Cablegate: Prometheus Gas Chairman: No Southstream Through

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RHMFISS/DEPT OF ENERGY WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 000262

SIPDIS

C O R R E C T E D C O P Y (TEXT IN PARA 6)

NOFORN
SIPDIS

E.O. 12958: DECL: 02/24/2018
TAGS: ENRG GR
SUBJECT: PROMETHEUS GAS CHAIRMAN: NO SOUTHSTREAM THROUGH
GREECE IN NEAR FUTURE

ATHENS 00000262 001.2 OF 002

Classified By: Ambassador Daniel V. Speckhard for reasons
1.4 (b) and (d)

Summary
-------

1. (C) Prometheus Gas Chairman Dimitri Copelouzos told the
Ambassador and the acting Economic Deputy in a meeting on
February 15 that he does not see Gazprom moving ahead with
Southstream through Greece for many years. Copelouzos also
indicated Prometheus Gas could supply another 3 bcm to Greece
via Bulgaria in as little as eight months at a cost of 50
million euros. Other highlights of the meeting include a
discussion of the Copelouzos Group's business activities in
Greece and the Balkans; Russian energy activities in Greece,
including the Gazprom/DEPA energy supply agreement; and the
Trans-Adriatic Pipeline. End Summary.

Copelouzos Group Investments in Greece and the Balkans
--------------------------------------------- ---------

2. (C) Copelouzos, who is also the Chairman and Managing
Director of the Copelouzos Group of Companies was joined by
his General Manager, Ioannis Karydas, in a meeting with the
Ambassador and the acting Economic Deputy on February 15.
Copelouzos informed the Ambassador that his Group's
investments in Greece are focused in the energy sector and
laid out his major investment projects. According to
Copelouzos, his group has built approximately 65 to 70
percent of all power plants (hydro, diesel, lignite and
combined cycle) in Greece. In addition, eight months ago,
Copelouzos Group won a government tender to build the
country's first fully privately-owned power plant.
Copelouzos hopes to execute the contract with the government
for the 400 MW plant within the next 15 days; however, he
expressed some frustration that the government has dragged
its heels for several months. (Comment: New power plants
such as those Copelouzos described have a potentially
important role in promoting our Southern Corridor Strategy.
They represent the first significant expansion in Greek
domestic gas demand in the coming years. End Comment.)

3. (C) Copelouzos also told the Ambassador that his group
is a leader in photovoltaic energy in Greece. His group
hopes to have a photovoltaic plant near Patras on-line in as
soon as eleven months. The Group,s other activities in
Greece include selling natural gas and investing in mixed
projects with the Greek state, including the new airport and
the suburban rail extension to the airport. Most recently,
the Copelouzos Group has engaged with the GOG to build a new
casino and resort near the new airport. Copelouzos described
the concept as a &mini Las Vegas,8 and indicated that the
government might publish a tender for Greece's second casino
license within the next six months. He believes the
investment will be good for Greece and will increase usage of
the urban rail, which currently is underutilized.

4. (C) Copelouzos Group is very active elsewhere in the
Balkans as well. The Group has invested in a power plant in
Bulgaria together with the Bulgarian National Electric
Company (NEC). In Albania, the Group recently won a tender
for a 200 MW diesel power plant and is negotiating with the
government for a 300 MW combined cycle plant near the Greek
border. (Comment: This plant potentially would be fed with
gas coming off a spur from TGI. End Comment.) The Group is
looking for an American company to co-invest in the latter
project. Copelouzos,s firm is actively pursuing investments
in Macedonian power plants, but he does not believe the GOM
is ready yet for serious negotiations, despite the country's
considerable need for additional electricity.

Southstream
-----------

5. (C) The Ambassador probed Copelouzos on his thoughts
regarding Southstream. Copelouzos indicated that the
Russians are thinking seriously about Southstream, and the
project is a priority for Gazprom as it continues to look for
more ways to export its gas. According to Copelouzos, the

ATHENS 00000262 002.2 OF 002

Russians have already signed agreements with Bulgaria and
Serbia for the export of gas. Copelouzos believes that these
and other countries are eager to sign agreements with Gazprom
due to transit disputes between Turkey and Azerbaijan. When
pushed on the issue of whether Gazprom desires to own a
pipeline in Greece, Copelouzos responded that Gazprom has
proposed a line through Greece to Italy, but that the
Russians hve already made a deal with Serbia for export of
their gas to Central Europe. Gazprom has not signed anything
with the Greeks.

6. (C) Copelouzos stated that he likes the idea of
Southstream in Greece because it will bring in more gas and
building the pipeline could be an important project for his
company. That said, he indicated that a submarine pipeline
and another line to Italy does not make sense. The Ambassador
thanked Copelouzos for this infrmation and emphasized the USG's
strong support for TGI through Greece. Copelouzos added that
it does not make sense for Gazprom to build several lines
in the near future. In his opinion, Southstream would not
be realized for many years.

Gas Supplies for Greece
-----------------------

7. (C) In response to the Ambassador's question about
whether the GOG has signed a new agreement to double Gazprom
gas supplies to Greece, Copelouzos responded that the current
agreement for 3 bcm expires in 2016. He explained that
Copelouzos Group,s joint venture with Gazprom, Prometheus
Gas S.A., could provide another 3 bcm to Greece for the first
time this year because DEPA (Greece's public gas supply
corporation) has sold all its gas already. The extra 3 bcm
could be delivered to Greece via Bulgaria, according to
Copelouzos. As is, the current pipeline could deliver an
extra500 mcm. The remainder of the extra 3 bcm could be
delivered with adjustments to the pipeline that would cost
approximately 50 million euros and take up to eight months.

Trans-Adriatic Pipeline (TAP)
-----------------------------

8. (C) When questioned by the Ambassador about the TAP,
Copelouzos responded that there are many pipelines reported
on in the news, but that the Turkey-Greece-Italy pipeline is
the true pipeline. He stated that he does not know when it
might be possible to execute the TAP, but that ultimately, it
would depend upon the gas supply from Turkey. Copelouzos
indicated that for an 11 bcm line to be built, one needs both
supply and demand.

A Note on Diversification
-------------------------

9. (C) The Ambassador concluded the meeting by stating
that the U.S. was very interested in the energy sector in
Greece and the region, and that it was our hope that the
sector would remain transparent and open to competition. He
stated that the U.S. has no issue with Russia or Gazprom as a
major supplier to Europe and Greece. However, we feel
strongly that there needs to be diversification in energy
suppliers and routes. Copelouzos concluded by saying that
his company will buy gas from whomever has the better price.
SPECKHARD

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