GREECE ENERGY: GOG DELAYING CONTACTS WITH AZERIS

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 001319

SIPDIS

E.O. 12958: DECL: 05/16/2016
TAGS: ENRG ECON GR GAZPROM
SUBJECT: GREECE ENERGY: GOG DELAYING CONTACTS WITH AZERIS
OUT OF FEAR OF RUSSIA?

REF: ATHENS 1298

Classified By: Charge' Thomas Countryman for Reasons 1.4 (b, d)


1. (C) Summary. According to recent meetings with Greek
officials, the GoG has temporarily put on hold efforts to
assure a diverse supply of natural gas for the
Turkey-Greece-Italy gas interconnector. Development Ministry
Director General Nicos Stefanou told us May 22 the Greeks are
waiting until they have had a chance to meet with the new
Italian government as well as with the Turkish government to
initiate discussions with the Azeris, the most significant
alternate supplier to Gazprom in the medium-term. The GoG is
in the meantime fending off Russian requests to discuss TGI,
according to Stefanou, limiting bilateral discussions to the
extension of the Russian natgas supply agreement, which
lapses in 2016. According to Assimakis Papageorghiou, the
Managing Director of Greece's monopoly natural gas provider
(DEPA),however, the real reason for the GoG's delay in
contacting the Azeris is fear of the Russian reaction. End
Summary.

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Italy and Turkey
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2. (C) Both Papageorghiou and Stefanou stressed that the lack
of a government in Italy had put TGI discussions on ice.
Sioufas was now seeking to move the ball forward through a
meeting with his newly-appointed Italian counterpart,
Minister of Productive Activities Bersani.


3. (SBU) On the private-sector side, Papageorghiou said May
12 he had conducted a positive meeting with his counterpart,
the Italian Edison (IE) CEO in late April: "There is lots of
interest on IE's part to move on TGI." Papageorghiou noted
that funding for the Italian leg of TGI would be provided by
the EU, the DEPA/IE firm Poseidon, and private investors and
did not express any worries that adequate funds would be
forthcoming.


4. (C) As for Turkey, both Stefanou and Papageorghiou noted
they were disappointed with the lack of responsiveness of
their Turkish counterparts. Papageorghiou said he had
received no reply to a letter he had sent to the new Acting
Director of BOTAS, Cifci, inviting him to meet in Athens. He
found this particularly disappointing since he wants to nail
down something on natural gas supplies with the Turks before
meeting Italian Edison on May 31. Although Stefanou also
expressed disappointment with his Turkish counterparts, he
noted Development Minister Sioufas will be meeting with
Turkish Minister Guler June 21, during which time the two
sides are to discuss energy issues.

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Azerbaijan
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5. (C) In the meantime, the GoG has not initiated supply
talks with the Azeris. Papageorghiou said Sioufas had
directed him not to approach the Azeris, as the minister did
not want such a meeting to take place before the next energy
committee meeting with the Russians. "We can meet the Azeris
in the fall," Sioufas told him. When Economic Counselor
asked Papageorghiou to explain why no Greeks were willing to
get into direct contact with the Azeris, Papageorghiou said
"they (i.e. at the Ministry of Development) are scared the
Russians will get angry if we meet the Azeris first."
Although Economic Counselor repeatedly recommended the GoG
move forward on contacts with the Azeris, Stefanou refused to
speculate on when this would happen. He did emphasize,
however, that his government supported the effort to assure
alternative sources of natural gas for Greece and for onward
sale to Italy.

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Russia
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6. (C) Stefanou admitted Greece approached its energy
discussions with Russia with a bit of trepidation. He
claimed that the Greeks are "buying time" in their talks.
"Although they want to discuss a range of issues including
putting Gazprom gas into TGI, we are limiting our discussions
to our domestic market." Papageorghiou told us that there is
supposed to be a Greek-Russian Ministerial in Athens on June
9 during which time he was concerned the Russians would
threaten not to extend their bilateral agreement on the
provision of natgas through Bulgaria that runs out in 2016.
(Note: As reftel reports, Russian Ambassador Vdovin claimed
in a conference in Athens May 17 that the extension of the
2016 agreement was close to finalization. End Note.)


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Comment
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7. (C) The Greeks clearly want to obtain a meeting of the
minds with their Turkish and Italian colleagues before
opening supply agreement negotiations with the Azeris. As
Stefanou noted, Minister Sioufas in particular wants to know
where the new Italian government stands. GoG officials are
also concerned over the Turkish lack of responsiveness to
Greek approaches on energy issues. We hope the upcoming
Greek-Turkish and Greek-Italian meetings will set the stage
for direct GoG-GoAZ contacts on energy supplies. In order to
prime the pump, Embassy Athens plans to meet with the Azeri
Ambassador to probe ways to get the two sides together sooner
rather than later.
Countryman