COPELOUZOS GROUP CHAIRMAN BRIEFS ON ENERGY PLANS

C O N F I D E N T I A L ATHENS 001366

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/22/2016
TAGS: ENRG GR AL MK
SUBJECT: COPELOUZOS GROUP CHAIRMAN BRIEFS ON ENERGY PLANS
AFFECTING NORTHERN GREECE, MACEDONIA AND ALBANIA.


Classified By: Ambassador Charles Ries for Reasons 1.4 (b,d)


1. (C) Summary. Copelouzos Group Chairman Dimitris
Copelouzos briefed the Ambassador April 27 on his proposal to
build a "West Macedonia Branch" of the Turkish-Greece-Italy
(TGI) gas interconnector. AccordinQto Copelouzos, whose
firm is closely linked with Gazprom, this could supply
natural gas to Macedonia, as well as power plants in northern
Greece and a 300 megawatt plant in Korje, Albania that his
firm hoped to build. According to documents Copelouzos
provided the Ambassador, the branch could also "serve as a
fuel source for the 150 MW CCGT plant in Vlore that is
currently under development." Copelouzos asked for the USG's
assistance in recommending the project to the Albanian
government and urging the GOA to establish a workable payment
plan for the plant. As for TGI, Copelouzos claimed Gazprom
was not particularly interested in filling that pipeline with
its gas, a claim that runs counter to everything we are
hearing from our GoG contacts. End Summary.

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A "West Macedonia Trunk Line" Could Provide
Energy to Macedonia, Northern Greece and Albania
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2. (SBU) Copelouzos estimated the capacity of the West
Macedonia trunk line at 1-2 bcm, which would be fed out of
TGI. Under Greek law, he noted, the state has the first
right of refusal to build the line. He argued that a
turn-key operation without GoG participation would, however,
be more efficient, proposing his company's joint venture with
Gazprom, Prometheus, construct the line in cooperation with
the U.S. firm ContourGlobal. Copelouzos said he had not yet
discussed his idea with Greece's semi-privatized energy
provider (PPC),but said he expected the company to view it
very positively. In an aside, Copelouzos noted his firm(s)
had constructed 70% of PPC's powerplants.


3. (SBU) Copelouzos claimed that the trunk line could have
major, positive ramifications for power generation in
northern Greece, Macedonia and Albania. The provision of gas
to existing lignite power stations in northern Greece would
allow the gas to replace expensive and polluting fuel oil in
slurry with the lignite, and, later, would allow for the
construction of modern combined cycle plants. One of these
plants, in Florina, could supply electricity to Macedonia,
just 15 kilometers distant. Copelouzos' proposed plant in
Korje, Albania would, he said, make a contribution to filling
the electric power deficit in Greece's northern neighbor.
According to his plan, the Korje plant would belong to
Prometheus and he noted it had already signed documents on
the plant with the Albanian government. Unfortunately the
plant had not yet received final GoA approval, something
Copelouzos hopes to discuss with the current Albanian energy
minister in May.


4. (SBU) In closing his presentation on the trunk line,
Copelouzos asked for Amb's help with the GoA on the Korje
powerplant, particularly vis--vis the issue of establishing
a workable payment plan.

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TGI: Gazprom Not Particularly Interested...
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5. (SBU) Copelouzos said the TGI Interconnector is such a
large pipeline that it could easily accommodate a diverse set
of gas inputs, including Azeri gas. He furthermore claimed
Gazprom did not have the ability to fill TGI, even if it
wanted to do so. Although Bluestream I could ramp up quickly
to 8bcm from the current 4, one had to remember that Turkey
was to receive 4bcm. That would leave only 4bcm for TGI,
which is supposed to deliver 8.5 bcm to Italy. Copelouzos
discounted claims Russia could easily meet additional demand
by constructing another pipeline to Turkey. He furthermore
claimed Gazprom did not have a strong motivation to fill TGI,
as the firm makes less money from gas it sells to Italy than
gas it sells to Turkey. Lastly, the fact that Azeris can
undercut Gazprom gas on basis of price makes it even harder
for Gazprom to sell into TGI. In any case, Copelouzos
claimed to be agnostic on the source of TGI's natural gas
supplies: "I am a businessman; I just hope decisions on TGI
are made on the basis of good economic senseQ

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Comment
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6. (C) Copelouzos' claims that Gazprom is not particularly
interested in filling TGI with its products runs directly
counter to everything we are hearing from our GoG contacts.
As recently as May 12, the head of Greece's natural gas
company, DEPA, told us of his concerns that the Russians were
going to link the extension of Greece's existing natural gas
agreement with Russia, which runs out in 2016, with the issue
of the gas going into TGI. This issue is likely to be
discussed during the Greece-Russia energy bilateral meeting
scheduled for June 9. We will report on that meeting once we
have a readout.
RIES