RAE, disgruntled, staging consultation for Kavala UGS price regulations

RAE, the Regulatory Authority for Energy, will discuss, at a board meeting on Thursday, business pricing regulations for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, before offering a proposal for public consultation ahead of a finalized decision, the authority’s president Athanasios Dagoumas told a press conference yesterday, confirming a previous energypress report.

Privatization fund TAIPED has pressed for this pending, and significant, step to be taken so that the prospective facility’s ongoing privatization can enter its final round of binding bids.

A gas grid operator DESFA and GEK TERNA partnership, as well as Energean Oil & Gas, have advanced to the second round of the project’s tender, staged by TAIPED, offering contracts for the development and operation of the facility.

In his comments yesterday, the RAE chief, clearly annoyed, noted that the process, until now, has had to overcome obstacles. He was particularly critical of DESFA, alleging the operator forwarded an unacceptable proposal as the authority’s role is to “protect the people, not help operators maximize their profit.”

DESFA proposed the development of a parallel double pipeline running from Thrace, in the country’s northeast, to northern city Thessaloniki, so that the Kavala UGS could function, according to Dagoumas, who added this would cost consumers in Greece nearly one billion euros, more than double the operator’s estimate of 450 million euros.

“There’s no way this proposal would cost 450 million euros…must be joking. Consumers in Greece would need to cover one billion euros so that the operator can make a profit,” Dagoumas argued. “They ought to be ashamed of themselves, having consumers pay one billion euros for pipelines we don’t need. This is not a colony.”

Senfluga, the consortium representing Italy’s Snam (54%), Spain’s Enagas (18%), Belgium’s Fluxys (18%) and Coupelouzos Group’s DAMCO ENERGY SA (10%), controls DESFA with a 66 percent stake. The Greek State holds the other 34 percent.

DESFA, responding to energypress questions, offered a completely different picture, insisting its Kavala UGS pipeline proposal would cost 420 million euros and is necessary as existing infrastructure is close to saturation point, especially in the north. Upgrades are needed to facilitate new infrastructure that would establish the country as a gas hub, DESFA officials noted, describing its proposal as a necessary network upgrade.