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North Macedonia involvement in key Alexandroupoli projects

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North Macedonia plans to help cover its energy needs through an involvement in two Greek-based projects, the prospective FSRU in Alexandroupoli, northeastern Greece, and, in the same region, a gas-fueled power station to run on LNG stemming from the floating LNG terminal.

Much progress has been made on the neighboring country’s interest in these two projects since a meeting in Athens last September between Greek Prime Minister Kyriakos Mitsotakis and his North Macedonian counterpart Zoran Zaev. The partnership also represents a strategic decision for the Greek government.

It is considered certain that a state-owned North Macedonian company will soon enter the Alexandroupoli FSRU project’s equity pool with a 10 percent stake, energypress sources have informed.

This project’s five current partners – Copelouzos group, Gaslog, Greek gas utility DEPA, Greek gas grid operator DESFA and Bulgartransgaz – are expected to each offer small portions of their respective 20 percent stakes to make available a 10 percent stake for the state-owned North Macedonian company in the Alexandroupoli FSRU.

The project’s development is not expected to be impacted by any equity reshuffles.

Two international tenders staged by Gastrade, a company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, have been successfully completed. One of the two tender concerns the FSRU’s construction. The other concerns the installation of pipelines linking this facility to the national gas grid.

The Alexandroupoli FSRU consortium is expected to make a final investment decision in late February, sources informed.

On the other front, ESM, North Macedonia’s state electricity company, is expected to acquire a 25 percent stake in a gas-fueled power station to be developed by Damco Energy, a Copelouzos group subsidiary, in Alexandroupoli’s industrial zone.

The initiative will secure 200 MW of the facility’s 800-MW capacity for North Macedonia. The country currently has an electricity deficit of approximately 2 GWh.

Bulgarian state-owned electricity company NEK EAD also appears interested in acquiring a stake in the Alexandroupoli power station. Bulgaria has projected an electricity deficit a few years from now as the country must phase out major lignite-fired power stations. European Commission exemptions extending the lifespans of these units are expiring.

DESFA one step away from Alexandroupoli FSRU entry

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Just days after the entry of Bulgaria’s Bulgartransgaz, Greek gas grid operator DESFA appears set to become the fifth member of Gastrade, the company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal envisioned for Greece’s northeast.

Talks concerning a DESFA entry, ongoing since the beginning of this year, have essentially concluded, while an announcement of the operator’s entry into Gastrade’s line-up is expected soon, no later than the end of September, energypress sources informed.

DESFA’s interest to join the consortium for the Alexandroupoli FSRU project, the first ever private-sector plan for such infrastructure in Greece, reflects the intention of the company’s new ownership and administration to broaden DESFA’s role from gas grid operator to a major player in Greece’s natural gas market.

As for Gastrade, keen to establish partnerships that support its strategic objectives, DESFA’s expected entry into the Alexandroupoli FSRU consortium appears to have been encouraged as a result of the operator’s knowhow, as a TSO, in LNG and the Greek gas market, its players, as well as the legal framework.

DESFA’s entry would also give the Greek State a stake in the Alexandroupoli project, supported for years by the previous and current Greek governments.

Besides the Copelouzos group, holding a 40 percent stake, the Gastrade consortium is currently also made up of Gaslog, Greek gas utility DEPA, and Bulgartransgaz, each holding 20 percent stakes. The entry of a fifth member will give all partners equal 20 percent shares.

The project, budgeted at 380 million euros, is expected to be launched no later than early 2023.

The Alexandroupoli FSRU, along with the existing Revythoussa islet LNG terminal just off Athens, are crucial given the current strains in Greek-Turkish relations as the two units represent the country’s only gas infrastructure not relying on Turkish territory.

The LNG terminals also promise to increase competition in the regional market and reduce natural gas supply costs to neighboring countries.

A market test was successfully completed for the Alexandroupoli FSRU in March.

Alexandroupoli FSRU investment decision later in ’20

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Investors behind the Alexandroupoli FSRU are expected to make final decisions on the project’s development in the final quarter of this year.

Two pending issues, the completion of a regulatory framework for the project, as well as approval by the European Commission’s Directorate-General for Competition of the project and funding via the National Strategic Reference Framework (2014-2020), are expected to be resolved by the final quarter.

Also, RAE, the Regulatory Authority for Energy, is soon expected to reach a preliminary decision exempting the FSRU from compulsory access to third parties as well as tariff adjustments every three to four years. This decision, needed for the project’s regulatory framework, is expected by late October or early November, when the European Commission’s approval is anticipated.

The Directorate-General for Competition will also need to give the green light for NSRF funding.

Once these pending issues are all resolved, investors will be able to decide on the project’s development, expected to require two years to construct. Investors envision a launch in 2023.

Yesterday’s anticipated entry of Bulgartransgaz, for a 20 percent stake, highlights the project’s regional prospects. This regional dimension will be highlighted even further if ongoing Romanian interest is materialized.  Talks that have been going on for some time were disrupted by the pandemic.

For the time being, Greek gas utility DEPA, Gaslog and Bulgartransgaz each have 20 percent stakes, while the Copelouzos group holds a 40 percent share. The entry into the project of Gastrade, as a fifth partner, remains pending.

Most crucial for the project’s prospects, a market test completed in March showed that the Alexandroupoli FSRU is sustainable. The test prompted a big response from Greek and international gas traders, who placed capacity reservation bids for a total of 2.6 billion cubic meters per year.

US interest for LNG supply via the Alexandroupoli FSRU is strong. Last year, Cheniere sold a big shipment to Greek gas utility DEPA, while a further ten American shipments have been made so far this year.

Alexandroupoli FSRU market test offers total 2.6 bcm, viability assured

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Binding capacity reservations for the prospective Alexandroupoli FSRU in northeastern Greece, whose second-round market test expired on Tuesday afternoon, amounted to 2.6 bcm, a tally that secures the project’s sustainability and paves the way for a finalized investment decision, energypress sources have informed.

Two Greek utilities, gas company DEPA and power company PPC, are among the participants who have reserved capacities, for long-term periods, the sources noted.

Bulgaria’s Bulgartransgaz and a Serbian company also confirmed earlier requests for capacity reservations.

Romania’s Romgaz did not turn up for the market test’s second round after expressing interest for a considerable capacity covering a lengthy period in the first round. Instead, two private-sector Romanian trading companies ended up submitting binding offers for Alexandroupoli FSRU capacities.

The Bulgarian, Serbian and Romanian interest highlights the potential of the Alexandroupoli FSRU to serve as a new natural gas gateway for southeast European markets, via the Greek-Bulgarian IGB pipeline, now under construction, as well as other existing and planned gas pipelines in the region.

Alexandroupoli FSRU market test extension until March 10

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A second-round market test offering capacity reservations for the prospective Alexandroupoli FSRU has been granted a deadline extension until March 10 to give newly emerged bidders more time to prepare for binding bids.

The Copelouzos group’s Gastrade, heading this LNG venture for Greece’s northeast, is determined to maximize the participation level of bidders and  capacity reservations in order to secure the project’s sustainability.

Besides the capacity reservation total, the duration of reservations is the other crucial factor determining the project’s sustainability. Gastrade would like to see reservations lasting 10 to 15 years instead of shorter periods.

Gastrade officials are confident the market test will produce a favorable outcome and soon propel the project towards construction.

The line-up of the Gastrade-initiated consortium for the Alexandroupoli FSRU appears to have been completed as a five-member team following a decision by Romania’s state-controlled gas company Romgaz to enter with a 20 percent stake. A related contract is expected to be signed within the next few days.

If the Romgaz entry is confirmed, the consortium’s line-up will consist of the Copelouzos group (20%), GasLog (20%), Greek gas utility DEPA (20%), Bulgartransgaz (20%) and Romgaz (20%).

 

 

Alexandroupoli FSRU awaiting Bulgarian, Romanian decisions

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Gas utility DEPA’s recent decision to enter the prospective Alexandroupoli FSRU project consortium with a 20 percent stake leaves two more vacancies for the line-up’s completion and internationalized establishment.

The venture’s consortium, formed by the Copelouzos Group’s Gastrade, is now awaiting entry decisions from Bulgaria’s BulgarGasTrans as well as Romania’s Rompetrol, seriously examining the prospect of acquiring a 20 percent stake in this prospective LNG terminal project in Greece’s northeast.

Gaslog, active in LNG transportation, was the first partner to join Gastrade with a 20 percent stake in the consortium.

Gastrade is now preparing to stage a binding second-round market test for capacity reservations. RAE, the Regulatory Authority for Energy, has approved Gastrade’s procedure inviting participants to bid.

This second-round bidding phase is expected to be completed by the end of January, paving the way for a finalized investment decision by the project’s developers.

The first round’s non-binding expression of interest phase was completed at the end of last December.

A total of 24 bidders had expressed interest for 12.2 billion cubic meters, more than double the planned facility’s annual regasification capacity of 5.5 bcm.