Greece is in preliminary talks with Iran to secure natural gas for local needs and provide a gateway for the Persian Gulf nation to�supply fuel to other parts of Europe,�Greek Energy Minister Panos Skourletis said.

Greece produces little oil and almost no gas, while Iran is a member of OPEC and holds gas reserves that BP Plc ranks as the world�s largest. The countries�agreed�in January for Iran to supply crude to Hellenic Petroleum SA and buy oil products from the refiner. That deal,�possibly Iran�s first such agreement with a European company since the lifting of sanctions, opens the road to cooperation in the gas market too, Skourletis said in an interview in Athens.

�What�s sure is that Iran wants to start selling its natural gas in liquefied form using ships and is interested in Greece,� he said. The Revythousa re-gasification terminal near Athens is one potential entry point for Iranian gas, and a planned facility at Alexandroupolis in the north of the country is another. Iran is interested in both sites �for exporting to Europe,� Skourletis said.

Iranian Oil Ministry media officials in Tehran couldn�t be reached for immediate comment.
Diversifying Supply
Greece is hoping that the removal last month of international sanctions against Iran will help it diversify its sources of energy and enhance the European country�s role as a regional energy-distribution hub. Greece was forced to import more liquefied natural gas and switch at least one power plant to using oil for fuel in 2009, when a dispute between Russia and Ukraine disrupted gas supplies.�Iran�s Deputy Oil Minister�Amir Hossein Zamaninia�discussed potential energy cooperation with Skourletis on Jan. 22 in Athens.

Iran, which currently lacks facilities to export LNG, wants to use idle capacity at a facility in neighboring Oman to process raw gas into a liquefied form for sale, the Iranian Oil Ministry�s news service Shana reported on Feb. 21, citing Alireza Kameli, managing director of National Iranian Gas Export Co. Iran and Oman are negotiating to build a pipeline to send gas across the Persian Gulf to the Omani facility, Shana reported.�By liquefying gas, producers can ship it by tanker to distant markets not linked by pipelines.
Regional Pipelines
Iranian companies have expressed interest in participating with Depa, Greece�s state-run gas supplier, in a company that will build and run the planned floating LNG storage and re-gasification facility at Alexandroupolis, Skourletis said. Expansion of the Revythousa gas-importing terminal will be completed in 2017, and with adequate investment, the plant could also send gas northward to other areas in Europe, he said.

Both facilities will be connected to two international pipeline systems, the planned Trans Adriatic Pipeline and Gas Interconnector Greece-Bulgaria links,�Skourletis said. The market test for the Interconnector�pipeline,�which will link the Greek and Bulgarian gas systems, is due to be finished this month.

�If that shows that the project is viable, it will open the road for the Alexandroupolis facility,� Skourletis said.

Iran is also interested in Greece�s refineries, he said. The Greek government has no plans to reduce its 35 percent share in Hellenic Petroleum, the country�s biggest refiner, so any purchase of a stake could only happen via a private investor in the company, Skourletis said. Paneuropean Oil & Industrial Holdings, owned by the Latsis Group, owns 43 percent of Hellenic Petroleum, according to the refiner�s website.

This article was written by Paul Tugwell and Nikos Chrysoloras for Bloomberg Business