DIMITRIOS COPELOUZOS AND THE COPELOUZOS GROUP:

C O N F I D E N T I A L ATHENS 000649

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 03/29/2017
TAGS: ECON AL BU ECON ENRG GR MK RS
SUBJECT: DIMITRIOS COPELOUZOS AND THE COPELOUZOS GROUP:
GAZPROM BY ANY OTHER NAME?

Classified By: Ambassador Charles P. Ries for reasons 1.4 (b,d)


1. (C) SUMMARY. Dimitrios Copelouzos, the founding Chairman
and Managing Director of the Copelouzos Group, has evolved
into a key player in the regional energy market and is
currently participating in a number of significant energy
transportation projects including the Burgas-Alexandroupoli
pipeline, the Turkey-Greece-Italy Interconnector (TGI),and a
proposed "Western Macedonia Branch" of TGI which will supply
a planned power plant in Korje, Albania, with natural gas.
He is also cooperating with the Swiss firm
Elektrizitatz-Gesellschaft Laufenburg (EGL) on the
development of a Balkan gas pipeline that could carry gas,
presumably Russian, to Italy via Greece and Albania.


2. (C) The Copelouzos Group is currently one of Greece's
largest commercial and industrial groups, operating in Greece
and abroad in several strategic sectors, including
construction, energy, transportation, and real estate. One of
the firm's subsidiaries is Prometheus Gas, a joint venture
with Russian Gazprom, which has developed into strategic
alliance that will allow Copelouzos to sell Russian gas
directly to the Greek market. The Greek Public Gas
Corporation (DEPA) views Copelouzos and his Gazprom alliance
with suspicion, fearing the firm could turn into a powerful
competitor, representing one of the major challenges to its
overall regional gas policy. END SUMMARY.


DIMITRIOS COPELOUZOS: BIOGRAPHY
--------------

3. (C) Dimitrios Copelouzos wears many hats and has been a
well-known Embassy contact for many years. In addition to
his role as chairman and managing director of the Copelouzos
Group, he is also the managing director of Prometheus Gas, a
Gazprom joint venture, and managing director of Neco, a
collaboration with Bulgaria's state power generation company.
He is also the chairman of Enelco, a joint company with
Italian Energy Utility Enel, and Europrom Telecommunications,
a cooperative effort with Europrom Communications. He has an
educational background in mechanical engineering and resides
in Athens with his son, daughter, and wife, Kiriaki Bonatsos.
Copelouzos served as a member of the Greek Parliament from
1981 to 1985, reportedly to attain power and influence for
business reasons. Copelouzos founded his original company
with his brother, Emanuel. Of the two brothers, Copelouzos
has always been the "deal maker" who prides himself on his
ability to create transactions through his networking
capabilities. The Copelouzos brothers eventually divided the
company due to differences in business philosophies although
they both continue to work in similar industries. Today,
Dimitrios Copelouzos is among the top ten businessmen who can
conduct and complete deals in Greece.


4. (C) Copelouzos has extensive and growing ties to Russia
and Russian concerns. He became heavily involved with
Gazprom when the construction arm of his firm was contracted
to build branches off of Greece's main gas trunk line, a line
filled almost entirely by Gazprom gas. It is believed that
Copelouzos was first introduced to the Russians in the 1980s
through his construction projects in power generation, road
works, and mining. After this initial contact, Copelouzos
began to receive additional contracts with Russian
involvement, eventually leading to his association with
Gazprom. In Greece, Copelouzos has developed a network of
individuals that hold strategic positions in various public
and private organizations who remain close to him, although
the extent of that network is not clear.


PROMETHEUS GAS ALLIED WITH GAZPROM
--------------

5. (C) Prometheus Gas was developed in 1991 as a joint
venture between Copelouzos Group and the Russian natural gas
company, Gazprom. Prometheus is both a natural gas
infrastructure development and supply company. On the
construction side, Prometheus was awarded an exclusive
contract to develop the natural gas infrastructure in
northeast Greece (Thessaloniki region),as well as a 55 km
portion of the Greek-Turkish natural gas interconnector. On
the supply side, Prometheus has the right to sell Russian
natural gas in Greece, as well as to resell it back into
neighboring Balkan countries, under certain conditions.
Currently, Prometheus cannot compete on gas sales with DEPA,
the local natural gas supply corporation, until DEPA

purchases 3 bcm in a single year. After that ceiling is
reached, Prometheus can buy up to an additional 3.1 bcm from
Russia for sale in Greece or other neighboring countries.
This deal is in place until 2016, which is the life-span of
the current DEPA contract with Gazprom. On its website,
however, Prometheus claims to have a 50-year supply agreement
with Gazprom, and that after 2016, it will become the sole
supplier of Russian gas in Greece, including to DEPA itself.


COPELOUZOS ON THE TURKEY-GREECE-ITALY INTERCONNECTOR
-------------- --------------

6. (C) Through DEPA, the Greek Government has embarked on an
ambitious plan involving cooperation with Italian Edison and
Turkey's Botas, to bring gas from Turkey to Italy. The USG
has urged the GoG to put Caspian gas into this pipeline,
which would make it the first line bringing Caspian gas
directly to Europe. Copelouzos has challenged this concept
through his efforts to supply Russian gas to GI. Were he to
be successful, this would further tighten Gazprom's hold on
Greece as well as choke off a potential Russian-free route
for Caspian natural gas to reach western Europe. Copelouzos
claims that TGI has sufficient capacity to accommodate
Russian and Azeri gas, although with an initial estimated
throughput of only 4 bcm annually, growing to a maximum of 8,
it is not clear that this is economically true.
Interestingly, Copelouzos told Ambassador directly that
Russia does not have the ability to fill TGI. (Note: While
this is a bold statement, and many professionals have noted
that Russian gas commitments exceed anticipated capacity
growth, it does not follow that Gazprom, interested in
maintaining its monosponistic control over Caspian Basin
natural gas, wouldn't find 4 bcm annually to fill the TGI
from some other contract. End note.)


COPELOUZOS LOOKING AT ALBANIAN MARKET
--------------

7. (SBU) Copelouzos has also expressed an intense interest
in building a gas pipeline to Albania which would feed a
gas-powered electricity plant in Korje, Albania. The plant
would cost approximately 200 million euros. Copelouzos said
his "West Macedonia Branch" of TGI would feed power plants in
Greece as well as Albania. Copelouzos has suggested that the
pipeline, which would fuel a 300 mega watt plant in Korje, be
constructed by Prometheus Gas in cooperation with U.S. energy
firm ContourGlobal.


EGL'S GREECE/ALBANIA/ITALY PIPELINE: COMPETITION FOR TGI
-------------- --------------

8. (C) Ever the busy bee, Copelouzos is also working on a
planned project with Switzerland's EGL to construct a
Trans-Adriatic natural gas pipeline (TAP) from Greece's
Thessaloniki to Italy's port of Brindisi through Albania.
EGL officials admitted to the Embassy that they are strongly
considering using Russian gas for this project. DEPA
officials are leery of the EGL project and are concerned that
the market will not support two regional pipelines running
gas to Italy. They are also concerned Gazprom may leverage
its support for EGL into a share in TGI. DEPA is worried
that EGL's shallower underwater route from Albania to Italy
will be cheaper than their TGI project, which runs across the
Ionian at a deeper point to the south, and will thus undercut
the viability of the DEPA/Edison pipeline. The GoG views
challenges to TGI such as EGL's extremely seriously. In
fact, according to the Head of Greece's Energy Regulation
Authority, the GoG decided to designate the Greek on-land
portion of TGI a public company in large part to allow it to
receive significant EU co-funding, which could help offset
TGI's higher-cost transit routing.


OPAP TENDER: COPELOUZOS WORKING WITH SCIENTIFIC GAMES
-------------- --------------

9. (C) Copelouzos is a pragmatic businessman, and does not
let any current alliance stand in the way of future
alliances; his relations with the Russians do not keep him
from courting U.S. business interests, for example. The
Greek Organization of Football (OPAP),one of Europe's
largest betting groups by market value and Greece's most
important lottery and gaming company, has been undergoing
privatization since 2000. In January 2006, OPAP announced
the submission of three bids in a 200 million euro
international tender to supply, install, and offer technical



support for a new IT system. The three bidders included
Intralot, GTECH Corporation, and Scientific Games
International. Copelouzos threw his hat in the ring for the
tender, eventually deciding to work with Scientific Games
International, a New York based company which provides
services, systems, and products to lottery and wagering
industries worldwide.


THE COPELOUZOS GROUP: ADDITIONAL BACKGROUND
--------------

10. (U) The following is additional background information
about the Copelouzos Group and its subsidiaries and ventures:

- The Copelouzos Group was established in 1970. It operates
in Greece and abroad within several strategic sectors
including key technological and industrial services. The
Group consists of: Prometheus Gas, Enelco, Damco Energy,
TechnoInvest, Remedy Advertising, Neco, Horizon Air
Investments, Gre-Tex Power Limited, Damlot Lottery Games, and
Europrom Telecommunications.

- Damco Energy activities include the development, design,
construction, and operation of energy, telecommunication and
transportation infrastructure projects. Damco Energy also
participates in the carrying out of technical and economical
feasibility studies, the rendering of consultant services,
and the trading of electrochemical equipment and other types
of vehicles.

- TechnoInvest was established in 1990 and is primarily
involved in the real estate sector. Its activities include
the purchase, construction and administration of office and
commercial buildings, as well as the development of new real
estate investments. In addition, TechnoInvest organizes,
administers and supervises technical projects and also trades
industrial products.

- Remedy Advertising belongs 100% to the Copelouzos Group and
engages in outdoor and indoor advertising. Remedy cooperates
successfully with the many municipalities and other public
and private authorities. The main advertising means are
panels, billboards, bus shelters, towers, wallscapes, and
transportation.

- Neco is a Greek-Bulgarian joint company established in
Athens in August 2002. The company's shareholders are NEK
EAD, the Bulgarian State power generation and distribution
company, which owns 50% and Prometheus Gas and Damco Energy
of the Copelouzos Group which own 25% respectively. The main
focus of the NECE is to import and trade electricity sourced
from Bulgaria to the Greek market.

- Copelouzos Group's involvement in the airport sector began
with the acquisition of a 5% stake of the new Athens
International Airport (AIA) by Horizon Air Investments, a
company owned 100% by the Group. The Group's strategy in the
sector is to expand and diversify its portfolio by acquiring
airport stakes in Greece and in the neighboring countries of
the Southeastern Europe area.

- Gre-Tex Power Limited is a company in which Damco Energy
holds 100% of the shares. The main activity of the company
is the rental of power generating sets, where it can provide
all the necessary services for turn-key delivery projects.

- Enleco was established in September 1999. The shareholders
of the company are Enel Investment Holding (a 100% subsidiary
of the Italian Electrical Utility Enel),holding 75% of the
shares and Prometheus Gas with 25%. The company develops
projects in the electric power sector in Greece and in the
neighboring countries. Enelco also deals with the potential
of exporting energy to Italy via the existing submarine
electrical power cable between two countries.

- Damlot Lottery Games was established in 1999. Its
activities include the development, management, operation and
exploitation of all kinds of lottery games, instant scratch
tickets and betting, in Greece and abroad. Damlot provides
electromechanical equipment, electronic equipment, and
lottery slips.

- Europrom Telecommunications is a joint company between
Prometheus Gas and Eurocom Telecommunications. The company
is involved in the provision of broadband telecommunications

services having acquired from the National Telecommunications
and Post Commission two licenses for Fixed Wireless Access in
the frequencies of 3.5Ghz and 26Ghz.


COMMENT:
--------------

10. (C) Copelouzos is strategically positioned to influence
the Greek natural gas market in favor of Prometheus Gas which
operates as an extension of Gazprom's network. There is
growing concern over Copelouzos' activity that serves Russian
interests and jeopardizes USG's efforts to promote
diversification of supply to the energy market of Greece and
the surrounding region. Post is concerned that Copelouzos
and Prometheus Gas dance to the tune called by Gazprom, and
that all three are dedicated to maintain Russia's virtual
natural gas monopoly in Europe and will work to undermine any
attempt to bring competition to the Greek market. END
COMMENT.
RIES