F oil is the king of fuels in Greece’s energy mix, then natural gas is the heir to the throne. At present, gas accounts for just 6% of energy consumption in the country—some way behind the European average of around 20%. But the next decade or so will see a rapid catching up process taking place with gas usage set hit 35% by 2020.

Most of the gas Greece receives comes from Russia. A new cross-border pipeline from the Capsian Sea is planned with Turkey

It is all good news for Greece’s principal gas operating company, the Public Gas Corporation of Greece (DEPA), which sees strong sales growth in the coming years. Established in 1988, when gas was first introduced into Greece, DEPA is responsible for the import, transport, and storage of natural gas.

In addition to sales to large industrial consumers and power plants, it is also seeking to broaden the market among domestic users. Athens is eager to diversify energy sources away from oil to enhance security of supply and to reap the environmental benefits of burning gas.

In a bid to create a more efficient gas market, the government is negotiating the sale of a 35% stake in DEPA to Spanish firm Gas Natural. The idea is to introduce foreign know-how and technical expertise, as well as new capital, and to broaden international links, especially with the EU. The government still holds 35% equity while Hellenic Petroleum holds the balance.

Raphael Moissis (INTERVIEW), DEPA’s Chairman and Chief Executive Officer, is understandably bullish. “There is very high demand and it is going to grow in the future.”

In 2003, DEPA recorded sales of 402 million euros ($535 million), with a jump of around 12% anticipated for 2004. Three-quarters of all sales go to the Public Power Corporation, the state-owned electricity producer.

With the anticipated rise in demand in the next decade—consumption shot up from just 1 billion cubic feet in 1996 to 77 billion cubic feet in 2002— Greece is investing heavily in its natural gas infrastructure.

Mr. Moissis believes that energy will be the new “mega project” for Greece in the wake of the Olympics. “The amount of money that is going to be invested on gas-related projects is not of the same magnitude but it stretches for a long period in time and it covers the whole of Greece. This will require a lot of investment,” he says.

The support of an experienced strategic investor like Gas Natural will make a big difference, he believes, in helping the company to rise to the challenge. “In general, it will be a very good thing for DEPA.”

Greece currently receives the bulk of its gas by pipeline from Russia with the rest coming from Algeria in the form of liquefied natural gas. It has signed an ambitious 250 million euros deal with Turkey to build a natural gas pipeline that could comprise a pivotal part of a network connecting the Caspian Sea regions gas fields with western Europe. DEPA and the Turkish company Botas will take the lead role in construction.

Mr. Moissis agrees that Greece is ready to become an energy hub for the southeastern corner of Europe. “We would like Greece to become the hub of a wheel with axes that point to Russia and Bulgaria as the source of supply in the northeast, Egypt and Algeria in the south, and the Caspian through Turkey in the east—and as destinations, the eastern Balkans in the northwest, and Western Europe via Italy in the west. We are working very hard to make this happen.”

Mr. Moissis thinks that the country must take advantage of its recent exposure on the international stage to boost goodwill among external investors.

He concludes, “I believe that this is a time when people from the outside are re-considering their perceptions of Greece. Therefore we should do everything possible to influence their perceptions in the right direction.”