The country’s demand for natural gas has fallen considerably and appears set to end the year registering a 25 percent year-on-year decline, which would activate a take-or-pay agreement reached between DEPA, the Public Gas Corporation, and Russia’s Gazprom.
Based on the agreement’s conditions, DEPA will need to pay Gazprom for unconsumed amounts of gas as the take-or-pay term will be activated if Greece does not consume a minimum level of gas agreed to for the current year, which is now certain.
However, according to various sources, ongoing negotiations between DEPA chief executive Spyros Paleogiannis and Gazprom officials, involving numerous visits to Moscow by the Greek executive over recent weeks, have considerably limited the demands being made by the Russian gas giant.
On last count, made on Christmas Eve, demand for natural gas in Greece was down by 25 percent. This figure is not expected to change over the current year’s last few days.
The current natural gas demand level in Greece has fallen back to levels last registered in 2005. Until Christmas Eve, Greece has absorbed 31.113 million megawatt hours of natural gas, down from 41.548 million megawatt hours in 2013. (Every megawatt hour amounts to between 86 and 87 cubic meters of gas).
Measured in terms of cubic meters, Greece’s natural gas demand in 2014 has plunged by approximately one billion cubic meters, year-on-year.
The decline has been primarily attributed to subdued operations at electricity power plants over the year as a result of regulatory framework changes that made operations unfeasible, especially for independent producers not equipped with alternate fuels such as lignite. The drop in gas consumption at PPC, the Public Power Corporation, which is not faced by such a problem, has been far more modest, registering a 6.14 percent decline in 2014.
The gas demand drop would have been far more drastic had the regulatory framework changes taken effect from the beginning of the year and, moreover, if the industrial sector had not maintained – and, in some instances, increased – its gas consumption levels.
Data provided by DESFA, the Natural Gas Transmission System Operator, showed that the industrial sector, in most cases, either maintained or increased its gas consumption levels. This trend is expected to continue in 2015 as a result of lower prices, and if Greek government officials realize that a tax rate reduction on gas would ultimately offer the State additional tax revenues from improved company profit performances and a bigger workforce in the economy.
Household and commercial gas demand in 2014 fell moderately as a result of the mild winter experienced to date, combined with the ongoing recession. Gas demand has declined by 8.3 percent in Athens, four percent in Thessaloniki, and 3.5 percent in the provincial cities of Larissa and Volos.
In the steadier industrial sector, ELPE (Hellenic Petroleum) was a stand-out performer in terms of gas demand, registering a considerable 50 percent increase to cover energy needs at its refineries in Elefsina and Aspropyrgos, both just west of the capital’s western outskirts.
Gas demand at electricity power stations plunged, except for certain units operated by PPC. Gas consumption at a station run by Protergia in the Viotia region, slightly northwest of Athens, fell by 70 percent in 2014. Gas demand for facilities operated by Elpedison in Thessaloniki and Viotia dropped by 69 percent and 60 percent, respectively. An electricity station operated by Heron in Viotia required 58 percent less gas, while the gas demand drop at another station run by Korinthos Power reached 78 percent.