Balkan hydropower summit planned for November in Bosnia and Herzegovina

The 4th Annual International Summit and Exhibition Hydropower Balkans 2020 is scheduled to take place November 4 and 5 in Sarajevo, Bosnia and Herzegovina.

In the lead-up, organizers of the event have prepared a related report listing all key HPP construction and modernization projects planned to be launched in the Balkan region between 2020 and 2025.

Projects featured in the report include:

  • Čebren HPP in North Macedonia, a 333-MW construction project in North Macedonia whose investment needs are budgeted at 570 million euros.
  • HPP Komarnica construction in Montenegro. EPCG has signed an agreement to produce a preliminary design plan for this construction project, an investment estimated to be worth 237.9 million euros.
  • Dabar HPP construction in Republika Srpske, one of the two entities of Boznia and Herzegovina. Hidroelektrana Dabar, a unit of Elektroprivreda Republika Srpske, issued a public call for financing and building of HPP Dabar, a turnkey/engineering project valued at some 200 million euros.
  • HPPS Foča and Paunci construction, a plan by Republika Srpska and Serbia plan to jointly build two HPPs with a combined installed capacity of between 90 MW and 95 MW. This investment is estimated at 200 million euros.
  • HPP Buk Bijela construction. Serbia and Republika Srpska intend to jointly build the Buk Bijela hydropower plant, a project requiring an investment of 193 million euros.

Requests for the full list of investment projects may be submitted to: https://www.hydropowerbalkans.com/request-the-full-list-of-investment-projects/

MH Elektroprivreda Republike Srpske and JP Elektroprivreda BiH are the November event’s strategic partners.

Bulgaria gas pipeline explosion highlights need for local projects

Yesterday’s Bulgarian gas pipeline explosion in Bulgaria, prompting a supply cut into Greece from a northern route, yet again highlights how vital it is for Greece to develop two gas infrastructure project plans in Alexandroupoli, northeastern Greece, and Kavala, in the north.

The explosion of this pipeline, carrying Russian gas into Greece via Bulgaria, has not affected Greece’s energy security as supply from the alternate Kipoi route remains uninterrupted, while the contribution of high LNG reserves at the Revythoussa terminal, just off Athens, has also been crucially important.

However, a Greek energy crisis could have resulted if this accident were more serious, or if the Revythoussa facility did not exist, or, worse still, the accident coincided with even greater Greek-Turkish tensions than at present, which could have meant a cut in gas supply from Turkey, hosting one of Greece’s key gas import corridors.

The intensifying geopolitical instability of the wider region, which includes Turkey, an extremely troubling neighbor, makes imperative the existence of sufficient gas storage facilities to safeguard Greece’s energy security. Despite the precarious conditions in the region, Greece remains one of the European countries without sufficient energy storage infrastructure.

In addition to the existing Revythoussa LNG terminal, Greece’s infrastructure definitely needs to be reinforced by projects such as the Alexandroupoli FSRU and an underground gas storage facility at a virtually depleted offshore deposit south of Kavala.

 

GEK TERNA set to develop new 660-MW thermal unit

GEK TERNA is expected to finance its development of a gas-fueled power station with a 660-MW capacity in Komotini, northeastern Greece, through bond funds totaling 500 million euros, sources have informed.

In a company statement, GEK TERNA noted it intends to use 400 million of 500 million euros in bond funds to finance the group’s investment program, which includes gas-fueled power generation.

GEK TERNA is close to reaching an investment decision on this facility, the sources added. It would represent the third thermal unit involving the group.

GEK TERNA, which has the potential to play a key role in renewable energy through Terna Energy, is not overlooking thermal-unit developments.

Greece’s decarbonization strategy and the dominance of natural gas as the main fuel during the energy transition are two factors creating major opportunities for the GEK TERNA group.

Other vertically integrated electricity producers are also preparing new thermal facilities. The Mytilineos group is already constructing an 826-MW gas-fueled power station in the Boetia area, slightly northwest of Athens. This unit is expected to be launched next year.

A licensing procedure by Elpedison, also for an 826-MW facility, in Thessaloniki, is maturing.

In addition, the Copelouzos group is making progress on licensing for a 660-MW facility in Alexadroupoli, northeastern Greece. Company official Kostas Sifneos recently said this facility’s launch is scheduled for 2022.

The country’s big energy players are also continuing to eye Balkan markets for electricity exports, pundits informed.

Poseidon overland section plan kept alive, PCI status sought

IGI Poseidon, a 50-50 joint venture between Greek gas utility DEPA and Italian energy operator Edison, is keeping alive the development prospects of an overland Greek segment, across northern Greece, for its Poseidon pipeline, to cross the Ionian Sea for a Greek-Italian link.

DEPA and Edison have submitted an application to the European Commission for PCI status concerning the overland section of Poseidon, enabling EU funding support, sources informed.

The Poseidon pipeline’s onshore segment, planned to stretch 760 km across northern Greece, from Kipous in the northeast, to Florovouni-Thesprotia, in the country’s northwest, before crossing the Ionian Sea all the way to Otranto, on Italy’s east coast, is considered an extension of the EastMed gas pipeline plan to link Greece, Cyprus and Israel.

Poseidon’s onshore segment could be used to transport natural gas from east Mediterranean gas reserves to Balkan markets.

The Poseidon pipeline’s overland section can also be expected to be linked to the Greek-Bulgarian IGB gas pipeline, another project involving IGI Poseidon.

The Greek-Italian Poseidon pipeline has been incorporated into a trilateral agreement signed by Greece, Cyprus and Israel for the EastMed pipeline. This pact was ratified in Greek Parliament last month.

Greece, Cyprus and Israel recognize the overland section of the Poseidon pipeline as a project of national significance.

Capacity of the Poseidon pipeline has been increased to 15 bcm from an original capacity of 8 bcm, while a further capacity boost to 20 bcm is planned.

 

Energy groups pressing ahead with natural gas-fired unit plans

The country’s major energy groups are pushing ahead with investment plans for new gas-fired power stations despite the pandemic’s unprecedented impact on the economy and electricity market.

Mytilineos, a vertically integrated group at the forefront of electricity production and supply, began constructing an 826-MW energy center at Agios Nikolaos in the Viotia area, slightly northwest of Athens, last October and is continuing to press ahead with this project.

Investment plans by other players are also maturing. GEK-TERNA is moving ahead with licensing procedures for a 660-MW unit in Komotini, northeastern Greece. The Copelouzos group is paving the way for a 660-MW facility in Alexandroupoli, also in the northeast, while Elpedison is carrying on with procedures for an 826-MW power station in Thessaloniki.

Copelouzos could partner with an investor for the group’s Alexandroupoli project, sources informed.

All the aforementioned corporate groups are positioning themselves in a new energy landscape being shaped by the dominant role of natural gas in the transition towards renewable energy and cleaner energy sources.

This trend became very apparent during the lockdown in Greece. Natural gas and the RES sector covered 60 percent of domestic electricity demand in March.

Power utility PPC is pushing ahead with its decarbonization program without any backtracking, despite the crisis. This is creating a need for new and modern gas-fired power stations.

Furthermore, Greek energy groups are continuing to eye Balkan markets for prospective electricity exports. Electricity generation in the neighboring region has not been satisfactorily upgraded in recent decades, market officials pointed out.

Vertically integrated groups are also eagerly anticipating a new permanent CAT mechanism.

Free webinar covering HPPs in the Balkans next week

A free webinar covering HPPs and their under-development in the Balkans, to feature sector authorities, is scheduled for April 23, 11:00 AM GMT. 

Hydropower in the Balkans accounts for about 50% of the region’s installed capacity, 12.5 GW, generated by 53 middle and large HPPs and 203 SHPPs. The region’s technical potential is estimated to be about 36 GW, three times above the actual usage. More than 30 hydropower investment projects concerning construction, rehabilitation and expansion are planned to be developed in the Balkans over the next five years.

Webinar participants will be informed on:

  1. Overview of the hydropower market, opportunities and forecasts of future development of clean generation in the Balkans;
  2. Most promising projects concerning construction and modernization of HPPs planned for development within 2020-2030 in the Balkan region;
  3. First-hand information on HPP technological improvement and further innovations.

Webinar speakers will include:

  • Željko Ratković, Department of Investments, MH Elektroprivreda Republike Srpske M.P. a.d. Trebinje, to present the topic “Energy Projects of MH Elektroprivreda RS with Relevance to Climate Change”
  • Nevena Djukic, General Manager, Energy portal, to discuss “Renewable energy in Serbia”.

Have no time to join the webinar at the appointed time? Follow the link to register and get the webinar materials. The webinar will be held in English.

Contact Person:

Elizaveta Smirnova

Webinar Producer

ESmirnova@vostockcapital.com

www.hydropowerbalkans.com

 

RAE given 5 months to set Kavala underground gas storage charges

RAE, the Regulatory Authority for Energy, has been given five months to determine the pricing policy, regulated earnings and WACC for a planned underground gas storage facility at a depleted offshore gas field in the south Kavala region, according to an imminent joint ministerial decision, energypress understands.

The launch date of the project’s tender will depend on funding for project studies through the EU’s Connecting Europe Facility (CEF) program. This essentially means that the privatization fund TAIPED will need to officially launch the project within the first half of this year to avoid missing out on CEF funds.

The project’s investment cost is estimated at between 300 and 400 million euros.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

The project, promising gas storage capacity of 360 million cubic meters, is considered vital for Greece as it will be able to maintain strategic reserves for considerable time periods.

Its development will help boost the performance level and strategic role of the Revythoussa LNG terminal just off Athens, and the prospective Alexandroupoli FSRU in the country’s northeast, as these will be able to supply the wider region greater gas quantities via the IGB and TAP gas pipelines.

The south Kavala project has been classified as a PCI project, offering EU funding opportunities, seen as crucial for the investment’s sustainability, according to some analysts.

DEPA set to appeal court verdict ordering ELFE refund

Gas utility DEPA is expected to submit an appeal by Wednesday challenging an Athens Court of First Instance verdict delivered in October that vindicates ELFE (Hellenic Fertilizers and Chemicals) for gas supply overcharging claims made against the utility.

The court ruling has ordered DEPA to return a sum of 63 million euros to ELFE for supply between 2010 and 2015 as a result of the application of a pricing formula used by Gazprom, pegging gas prices to international oil prices.

The Athens court ruled the pricing procedure should be based on formulas used by northern Europe hubs, which are not pegged to fluctuating international oil prices.

DEPA, in its appeal, will argue the pricing formula is not a local creation but, instead, used by Gazprom customers in the wider area such as North Macedonia, Bulgaria and Romania.

The gas utility, in its appeal, will also contend the Greek gas market, still isolated, cannot be compared to those of west and northern Europe as interconnected gas trading hubs operate in these regions.

The case could have wider ramifications for DEPA if ELFE is victorious because other  customers supplied by the Greek gas utility could emerge to dispute the Gazprom pricing formula and also request pricing revisions.

Also, if unsuccessful, DEPA would need to recalculate ELFE’s entire outstanding amount, currently worth 126 million euros.

JinkoSolar signs deal with COSCO for Piraeus port as distribution hub

JinkoSolar, one of the largest and most innovative solar module manufacturers in the world, has signed an agreement with COSCO (China Ocean Shipping Company) to use the Greek Port of Piraeus as a distribution hub for the shipment of its renewable energy products in Europe, and in particular for Greece, the Balkans and the EMEA region, the company has announced in a statement.

COSCO holds a controlling 51 percent stake in the Piraeus Port Authority, operator of the port.

“The Port of Piraeus is the ideal distribution hub to strategically expand JinkoSolar’s logistics and distribution network in Europe,” said Frank Niendorf, General Manager of JinkoSolar Europe. “This partnership with COSCO will enable us to work very closely with our clients in the region by providing an optimized logistics solution that will not only be reliable, timely but most of all, cost-efficient.”

Xudong Su, Managing Director of COSCO SHIPPING Lines (Greece) commented, “Today’s agreement is an important milestone for COSCO. This partnership reflects the trust JinkoSolar has in our experienced team and operations to provide the highest quality E2E Supply Chain Solutions through the distribution hub in the Port of Piraeus. This is a historic collaboration for both companies as we jointly work to generate long-term sustainable growth.”

 

Jetoil placed on the comeback trail by new owner Centracore

Bankruptcy-struck oil trading company Jetoil, now controlled by Austria’s Centracore and on the rebound, has reclaimed approximately 15 percent of the fuel-station network it controlled prior to the rescue plan.

Jetoil now operates 83 fuel stations (DODO, dealer-owned, dealer-operated), primarily in northern Greece, as well as the Thessaly, Epirus and other mainland regions.

At the peak of Jetoil’s crisis in the summer of 2016 – when founder Kyriakos Mamidakis committed suicide, aged 84, not long after the company had filed for bankruptcy – the company’s retail network had shrunk to just 34 outlets.

A Jetoil rescue plan was approved Iast year. Strategic investor Centracore agreed to take on the company’s liabilities following a partial haircut.

Besides a purchase price of 107 million euros, the new Jetoil shareholder has invested 10 million euros to upgrade the company’s storage facility in Kalohori, on the outskirts of Thessaloniki.

Jetoil has increased its sales in Greece and achieved significantly higher exports since its takeover. Total sales for the first financial year since Centracore’s entry reached 420 million euros generated by a trading volume of 350,000 metric tons.

In a year, the company has achieved 35 percent of its business plan’s target, set at one million metric tons of trading volume, or a 10 percent Greek market share, including exports.

The strategic investor, maintaining access to Russian refineries, has admitted the decision to invest in Greece was based on export potential to Balkan markets. Centracore obtained a Greek trading license in July, 2018.

Centracore is a Vienna-based trading company headed by Luxembourg’s UFG Europe Holding, holding an 80.1 percent share and comprised of private equity funds. Russian Petroleum company Rosneft holds the other 19.9 percent.

Greek power producers also eyeing Balkan export potential

The country’s power producers are focusing on the market prospects of  neighboring countries along with a heightened interest in Greece’s electricity market as a result of the upcoming elections, seen bringing the main opposition New Democracy party into power for more decisive reform action at power utility PPC, and intensified market competition.

Investments plans by PPC, currently developing its Ptolemaida V power station, as well as by private-sector enterprises, which have announced plans for five new state-of-the-art units, are expected to create an overabundance of electricity, even of all these plans are not executed. This is one of three main factors turning the attention of power producers to neighboring markets.

Also, it has become clear that Balkan markets lack flexibility in electricity generation as they primarily depend on coal, while gas networks that could support flexible gas-fueled power stations in the region are insufficient.

A third factor contributing to the heightened the interest of local producers for energy-related business in the wider region is Greek power grid operator IPTO’s ongoing upgrade of Greece’s grid interconnections with neighboring countries, especially Bulgaria and North Macedonia, which promises to create greater export potential.

Besides the independent producers, PPC is also looking to capitalize on this export potential.

DEPA awaiting Gazprom news for lower gas price, LNG a market hit

Gas utility DEPA, which has asked for a lower natural gas supply price from Gazprom, can expect a response around June 15, the Russian gas giant has informed.

DEPA was driven to action by extremely low spot-market prices for LNG currently available in Europe.

Major European hubs, such as the TTF facility in the Netherlands, are currently offering prices of 10.928 euros per MWh, compared to Gazprom’s supply contract for the Balkans, including Greece, of approximately 20 euros per MWh.

It remains to be seen how DEPA will respond if the price-related news from Gazprom is not favorable.

LNG is projected to have captured roughly 55 percent of western European energy markets five years from now, up from approximately 40 percent last year, authorities told a recent forum in Brussels.

According to the World Energy Council, LNG will capture a 51 percent share of the global market by 2025, from 25 percent in 2000 and 45 percent in 2018, as a result of new production line investments in the USA, Qatar and Australia.

Lower LNG prices have coincided with an upgrade at the LNG terminal on Revythoussa, an islet just off Athens, resulting in its capacity increase to 220,000 cubic meters. This has enabled bigger incoming shipments.

So far this year, LNG shipments have arrived from Qatar and the USA. More are expected.

Meanwhile, DEPA’s domestic market share for LNG supply is on a downward trajectory and currently at around 30 percent as a result of intensifying competition.

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

Gas utility DEPA and US energy exporter Cheniere have reached an advanced stage in negotiations for a long-term LNG supply agreement that could result in a five-year deal, according to sources.

A 150,000-cubic meter spot-market purchase made by DEPA from the Texas-based company towards the end of last year kindled the current negotiations for a longer-term agreement between the two sides, energypress sources informed.

The US has made clear its interest to establish Greece as a gateway for American LNG into Balkan markets. The US Ambassador to Greece, Geoffrey R. Pyatt, has often made reference to the prospect.

A supply agreement between DEPA and Cheniere would further diversify the Greek gas utility’s sources, currently dominated by Russian natural gas and LNG from Algeria.

DEPA has reserved a one-billion cubic meter capacity through the TAP route as of 2020, when the new gas pipeline carrying natural gas from Azerbaijan is expected to begin operating. The prospect should enable DEPA to offer domestic-market customers more competitive prices and further penetrate Balkan markets, via the IGB Greek-Bulgarian pipeline, to connect with TAP.

The ongoing DEPA-Cheniere talks have not swept Algeria’s Sonatrach out of the picture, sources stressed. DEPA’s current supply agreement with Sonatrach expires in 2020 and the two sides are already discussing a renewal.

DEPA agreements with Cheniere and Sonatrach, combined with Azerbaijani gas supply through TAP, promise to place the Greek gas utility in a more favorable position opposite Russia’s Gazprom, its main supplier.

DESFA, Windows International to battle for northern pipeline

Respective applications submitted by Windows International Hellas, an enterprise controlled by Russian entrepreneur Leonid Lebedev, and Greece’s gas grid operator DESFA for the development of a gas pipeline interconnection running from Greece’s north into North Macedonia have both been approved by RAE, the Regulatory Authority for Energy, viewing  the proposals as rival initiatives.

Windows International Hellas and DESFA will now need do to battle for the project’s contract.

RAE had approved the Windows International Hellas application in December, but the news was not disclosed until now, according to sources.

DESFA has been granted conditional approval for its ten-year development plan covering 2017 to 2026, which includes the gas pipeline interconnection, a project budgeted at 48.7 million euros. Full approval remains pending and depends on the results of a required market test.

Windows International Hellas intends to develop the pipeline as an independent natural gas system, which would not burden users, whereas DESFA wants to develop the project as part of the national natural gas system, which explains why RAE has called for a market test. The test will determine if sufficient demand exists to avoid burdening users.

Windows International Hellas wants to utilize the pipeline for coverage of North Macedonia’s domestic needs. The Lebedev-led firm plans to construct a gas-fueled power station, it has been rumored.

DESFA is aiming to connect with networks in other Balkan countries through the prospective gas pipeline.

It is planned to run from Nea Mesimvria in Thessaloniki to Gevgelija in North Macedonia.

 

Name agreement developing Fyrom into ELPE oil hub

A bilateral agreement between Greece and Fyrom (Former Yugoslav Republic of Macedonia) for a change of name by the latter to the Republic of North Macedonia is providing further momentum to talks between ELPE (Hellenic Petroleum) and the neighboring country’s government for the reopening of an oil pipeline stretching 213 kilometers from the Greek petroleum group’s Thessaloniki facilities to its Okta company refinery across the northern border.

The two sides are close to finalizing an agreement for the pipeline’s relaunch, sources informed. The facility was shut down in 2013 when ELPE decided it was no longer feasible to keep it running.

The Greek company used the pipeline as a channel of transportation for crude from its Thessaloniki plant to the Okta unit in Fyrom.

Road networks have been used to supply fuels to Fyrom since 2013 but transportation costs and smuggling activity have risen sharply at the expense of both Fyrom and ELPE, the neighboring market’s main supplier.

Besides supplying the Fyrom market, ELPE’s Okta refinery also promises to serve as a hub for the wider region. Wider growth in Balkan countries over recent years was a catalyst in the ELPE board’s decision to reopen the pipeline to its Okta plant.

ELPE maintains a market presence in Bulgaria, Serbia, Montenegro and Fyrom, operating more than 200 petrol stations in total. The pipeline’s reopening is expected to facilitate ELPE’s entry into new markets.

 

DEPA placing extra LNG order for bigger Revythoussa terminal

Gas utility DEPA is making arrangements with Algeria’s Sonatrach for a considerable additional LNG order to fill a new third storage tank at the upgraded LNG terminal on the islet Revythoussa, just off Athens, once the facility’s imminent commercial launch is staged.

This LNG shipment, entailing part of a 130,000-cubic meter order, comes as an addition to scheduled deliveries for the winter season’s heightened demand.

DEPA is now awaiting the LNG terminal’s launch, which has been delayed by a few weeks, to proceed with its extra Sonatrach order. The gas utility is keen to move ahead with the order as soon as possible to avoid any price fluctuations in the European energy market, currently volatile.

According to latest estimates, the upgraded Revythoussa terminal is expected to begin operating – commercially – in the second half of December, despite a preceding official launch ceremony, planned for November 22.

The terminal’s new storage tank will offer a 95,000-cubic meter capacity, boosting the facility’s overall capacity to 225,000 cubic meters. The upgrade promises to create new gas export potential to Balkan and southeast European markets.

According to a study conducted by Greek gas grid operator DESFA, the new Revythoussa terminal will be able to cover 30 percent of gas import needs in the Balkans, Slovenia and Hungary.

The US is currently seeking European gateways for shale gas exports. Besides catering to American gas trading interests, the upgraded Revythoussa terminal could, in the medium term, also facilitate gas quantities stemming from rich Cypriot and Israeli sources in the east Mediterranean.

 

Heatwave, unfavorable factors prompt energy crisis meeting

The country’s grid capacity is set to be seriously tested for the first time this summer over the next few days when temperatures around the country are forecast to soar to levels of at least 37 degrees Celsius, which is sure to prompt widespread and heavy use of air conditioning systems and lead to a surge in electricity demand.

This anticipated early-summer heatwave will coincide with a combination of unfavorable temporary factors limiting electricity generation.

A crisis team comprised of RAE (Regulatory Authority for Energy), DEPA (gas utility), DESFA (gas grid operator) and IPTO (power grid operator) officials will convene for an emergency meeting today, energypress sources informed, to discuss energy supply as the heatwave nears.

The LNG terminal at the Revythoussa islet off Athens is currently closed for expansion work, now in progress. The Greece-Italy interconnection linking the grids of both countries is temporarily closed until June 21 for maintenance work. The anticipated increased reliance on air conditioners during the heatwave will require greater electricity output from the country’s gas-fueled power stations. Also, higher electricity prices in regional markets have prompted local traders, lured by the higher prices, to increase Greek electricity exports to the north.

Participants at today’s emergency meeting will seek solutions ensuring the grid’s ability to meet heightened electricity demand over the next few days.

CO2 emission right costs have risen over the past three months, especially in May, while fuel and natural gas price levels have also climbed to remain at elevated levels.

These developments have sharply increased prices of electricity futures markets contracts both in Germany, guiding European developments, and in regional markets impacting Greece, namely Hungary, which shapes prices in Balkan countries interconnected with Greece, as well as Italy, a key market also interconnected with the Greek grid.

In Germany, wholesale electricity prices rose by approximately 10 euros per MWh in a month. In Italy, current electricity futures contracts concerning delivery in July are being established at levels of around 75 euros per MWh.

These regional price increases are already impacting the Greek market, where the System Marginal Price, or wholesale price, averaged 56.33 euros per MWh in May. June contracts are being established at 59 euros euros per MWh.

RAE and the country’s operators see all these factors as severe warnings which prompted the need for today’s meeting.

 

 

 

 

 

 

Wholesale power prices rise, perilous times for suppliers

Increased wholesale electricity prices in Europe, still only partially reflected in the Greek market, are increasing the challenges faced by local suppliers.

CO2 emission right costs have risen over the past three months, especially in May, while fuel and natural gas price levels have also climbed to remain at elevated levels.

These developments have sharply increased prices of electricity futures markets contracts both in Germany, guiding European developments, and in regional markets impacting Greece, namely Hungary, which shapes prices in Balkan countries interconnected with Greece, as well as Italy, a key market also interconnected with the Greek grid.

In Germany, wholesale electricity prices rose by approximately 10 euros per MWh in a month. In Italy, current electricity futures contracts concerning delivery in July are being established at levels of around 75 euros per MWh.

In Hungary, energy supply term contracts covering all of 2019 (CAL-19 contracts) rose by 6.3 percent in May, from 47.45 euros per MWh to 50.78 euros per MWh. Compared to price levels in March, the cost of CAL -19 contracts has increase by 22 percent, from 41.65 euros per MWh to 50.78 euros per MWh.

These regional price increases are already impacting the Greek market, where the System Marginal Price, or wholesale price, averaged 56.33 euros per MWh in May. June contracts are being established at 59 euros euros per MWh.

Worse still for independent suppliers, the starting price at the country’s next NOME auction, next month, will be significantly increased.

Higher price levels in regional markets have made electricity exports a more attractive prospect for local traders, resulting in further upward pressure on local prices.

Given the current market conditions, lofty price levels reached at previous NOME auctions no longer look as bad, officials at independent supply firms have told energypress. Elevated NOME auction prices of 45.2 euros per MWh reached at the end of 2017 are no longer regarded as lofty and will soon be reminisced, independent supply firm officials said.

NOME auctions were introduced in Greece nearly two years ago to offer independent suppliers access to the main power utility PPC’s lower-cost lignite and hydrocarbon sources.

It remains to be seen whether independent suppliers, especially smaller players, will be able to handle these wholesale price increases as they push to penetrate the retail market. Export and trading will offer suppliers some profit opportunities but, at current wholesale price levels, most firms, including PPC, are incurring losses in the local retail supply market.

Under normal market conditions, wholesale price increases lead to higher retail prices. But this is not so in the Greek electricity market, still distorted. State-controlled PPC, the dominant player, does not set its retail prices based on cost but political decisions taken at the energy ministry, keeping electricity price levels lower than they should be.

This market distortion is affecting the ability of independent suppliers to compete and gain more respectable retail market shares as they are forced to follow PPC and keep their price offers low.

An upcoming reduction of the RES-supporting supplier surcharge will offer independent suppliers some relief, but it does not appear to be enough to offset the higher wholesale prices, while CAT payments paid by suppliers are expected to be reintroduced.

 

 

 

 

Coral entering natural gas supply market, eyeing Balkans

Motor Oil Hellas subsidiary Coral’s (Shell) plan to enter the natural gas market and penetrate the Balkan and Cypriot regions was highlighted at a company event yesterday, held to mark the launch of a Coral company bond.

The company, which currently holds a 23 percent share of the fuels market and maintains a network representing 15 percent of the market, made clear its natural gas market aspirations.

“We have acquired a retail [natural gas supply] license and aim to utilize our network’s retail systems. We already have our first two [major] clients,” Giorgos Hatzopoulos, general manager at Coral, noted at the event, adding that trial runs are now being conducted for supply to a further 18 major-scale customers. “We will enter the retail natural gas market and, potentially, those of other energy forms,” he added.

Last year was significant for Coral as the firm began operating beyond Greece for the first time. This foreign activity was launched in Cyprus through the firm’s acquisition of Lukoil’s network of 31 retail outlets, holding an 8 percent share of the market. Coral aims to increase this Cypriot presence to 15 percent and 50 outlets within the next two years.

Besides Cyprus, Coral also acquired one retail outlet in Serbia. In just a few days from now, Coral expects to launch an additional outlet in Belgrade and follow up with the opening of a station in Novi Sad, Serbia’s second largest city.

Coral also holds the rights to use the Shell brand name in Montenegro and the Former Yugoslav Republic of Macedonia (Fyrom).

Coral plans to use its storage facilties in Kalohori, slightly west of Thessaloniki, to develop its market presence in the wider Balkan region.

Besides Kalohori, Coral also maintains company-owned storage facilities in northern Greece’s Kavala and Alexandroupoli, the Piraeus port city’s Perama district and Hania in Crete, all offering a total capacity of 150,493 cubic meters.

Coral expects its sales performance to reach 2.4 billion euros this year, from 1.94 billion euros last year, as a result of the rise in fuel prices and the firm’s entry into the shipping fuel market.

Coral posted an EBITDA (operating profit) figure of 44 million euros in 2017. This year, the company plans to make investments worth 35 million euros for the development of eight new refuelling stations in Greece, primarily at highway locations, as well as investments in the Balkans and Cyprus.

Over the past five years, Coral’s investments have averaged 17 million euros per year. The firm has invested a total of 85 million euros, mostly to replan its network.

 

 

 

 

Conditions in Italy, Balkans seen subduing NOME prices

Electricity suppliers taking part in this Wednesday’s second NOME auction for the year believe that appropriate conditions exist for a subdued price in the 30-something euros per MWh range, but unusual factors that would drive the price level to at least 40 euros per MW, which the suppliers hope will be avoided, cannot be ruled out.

The price at the year’s first NOME session reached 41.45 euros per MWh, while the price at the closing sesson for 2017 rose to 45.2 euros per MWh.

Current market conditions in Italy, the Balkans and central Europe – regions to which local NOME participants expect to export some electricity amounts to, permitted by the current NOME rules – are expected to help subdue prices at this Wednesday’s auction.

Normally, electricity prices are not elevated during summer periods, as is reflected by futures contracts covering the next three months.

The large electricity amount to be offered at the April 18 NOME auction, totaling 400 MW/h, is also expected to help keep bidding prices lower. The same amount is also planned for the next session, scheduled for June 18.

In addition, certain suppliers currently hold leftover NOME-related electricity amounts that have remained untilized. Consequent expenses, such as mandatory deposit payments for unused amounts and fines if this non-utilization period exceeds two months, push suppliers to sell excess amounts in the secondary market, even at below-purchase prices.

On the other hand, demand and prices could be driven higher on Wednesday if participants fear limited NOME amounts at future sessions, assuming all proceeds smoothly with the main power utility PPC’s bailout-required disinvestment of lignite units and, as a result, the government reaches an agreement with the lenders for reduced NOME amounts at future auctions.

NOME auctions were introduced in Greece about a year and a half ago to offer independent players access to the state-controlled PPC’s lower-cost lignite and hydropower sources.

 

 

Balkan hydrocarbon collaboration discussed at Athens conference

The prospect of collaboration between state hydrocarbon companies was raised by Yiannis Bassias, chief executive of EDEY, the Greek Hydrocarbon Management Company, at the Balkans Petroleum Summit, held in Athens October 3-4 by global event organizer IN-VR Oil & Gas.

The summit brought together state hydrocarbon authorities, regulators and international oil company officials for a discussion on exploration and production projects, as well as an exchange of ideas on future hydrocarbon projects in the Balkans.

Bassias, as part of his contribution to the event, also underlined the similarities and differences between methods favored by Balkans countries in dealing with the resurgence of Balkan region interest by the international industry over the past seven years.

The importance of midstream projects and new infrastructure, need for reprocessing exisiting data and coordination for common regional petroleum targets, achievable only through information exchange by Balkans states, were among the topics addressed at the event.

Participants unanimously agreed that the EU hydrocarbon directive should be used as a guiding mechanism for a framework of common business practices.

The panel agreed to stage a follow-up meeting in the near future and meet annually.

Other participants included: Vladan Dubljevic, Executive Director of the Montenegrin Hydrocarbon; Milica Zorić, Head of Geology and Mining Division of the Ministry of Mining and Energy of Serbia; Florina Sora, Senior Advisor of the National Agency of Mineral Resources of Romania; Ilia Gjermani, Director of Petroleum Department of the Ministry of Infrastructure and Energy of Albania; and Hazim Hrvatovic, Director of the Institute of Geology of the Federal Ministry of Energy of Bosnia and Herzegovina

 

 

 

Greece crucial in west’s effort to limit Russian energy influence

The US is increasingly viewing Greece as a platform capable of supporting American energy interests in the wider region, a development that would stifle Russia’s current energy-related dominance. This outlook ultimately upgrades Greece’s geostrategic role in the region.

This American perception of the wider region was made clear yet again yesterday by the US Ambassador to Greece, Geoffrey R. Pyatt, during a speech delivered at the “1st Oil & Gas Forum” in Alexandroupoli, northeastern Greece. The event was organized by the American-Hellenic Chamber of Commerce.

Signs of growing intervention by Russia in the domestic affairs of Balkan countries have prompted US officials to increase their monitoring of the region.

Closer ties being established between Balkan countries and the west, combined with the development of energy projects supporting western interests, promise to reduce the Balkan region’s energy dependence on Moscow, currently as high as 90 percent.

Pyatt, during yesterday’s energy conference in Alexandroupoli, noted that an attempt made last year to prevent Montenegro from becoming a NATO member – the accession process was completed just months ago, in June – was propelled by Russian concerns over Russia’s  potential loss of influence in energy regions. This remark reiterated a recent comment made on the issue by US Vice President Mike Pence.

Montenegro is now a NATO member, the new Fyrom (Former Yugoslav Republic of Macedonia) government appears to be distancing itself from the previous administration’s pro-Russian position, while Albania, Bosnia, Kosovo and Serbia all find themselves at different stages along the EU accession course.

Energy projects of western interests, which, once completed, promise to reduce the region’s reliance on Russia, are now in full progress. Many of these projects carry Greek dimensions.

One of these, the TAP natural gas pipeline, to pass through Greece’s north, Albania and the Adriatic Sea across to Italy, promises to reform energy security in southeast Europe, Pyatt, the US Ambassador to Greece, told yesterday’s energy conference.

Pyatt expressed concerns over delays holding back the development of the IGB Greek-Bulgarian gas grid interconnection and extolled the roles to be played by a prospective FSRU in Alexandroupoli and extension of the existing LNG facility on Revythoussa, an islet just off Athens.

 

PPC preparing for new attempt to penetrate Balkan markets

PPC, Greec’s main power utility, is preparing to make a new attempt at penetrating the Balkan market, the corporation’s chief has told the recently launched weekly Nea Selida.

As part of the effort, the utility plans to participate in an upcoming international tender offering two hydropower facilities in Turkey, while similar moves are being planned for the Albanian market, according to PPC chief executive Manolis Panagiotakis.

The power utilty’s entry into the wider Balkan market, gaining pivotal importance as the EU energy market moves towards full intergration, is imperative for the Greek corporation’s future, Panagiotakis stressed in the interview.

PPC is aiming to heighten its activity in the Turkish market by establishing synergies with enterprises in the neighboring country, Panagiotakis noted without elaborating further.

Many pundits believe that PPC will seek to penetrate the Balkans with the backing of Chinese business partners. For quite some time now, the Greek utility has made clear its anticipation of and reliance on Chinese capital as a key towards entering Balkan markets following unsuccesssful attempts going back over a decade.

PPC made its first attempt in 2003 when it sought to enter the Romanian market. A series of other efforts ensued, all proving unsuccessful.

Albania, where PPC has established a subsidiary, needs to have its network developed, while thermal units also need to be constructed as the country’s network is heavily reliant on hydropower facilities.

 

Free CO2 emission rights for Balkan units would spell bad news for PPC

The development of coal-fired power stations in the western Balkans, combined with their provision of free carbon emission rights, as is being anticipated by the countries planning these units, would come as bad news for Greece’s main power utility PPC, now preparing a bailout-required list of carbon-fired power stations to be placed for sale.

A market test will be conducted after summer to determine the level of investor interest in these PPC units. The prospect of free CO2 emission rights for carbon-fired power stations in neighboring Balkan countries would certainly diminish the overall investor interest in PPC’s equivalent units. Consequently, PPC hydropower stations will need to be added to the Greek utility’s sales list.

Plans by former Yugoslav states to develop ten coal-fired power stations in the western Balkan region suggest that these countries are relying on qualifying for free carbon emission rights offered by the European Commission to less developed countries.

Otherwise, these prospective coal-fired power stations would not be sustainable when eventually incorporated into the EU’s ETS (Emission Trading Scheme). Carbon emission right costs are expected to keep increasing as a means of encouraging electricity generation investments in other technologies and help the EU reach climate change targets.

Free CO2 emission rights are made available to less affluent European states as a transitional measure to help them shoulder the cost of needed infrastructure upgrades.

It is estimated that the annual CO2 emissions of prospective western Balkan coal-fired power stations could reach 23.7 million tons. Given the anticipated rise of emission right costs, the ventures would not be sustainable.

Though these western Balkan countries have yet to be included in the ETS, all have expressed an interest for EU membership. EU accession talks with Serbia and Montenegro are believed to have reached an advanced stage.

 

Bulgarian, Fyrom energy developments monitored

Greek diplomats stationed in other Balkans countries are keeping a close watch on local energy-sector developments and their implications, positive and negative, for Greece’s aim of becoming a regional energy hub.

Most recently, Greek diplomats informed Athens of a change of guard at ICGB, the consortium behind the development and management of the prospective IGB (Greek-Bulgarian Interconnector) pipeline project. Teodora Georgieva was replaced by new CEO Valentin Haralambiev, who possesses extensive experience in gas-sector infrastructure projects and is expected to speed up the IGB project.

An objective has been set for this pipeline interconnection project to begin operating by early 2020.

Bulgarian Energy Holding (BEH) holds a 50 percent stake in the consortium, also including DEPA, Greece’s Public Gas Corporation, and Italy’s Edison.

BEH issued a statement noting that the natural gas interconnection with Greece represents a “significant priority for the Bulgarian government’s energy policy.”

According to the Greek Embassy in Sofia, Bulgaria’s interim energy minister Nikolay Pavlov, speaking to an audience of European energy authorities at last month’s 3rd Southern Gas Corridor Advisory Council, held in Baku, noted that his country’s government is working intensively so that construction of the project’s segment concerning Bulgaria may begin early in 2018.

The Southern Gas Corridor is a Brussels initiative promoting natural gas supply from Caspian and Middle Eastern regions to Europe, the aim being to reduce Europe’s dependency on Russian gas.

Greek diplomats have also been drawn to energy developments in the Former Yugoslav Republic of Macedonia (Fyrom).

Reporting on a recent roundtable discussion organized by Fyrom’s Chamber of Commerce on supply security concerning petroleum and other products, the Greek Embassy informed that participants agreed Thessaloniki port and Corridor X – a route linking the cities Thessaloniki, Skopje, Belgrade, Zagreb and Budapest – represent the most advantageous and safest passage for Fyrom’s trading and economic interests. The head of OKTA, an ELPE (Hellenic Petroleum) subsidiary, was among this session’s participants.

 

PPC, joined by China’s CMEC, looking to expand as far as Iran

Main power utility PPC, which recently signed a Memorandum of Agreement with CMEC (China Machinery Engineering Corporation) for joint development of a second lignite-fired power station in Meliti, close to Florina, northern Greece, plans to establish a broader strategic partnership with the Chinese company for business ventures in foreign markets as a means of covering at least some of the losses expected by the the utility from its bailout-required market contraction in Greece.

PPC’s chief executive Manolis Panagiotakis and CMEC president Zhang Chun, leading a group of company officials on a visit to Athens, are expected to sign a strategic partnership agreement in the Greek capital today. It will make official the Greek utility’s plan to seek new business opportunities beyond Greece with CMEC as a partner.

According to sources, PPC and CMEC plan to begin their endeavors by trying to penetrate the Albanian electricity market. If successful, the pair will also tap the Fyrom (Former Yugoslav Republic of Macedonia) and Kosovo markets. The PPC-CMEC partnership plans to eventually stretch out even further to the markets of Iran and Egypt, as well as Turkey.

PPC views an expanded presence in foreign markets as the only way of compensating for bailout-required losses in the Greek retail and production electricity markets. The utility needs to reduce its market share in Greece to less than 50 percent by the end of 2019. PPC’s retail market share slipped to 88.07 percent in September, down several percentage points over the past year. The utility’s virtual monopoly in Greece is gradually eroding.

As part of its foreign markets campaign, PPC has already established a subsidiary firm in Albania but has yet to do likewise in Fyrom and Kosovo.

“If PPC wants to make up for the planned Greek production and retail market share losses over the next few years, joint ventures with a foreign partner for business in the Balkans stand as more than just a strategic choice,” an official told energypress, implying the company’s survival will be at stake.

CMEC will take on a key role that may help PPC succeed in the Balkans following a series of failed attempts in the previous decade or so. The Greek utlity made its first attempt in 2003 in Romania and has since made many more unsuccessful efforts to penetrate neighboring markets. This overall failure can be attributed to the preferences of respective Balkan country governments for stronger western partners, based on reasons concerning wider political expediency, as well as poor judgement on behalf of PPC’s previous administrations.

Fyrom, Kosovo also eyed by China-backed PPC after Albania

Although still a preliminary concept, main power utility PPC’s intended regional expansion into the Balkans with the backing of Chinese capital, which could be provided by CMEC, the Greek utility’s new partner for possible construction of a power station in northern Greece, or another Chinese firm, represents a one-way road towards survival for the utility.

PPC plans to attempt entering the Albanian electricity market and, if successful, then also try and move into the electricity markets of the Former Yugoslav Republic of Macedonia (Fyrom) and Kosovo.

PPC’s leadership, along with the heads at Greece’s energy and economy ministries, have held a series of meetings with Albanian officials in recent months, generating enough interest for the Greek utility to decide, earlier this week, to establish a subsidiary in the neighboring country. Equivalent exploratory steps have yet to be taken in Fyrom and Kosovo.

“Collaborations with a foreign partner for penetration of Balkan markets constitute more than just a strategic choice if PPC wants to compensate for the planned [bailout-required] market share reductions in Greece’s production and retail sectors over the next few years,” a government official who had joined Prime Minister Alexis Tsipras on an official visit to China in July told energypress.

In this sense, CMEC as well as other Chinese companies, officials of which have held talks with PPC’s boss Manolis Panagiotakis, will play a crucial role in helping the Greek utility succeed in its Balkans expansion plan.

Previous efforts, beginning in 2003, failed to produce any results. PPC had begun by exploring the market prospects in Romania and followed up with other Balkan countries, all to no avail.

The failure of PPC’s previous Balkan quest has been attributed to politically motivated ties established by respective Balkan governments for collaboration with more powerful western partners, as well as misjudgements made by previous PPC administrations.

It remains to be seen whether PPC will be able to break the Balkan deadlock with a Chinese partner. PPC will definitely need to draw capital for international business activities if the corporation is to remain afloat in the next few years.

While commenting on yesterday’s signing of a Memorandum of Understanding with CMEC for joint development of Meliti II, a second coal-fired power station in Meliti, northern Greece, Panagiotakis, PPC’s chief executive, did not refrain from placing enormous importance on the utility’s successful entry into the Balkan region.

Actualization and success of PPC’s Meliti power station plan will be pivotal to any future Greek-Chinese collaboration beyond the Greek borders.