its liquefied gas imports via the LNG terminal Revithousa near Athens. Liquefied natural gas (LNG) currently accounts for 47 percent of Greek gas imports, more than half of which comes from the USA. The remaining 20 percent of gas imports come from Azerbaijan via the Trans-Anatolian Pipeline (TANAP).
Greece is now massively expanding its gas infrastructure. At the LNG terminal on the island of Revithousa near Athens, a third floating tank is being built in addition to the three existing gas storage facilities. This increases storage capacity from 225,000 to 325,000 cubic meters. Further LNG terminals are under construction or planned at the northern Greek port of Alexandroupoli, near Corinth and at the port city of Volos.
In front of the northern Greek port of Kavala, a natural gas reservoir that has been exploited since the 1980s and is now exhausted is to be used as an underground gas storage facility with a capacity of around one billion cubic meters. The privatization is currently ongoing. The Interconnector Greece-Bulgaria (IGB) is expected to go into operation in September of this year.
The 182-kilometer gas pipeline connects the networks of Greece and Bulgaria. It can be used in both directions and thus contributes to the security of supply in both countries. The capacity of the Trans-Adriatic Pipeline (TAP), which went into operation at the end of 2020 and transports gas from Greece to Albania and southern Italy, is to be doubled to 20 billion cubic meters per year over the next four years. With these projects, Greece is strengthening its role as a gas hub in south-eastern Europe.
The accelerated search for hydrocarbons and the expansion of the gas infrastructure should not signal a departure from the government’s climate goals, government circles in Athens emphasize. Greece wants to phase out coal-fired power generation by 2025 and cover 65 percent of its electricity needs from renewable energy sources by 2030.
Prime Minister Mitsotakis explained his plans for diversifying the energy supply in Parliament: The expansion of renewable energies, the exploration of our own gas deposits and the international networking of power lines are the pillars of the future energy mix, said the Prime Minister. A special role is played by a planned 1,400-kilometer-long underwater cable that will bring green electricity from Egypt to Greece via Cyprus. The investment is estimated at 3.5 billion euros, and the line could go online in 2026.
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