BP

ELPE transformation ending State’s board majority

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Hellenic Petroleum ELPE is moving ahead with a full transformation, both in terms of investments, taking a turn focused on green energy, as well as administratively, through a revision to soon nullify a 2003 agreement that has given the Greek State, holding a 35.5 percent stake, majority rights, represented by 7 of 13 board members.

Legislation ratified last year and set to be implemented on July 17 will give company shareholders board representation rights reflecting their respective stakes in ELPE.

Besides the Greek State’s 35.5 percent share, the Latsis group’s Paneuropean holds a 47 percent stake in ELPE, while the remaining 17.5 percent is free-floating.

The company is scheduled to hold a general shareholders’ meeting on June 30, when a new board is expected to be voted in.

It is believed that ELPE’s administrative duties will be taken on by a new holding company, now in the making, possibly with its headquarters abroad. Its board membership is expected to be trimmed to 11 from ELPE’s 13 at present.

The ELPE group’s subsidiaries as well as stakes in various companies, including refineries, petroleum product trading companies, namely EKO and BP, as well as ELPE Renewables, energy supplier Elpedison and plastic packaging firm Diaxon, will all be transferred to the new holding company, sources have informed.

Gas developments in the East Med

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The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Revythoussa at full capacity in May, 10 LNG orders scheduled

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A total of nine LNG shipments are scheduled to be delivered to the Revythoussa islet terminal just off Athens in May, taking the facility to full capacity for yet another month, data provided by gas grid operator DESFA has shown.

Three LNG tankers are scheduled to bring in three big orders for a total of ten recipients in May.

The inflow has already begun. Last week, the Maran Gas Ulysses, a tanker belonging to the Aggelikousis group, imported 149,254 cubic meters for four buyers, Motor Oil, Heron, gas utility DEPA and Mytilineos, whose share, 74,627 cubic meters, was the biggest.

The next shipment, scheduled to be delivered to the Revythoussa terminal on May 20 by the Gaslog tanker belonging to the Livanos group, will deliver 147,710 cubic meters of LNG for Elpedison and power utility PPC, taking the bigger share of the two buyers, 127,031 cubic meters.

A third and final LNG shipment for the month is scheduled to arrive May 31 on the British Saphire tanker, owned by BP. This vessel will bring in 121,123 cubic meters of LNG for DEPA and Elpedison, the bigger of the two buyers with a 64,993 cubic-meter order.

A total of five big LNG shipments are expected in June for orders placed by Mytilineos, Elpedison and DEPA.

Energean extends Prinos offtake agreement with BP until late 2025

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Energean Oil & Gas, a leading independent E&P company focused on the Eastern Mediterranean, has extended its Prinos long-term offtake agreement with BP Oil International Limited until November 1, 2025, the company has announced.

All of the group’s production of crude oil from the Prinos basin is currently sold to BP under the offtake agreement, which was originally signed in 2013 and covered the period until July 31, 2021.

The extension of this agreement secures Energean’s sales of crude oil from the Prinos basin for a further four years, helping safeguard the group’s cash flow, the company noted.

Energean is implementing a new investment program to further increase production from the Prinos and Prinos North oil fields, as well as to develop the Epsilon oil field, which is also a part of the Prinos licence.

The new program, to be financed by a $180 million reserve-based lending facility, consists of drilling of up to 25 wells and the installation of two new platforms by 2021. This will be executed by both the Energean Force, Energean’s owned and operated offshore drilling rig, and the jack-up GSP Jupiter that will drill the first 3 Epsilon wells.

Energean Oil & Gas CEO, Mathios Rigas, commented: “We are very pleased to extend our agreement with BP, a relationship that started in April 2013 and is now developing into a strategic partnership that secures cash flow from our production in Greece. BP has consistently lifted Prinos cargoes in the past four years and has established the Prinos crude in the international markets.

“Increasing our production from Greece, the $1.6 billion capex Phase 1 development of the Karish and Tanin gas fields, offshore Israel, and the exploration of the Eastern Mediterranean remain our focus and we believe the extended BP offtake agreement further strengthens our position to deliver maximum value from the Prinos licence.”

 

Extended period of higher oil prices would benefit local aspirations

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It remains to be seen if the currently improved market conditions for the global petroleum industry, prompted by higher oil prices, will last long enough to benefit Greece’s hydrocarbon aspirations.

Greece is looking to push ahead with hydrocarbon exploration and exploitation agreements for fields southwest of Crete as well as in the Ionian Sea.

Earlier this week, British Petroleum announced that the increase in oil prices, combined with lower production costs, helped the petroleum giant increase its profit by 2.8 billion dollars in 2017, following a one-billion dollar drop in 2016. BP’s improved performace in 2017 represents the firm’s best performance, in the hydrocarbon exploration sector, since 2004.

Also highlighting the petroleum industry’s upbeat prospects, ExxonMobil recently announced that it expects a fivefold hydrocarbon production increase by 2025.

 

Improved ELPE results a positive indicator for entire energy market

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Hellenic Fuels, an ELPE subsidiary that controls EKO and BP, two of the country’s three major fuel trading companies, posted a sales figure of 3.54 billion metric tones in 2016, a one percent increase compared to the previous year’s figure of 3.49 metric tones.

The company also reported an increase in consolidated sales, prompted by its expanded network of fuel stations, which rose from 1,739 to 1,709, a 2 percent increase.

The annual release of ELPE’s financial results is viewed as an important indicator of where the local energy sector stands as the corporate group maintains a widespread energy market presence.

ELPE is active in fuel trade, through Hellenic Fuels, electricity production and supply, through Elpedison, as well as the natural gas market, as the corporation holds a 35 percent stake in DEPA, the Public Gas Corporation.

The financial standing of Hellenic Fuels, an ELPE subsidiary that controls EKO and BP, two of the country’s three major fuel trading companies, mirrors the entire fuel market’s condition.

In the electricity production sector, ELPE, which maintains a vertically integrated operation through Elpedison, more-than-doubled output in 2016 at its two plants. It amounted to 2,489 GWh from 1,143 GWh in 2015. Elpedison posted a significant sales increase, up 71 percent, and an equally impressive EBITDA rise, up to 40 million euros from 18 million euros. Also, the company rebounded from a loss of 9 million euros to post a net profit of 4 million euros.

As for its natural gas market activity results, ELPE, whose performance signals the figures to come from DEPA, posted a sales increase of 31 percent in 2016, up to to 3.99 billion NM3 from 3 billion NM3. This increase was driven by higher demand at gas-fueled power stations, especially in the fourth quarter, for which DEPA reported an 18 percent year-on-year sales increase to electricity producers and a 21 percent increase to the EPA regional gas supply companies.

 

TAP member BP ‘supporting investments in Greece’ says CEO

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BP chief executive Bob Dudley has underlined the importance of the prospective TAP (Trans Adriatic Pipeline) project during a meeting with Greece’s Minister of State Nikos Pappas at the annual World Economic Forum now taking place in Davos.

Dudley, speaking to ANA-MPA (Athens News Agency-Macedonian Press Agency), described the TAP project, in which BP holds a 20 percent stake, as the biggest pipeline infrastructure project in the world at present, according to the oil giant’s knowledge.

The TAP project will carry Azeri natural gas to central Europe via Greece, Italy, Albania, Turkey, and Georgia.

The BP chief noted that the Greek government has been supportive of the plan to implement the TAP project.

“We will begin installing the pipelines for this very significant Southern Corridor project this year. It will be launched in one or two years,” Dudley remarked. “We have signed agreements with Greek firms for the construction and procurement of pipelines,” he added, noting BP supports investments in Greece.