ITGI project can face difficulties

The ITGI project (Turkey-Greece-Italy pipeline) is one of the three corridors that envisage the delivery of gas from the Azerbaijani Shah Deniz field to Europe, along with Nabucco and TAP.

It includes updated Turkish pipeline infrastructure, as well as projects ITG (Interconnector Turkey-Greece) and IGI (Italy-Greece interconnector). The designed capacity of ITGI pipeline is 11.8 billion cubic meters per year.

Over the last year, experts' opinions on the chances of this project to be implemented were polar - from extremely negative to confidently optimistic. The European specialist on energy John Roberts: "ITGI is not likely to be chosen by Shah-Deniz Consortium as a preferable pipeline route to transport Azerbaijani gas to Europe. The project has too many problems". But the opinion of the head of Greece's DEPA Gary Sachinis is that "ITGI project is the best option for opening "Southern Gas Corridor".

All the arguments used up to now "for" or "against" the construction of this pipeline primarily touched upon technical and temporal aspects, and commercial attractiveness: "the pipeline is too small and has the least flexibility in terms of capacity expansion,... the negative feature of this project is that it consists of several parts. As long as the project contains a combination of several routes, its implementation is unlikely. "Or, for example: "the project has several advantages over other gas projects in the region and particularly envisages using the existing infrastructures of Georgia, Turkey and Greece. ITGI pipeline is the only pipeline amongst those proposed, which can be put into operation by the beginning of gas production within the second stage of the development of Shah Deniz gas condensate field in the Azerbaijan sector of the Caspian Sea".

However, the complexity in the project implementation may have an entirely different character. It should be noted that the ITGI shareholders are the Greek DEPA and Italy's Edison.

According to the European Central Bank President Jean-Claude Trichet, today, the financial system crisis faced by the European Union assumes a "systematic" character. The most critical situation is in Greece, which along with Italy, is part of PIIGS (Portugal, Ireland, Italy, Greece, Spain), indicating the zone of spread of the debt crisis. Today, Greece is on the verge of bankruptcy, Italy's sovereign credit rating was downgraded by international rating agencies to "negative".

At the EU summit in July, it was decided to establish a Stabilization Fund to provide the necessary resources to European economies with "problem", in particular, to cover part of the debts of Greece, and a few days ago, a plan was ratified to expand the lending capacity of the Fund, since the first infusion in the Greek economy has not brought the desired effect.
According to Euronews, the European Commission insists on the total recapitalization of banks to prepare them for possible write-off of the Greek debts. Banks were actually offered to write off 21 percent of Greek debts, but Brussels unofficially speaks about 50 percent of restructuring.

In this situation, the ITGI shareholders may have difficulties in obtaining loans from the international financial institutions for the construction of a pipeline. It is not excluded that having assessed the financial viability of the two companies from countries with the highest risk of default in the eurozone, the IFIs will refuse to give them a loan. By the way, the state's share in DEPA is 65 percent.

With regards to financing the project through own assets of companies, then this is unlikely, considering the fact that the Greek government has put up DEPA for sale, trying to partially cover its huge national debt.


Azer Ahmedbeyli
/Trend/