It appears that Herr Schaeuble will be left in the cold as following comments from the Greek energy minister that a deal is coming "soon," it is being reported that:
- *RUSSIA MAY SIGN GAS LINK ACCORD W/ GREECE TODAY: ROSSIYA 24
According to Gazprom's CEO comments on Greek TV, following his meeting with Greek PM Tsipras, Russia will guarantee 47BCM/YR of gas via Greece with the link to be built by a Russian-European group at a cost of around €2 billion.
[10]
First, talks with Russia on extension into Greece of Turkish Stream pipeline are positive, will continue with aim of concluding “soon,” Greek Energy Minister Panagiotis Lafazanis says in comments broadcast live on state-run Nerit TV.
- *GREECE HOPES FOR DEAL SOON WITH RUSSIA ON PIPELINE: MINISTER
Then RIA reports,
- *RUSSIA MAY SIGN GAS LINK ACCORD W/ GREECE TODAY: ROSSIYA 24
- *RIA CITES GAZPROM CEO MILLER ON GREEK GAS TRANSIT
- *RUSSIA GUARANTEES TRANSIT OF 47BCM/YR OF GAS VIA GREECE: RIA
- *GAZPROM CEO: GAS LINK TO EU MAY BE BUILT BUY RUSSIA, EU GROUP
- *GAZPROM CEO: GREEK SECTION OF GAS LINK TO EU TO COST 2B EUROS
- *GAZPROM CEO MILLER COMMENTS ON GAS LINK TO EU ON RUSSIAN TV
Of course this should not be a huge surprise as we noted previously: [11]
Peskov reiterated that the Greeks had not requested financial assistance during talks in the Kremlin earlier this month between Prime Minister Alexis Tsipras and Russian President Vladimir Putin.
"Naturally the question of energy cooperation was raised. Naturally ... it was agreed that at the expert level there would be a working-out of all issues connected with cooperation in the energy sphere, but Russia did not promise financial help because no one asked for it," Peskov was quoted as saying.
Of course, this is merely diplomatic double talk, and all it suggests is that Russia is awaiting the official admission from Greece that it will pivot to Russia. For that to happen, Greece will have to formally state that in addition to creditor negotiations it is now openly looking to Moscow (and Beijing) for additional aid. The problem is that such a statement would promptly end any hopes of a Greek deal with its Troika creditors.
* * *
As a reminder, Russia is not acting out of the kindness of his heart, but merely engaging in another calculated move, one which kills two birds with one stone:
- Following the death of the South Stream, whereby the EU pressured Bulgaria to refuse passage of the Russian gas pipeline to Europe, Russia needed an alternative route of bypassing Ukraine (and Bulgaria) entirely, something which according to Kremlin's plan should happen over the next 3 years. And with Hungary and Serbia all eager to transit Russian gas to the Austrian central european gas hub, Greece was the missing link for a landline transit. With this agreement, Russia gets the green light to extend the Blue Stream [12]all the way to Austria and preserve its dominance over the European energy market while leaving Ukraine in a completely barganining vacuum.
- Perhaps just as importantly, suddenly Russia will energy as the generous benefactor riding to Greece's salvation, in turn even further antagonizing the Eurozone and further cementing favorable public opinion. As a reminder, several weeks ago we showed that Russia already has a higher approval rating among the Greek population thatn the Eurozone. In this way, Russia has just won a critical ally for the very low price of just €5 billion, without even having to restructure the entire Greek balance sheet should Greece have exited the euro and been attracted to the Eurasian Economic Union. Which also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote.
Russia is not alone in seeking to divide the spoils of the collapsing Eurozone: Beijing has also sought to invest in Greece's infrastructure and bought up €100m worth of short-term government debt last week the Telegraph reports.
* * *
Most importantly, we suspect, given the total illiquidty of Greece is:
- *GREECE MAY GET LOANS USING RUSSIA GAS TRANSIT GUARANTEE: MILLER
Providing a much needed potential flow of cash into the country securitized on that future cashflow from the pipeline deal... and enabling them to avoid Europe's austerity demands.
As Bloomberg reports, the gas transit guarantees will help Greece “to get additional commercial credits for other projects."
But stoically, spokesman Sergei Kupriyanov says by phone in response to question if company will provide loans to Greece:
"Gazprom isn’t a bank."
* * *
Finally, for those confused about the flow of funds, here it is:
Russia (Gazprom) gives Greece money, which Greece uses to repay the IMF, which uses the Greek money to fund a loan to Kiev, which uses the IMF loan to pay Russia (Gazprom).
A perfect circle.
