The decline of natural gas demand in Greece, which fell by 25 percent, year-on-year, in 2014 has continued into the present year with demand during the first three-and-a-half months down by roughly eight percent compared to the equivalent period last year, according to figures provided by DEFSA, the Natural Gas Transmission System Operator.

The DESFA figures showed that demand during the current year’s first three-and-a-half months amounted to 10.55 million megawatt hours, from 11.47 million MWh during the equivalent period in 2014. In cubic meter terms, consumption reached about 907 million cubic meters for the period, down from 980 million cubic meters in the equivalent period last year.

The drop has been primarily attributed to a considerable reduction in gas-fueled electricity production as a result of regulatory revisions made mid-way through 2014.

DESFA’s latest figures showed that the country’s power stations – both those run by the PPC power utility and independent units – are aborbing 25 percent less natural gas than they were a year ago. The drop for PPC’s power stations, alone, is even greater, at 40 percent.

Demand for natural gas was essentially supported by the industrial sector, small-scale consumers, and, to a lesser degree, certain independently run power stations, whose consumption drop has been fare more restricted than that of PPC’s.

It should be noted that the declining demand for natural gas has coincided with falling natural gas prices, tagged to crude oil price levels.

Officials at DEPA, the Public Gas Corporation, are hoping that a recently announced 16 percent tariff reduction for natural gas in Greece, for all consumer categories, effective as of April 1, may boost demand in the sector.

Should this downward trajectory in natural gas demand be sustained, and no contractual revisions are made between DEPA and its suppliers, primarily Russia’s Gazprom, then a new round of take-or-pay claims will most certainly arise.

Greece overestimated its gas order from Russia for 2014, which subsequently activated a take-or-pay clause in the natural gas agreement between the two sides. The resulting cost for Greece is believed to exceed 100 million euros, if the take-or-pay clause is strictly upheld.

Domestic gas demand last winter was partially covered by LNG imports made by M&M Gas, a Mytilineos Group and Motor Oil Hellas wholesale venture, which capitalized on attractive international LNG market opportunities. Taking this into account, the drop in sales at DEPA is far greater than the overall drop in demand.