Gas grid operator DESFA auctions staged last week for LNG cargo slots in 2024 proved successful, as had been anticipated. Just five of a total of 45 slots were available as 40 slots had already been reserved by bidders during a previous round.
This year, DESFA is, for the first time, staging LNG slot reservation auctions offering capacities for the next 15 years, from 2024 to 2038, triple the five-year extent offered up until last year.
Slot commitment by bidders beyond five years constitutes a significant qualitative leap for both the natural gas market and gas infrastructure as, on the one hand, long-term capacity agreements are bolstered, and on the other, infrastructure development visibility is improved through the expression of definite interest, market officials noted.
Latest auction premia have fallen to much lower levels, compared to last year, a development attributed to two key factors, reduced gas demand and the forthcoming launch of the Alexandroupoli LNG facility in Greece’s northeast, DESFA sources noted.
Reduced gas demand and the imminent launch of the new Alexandroupoli LNG facility, along with other gas-sector infrastructure, has led to a better supply-demand balance in terms of capacity commitment at the Revythoussa terminal – Greece’s only LNG unit at present – and prevented conditions for high premiums, as was the case last year.
Heightened gas demand last year pushed slot prices well above auction starting prices. As a result, premia, or windfall earnings, generated at the Revythoussa slot auctions and the Greek gas grid’s other entry and exit points reached 65 million euros.
DESFA’s windfall earnings, according to domestic gas market regulations, need to be utilized to benefit grid users. The 65 million-euro amount accumulated last year will go towards supporting the country’s latest supply security effort, as part of a 160 million-euro preventive action plan.
This initiative will lessen, by 65 million euros, the supply security effort’s collection target through various surcharges on consumer bills.