Azernews.Az

By Nigar Orujova

Gloomy financial position of Greece made the country to grasp for any chance to stay afloat. In this light, it seems that the country consider natural reserves rich Azerbaijan as a lifering.

The country of Hellenes is balancing on the edge of default now as the International rating agency Fitch lowered Greece's rating by one degree, to CCC level, which means the possibility of default in two steps. The same forecast give other major credit rating agencies Standard & Poor’s and Moody’s.

While the European Central Bank has stopped accepting Greek government bonds as security for new loans, but the country uses the possible bankruptcy to threat to international creditors, such as EU and IMF. The new authorities that came to power this January do not hesitate to demand money from Europe, as the default will obviously lead to panic in the peripheral countries of the European Union and the chain reaction.

The new government said to have money until April end. If default comes, the country will damage the euro area by € 330 billion, which is 3.4 percent of the eurozone’s GDP.

How does Azerbaijan come into the picture? Greece’s gas transmission operator DESFA turned a real problem between the two after resource-rich Azerbaijan acquired the bankrupt company in December 2013. The Azerbaijan State Oil Company won the tender, purchasing a 66 percent stake in DESFA for €400 million, while the Greek state controls the remaining 34 percent stake.

Azerbaijan needs DESFA to transport its "blue fuel" to gas-hungry Europe, which seeks its energy security.

Azerbaijan plans to export gas to be produced from its largest natural gas field Shah Deniz through the Southern Gas Corridor, which goes to Greece before reaching its final destination in Italy.

The European Commission opened an in-depth investigation to determine whether the acquisition of DESFA is in line with the EU Merger Regulation in November 2014. The case saw no solution yet, and the deadline is April end.

At the cusp of default Greece seems to spring a trap to the deal. Now Athens speaks of the lack of benefits that Greece can get from the transit of natural gas through the territory of the country.

This means that the country violates the treaty and blackmail not only supplier but mostly consumers, as Azerbaijan can find another way to transport gas, while Greece is still the part of the EU.

SOCAR has already made a reasonable response to all the claims and questions of the Greek side noting that the country should not hope for alteration in cost of Azerbaijani gas and transit fee.

Reducing the price of Azerbaijani gas to be transported to Greece cannot be discussed, since such a price reduction is not consistent with international practice. If the contract is for 25 years, it provides change in gas prices in the event of a sudden change in market conditions.

So, this may occur after gas starts flowing, which is not the case in this deal. Moreover, the issue of changes in tariffs for the transit of Azerbaijani gas should be addressed at the EU level.

Bearing in mind the difficult financial situation of Greece and its opportunities for share in TAP project, SOCAR is ready to concede Greece a part of its stake in the project. However, the basic term here is to assure payment on time.

Greece can hardly find out a foreign investor keen to raise money in a quite unattractive environment. Under these circumstances, the transaction that SOCAR inked with DESFA is almost an ideal way out, as it puts all three sides on benefit.

The important factor here is that Azerbaijani gas flowing through Greece promises considerable money to the Hellenic country, and energy security to the EU. In other words the deal will enable them to get rid of the long-playing pain in the neck.

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Nigar Orujova is AzerNews’s staff journalist, follow her on Twitter: @o_nigar

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