Prinos CCS state aid talks with European Commission begin

Prinos CCS, a carbon capture and storage project being promoted by upstream company Energean as Greece’s first CCS facility, at a depleted underwater Prinos field, south of Kavala, is approaching the stage of development.

The Greek ministry has pre-notified the European Commission on a relevant support scheme, within the framework of Climate, Energy and Environmental Aid Guidelines, allowing exceptions to an EU ban on state aid in the climate, environment and energy sectors.

The ministry’s pre-notification is expected to initiate consultation between the two sides for the formation of a support scheme that will need to be appraised and approved by Brussels.

Greek officials have also submitted a funding request for 50 million euros through the REPowerEU facility.

Prinos CCS has been included in a sixth edition of a PCI/PMI list, which was given the green light yesterday by a relevant Brussels committee but still needs to be approved by European Parliament and the European Council.

PCI/PMI status would facilitate financing for the CCS project’s development plans through the Connecting Europe Facility, the EU fund supporting infrastructure investments in transport, energy, digital and telecommunication projects. This status could also lead to favorable borrowing terms for the project.

Greek gas grid operator DESFA is supporting the effort to secure PCI/PMI status for the Prinos CCS project.

DESFA’s role in the project’s development would entail constructing a network for collecting CO2 quantities. Industries operating in the wider Athens area would be connected to this network.

CO2 amounts would be liquefied and temporarily stored at a facility near the port of Elefsina, west of Athens, then loaded onto CO2 tankers and shipped out to the Prinos CCS.

Energean holds a license for the Prinos facility, currently running until August, 2024. As a next step, the company will need to secure a social and environmental impact study. Its approval would enable Energean to take a next step and apply to EDEYEP, the Hellenic Hydrocarbons and Energy Resources Management Company, for a CO2 storage license, which would make the company its operator.

Energean plans to start operating the Prinos CCS in late 2025 or early 2026 at a first-phase level for storage of up to 1 million tons of CO2 per year.

 

IPTO in advanced talks for EuroAsia Interconnector helm

Power grid operator IPTO appears set to assume the role of project promoter at EuroAsia Interconnector, the Cyprus-headquartered consortium established to develop a grid interconnection project linking the Greek, Cypriot and Israeli electricity networks.

Questions have recently abounded about the consortium’s financial and technical ability to develop such a complex project.

Negotiations between IPTO and EuroAsia Interconnector, headed by Cypriot CEO Nasos Ktorides, have reached an advanced stage, sources informed.

IPTO, which recently acquired a 25 percent stake in the EuroAsia Interconnector, has submitted an offer that would give the Greek operator majority control of the consortium. The offer, sources informed, has been accepted, but still requires the European Commission’s approval.

Though the consortium has achieved noteworthy progress by securing, among other things, 657 million euros in funding from the Connecting Europe Facility and establishing an agreement for the project’s cable with Norwegian company Nexans, the overall endeavor has now reached a critical pre-construction stage, leading to greater needs, especially financial, which the Cypriot company appears to have found challenging.

IPTO’s assumption of the project promoter’s role at EuroAsia Interconnector is seen, by all parties involved, as the best solution for the smooth implementation of the project, as the Greek operator possesses the necessary financial strength, technical capacity and expertise to develop an HVDC interconnector of such magnitude and technical complexity.

The Cypriot government is taking this interconnection project very seriously, while cooperation between IPTO and the Cypriot energy ministry is excellent at all levels, IPTO officials informed energypress, in response to questions.

EuroAsia Interconnector fails to make first Nexans payment

The beleaguered EuroAsia Interconnector project, aspiring to interconnect the electricity networks of Greece, Cyprus and Israel, has run into further trouble following its Cyprus-headquartered consortium’s failure to meet yesterday’s deadline for a 50 million-euro payment to Norwegian company Nexans as a first installment for cable supply.

This deadline was widely viewed as a crash test for the credibility of the consortium, spearheaded by Cypriot entrepreneur Nasos Ktorides, its chief executive officer.

The payment failure has given rise to various scenarios concerning the project’s future. Without a doubt, the Cypriot government wants this geostrategically important project to go ahead, while the European Commission, which has offered funding support worth 657 million euros, through the Connecting Europe Facility, can be expected to become more actively involved in an attempt to push the project forward.

Given its commitment to the EuroAsia Interconnector project, Greek power grid operator IPTO could also intensify its efforts to keep the grid interconnection project afloat.

IPTO has pledged to contribute 33 percent of the investment if legal due diligence is successfully completed, while an Israeli fund that has expressed interest could provide an equivalent amount. Under such a scenario, IPTO and the Israeli fund would hold 66.66 percent of the EuroAsia Interconnector project’s equity capital.

It remains unclear as to why the EuroAsia Interconnector consortium failed to meet yesterday’s payment deadline, despite having recently received the required 50 million-euro amount from the CEF. According to one resulting scenario, a new consortium could now be sought for the project’s development.

A growing number of Cypriot government officials have been distancing themselves from the Euroasia Interconnector project ever since Brussels’ recent warning that the 657 million-euro CEF sum secured for it would be reexamined if the project’s schedule is not maintained.

Cyprus’ energy minister Giorgos Papanastasiou recently noted the project is still 1.1 billion short of its 1.9 billion-euro budget, which was revised upwards from a previous total of 1.57 billion euros.

Euroasia Interconnector, short of €1.1bn, faces payment test

The moment of truth is approaching for the promising yet troubled Euroasia Interconnector project, aspiring to interconnect the electricity networks of Greece, Cyprus and Israel but facing challenges in terms of its schedule and funding.

European Commission warnings over the project’s insufficient financing plan have raised concerns among authorities in Cyprus, where the Euroasia Interconnector consortium is headquartered. The consortium faces a September 7 deadline for a 50 million-euro payment to Norwegian company Nexans, for the construction of a cable. Tomorrow’s deadline represents a crash test for the consortium’s credibility.

A growing number of Cypriot government officials have been distancing themselves from the Euroasia Interconnector project since Brussels’ recent warning that EU funds worth 657 million euros secured by the project would be reexamined if the project’s schedule is not maintained.

The project’s challenges have been highlighted by the very statements of Cypriot government ministers and officials. Asked, just days ago, about Euroasia Interconnector, government spokesman Konstantinos Letymbiotis replied that the Cypriot government would first wait for a rating agency’s assessment of the project’s feasibility and geostrategic value before taking any decisions on its involvement.

Also, Cyprus’ energy minister Giorgos Papanastasiou has downplayed the significance of Greek power grid operator IPTO’s recent preliminary agreement with an Israeli fund for the latter’s entry into the equity capital of Euroasia Interconnector with a share of up to 33 percent.

This agreement would contribute roughly 100 million euros to the project, just a fraction of the Euroasia Interconnector’s budget, which has risen sharply to 1.9 billion euros from a previous estimate of 1.57 billion euros, Papanastasiou noted, when asked to comment on IPTO’s agreement with the Israeli fund.

This agreement’s anticipated 100 million euros, along with the Connecting Europe Facility’s 657 million euros, and a further 100 million euros from the Cypriot recovery fund, all totaling 857 million euros, still leaves the project’s required funding short of 1.1 billion euros, Papanastasiou pointed out.

Euroasia Interconnector’s budget-increase need validated

RAAEY, the Regulatory Authority for Waste, Energy and Water, has approved as valid a budget-increase request submitted by Euroasia Interconnector, the consortium promoting a project planned to interconnect the Greek, Cypriot and Israeli power grids, as the cost of materials, especially cables, have increased significantly.

The authority’s approval of the request highlights Greece’s support for the interconnection project.

The Euroasia Interconnector consortium has asked for the project’s budget to be increased by 350 million-euro budget increase, to 1.925 billion euros from the present level of 1.575 billion euros.

All parties involved with the Euroasia Interconnector project appear determined to push ahead following a recent warning from EU authorities that delays have placed under threat 657 million euros worth of Connecting Europe Facility (CEF) funding for the PCI-listed project.

The Euroasia Interconnector consortium now needs to provide detailed supporting documents to RAAEY and its Cypriot counterpart, RAEK, explaining the reasons why the budget revision has been requested.

Though a timeline has not been established, the Euroasia Interconnector consortium and the regulatory authorities are expected to act fast, given the political support for the interconnection project.

 

EuroAsia Interconnector funds threatened by project delays

EU authorities appear to have issued a strict warning to Cyprus over major delays in binding scheduling terms for EuroAsia Interconnector, a project of strategic importance planned to interconnect the Greek, Cypriot and Israeli power grids.

According to sources, the EU has warned the Cypriot government that if appropriate decisions are not taken immediately to ensure that the project can be put back on track, then a decision offering 657 million euros worth of Connecting Europe Facility (CEF) funding for the PCI-listed project would need to be reviewed.

In response, Cypriot president Nikos Christodoulides held an emergency meeting last Friday with Nasos Ktorides, CEO of the EuroAsia Interconnector consortium, and the country’s energy minister George Papanastasiou.

Though no official announcements have been made, Cypriot press has reported that the government intends to engage directly and vigorously at the highest political level to secure the planned funding for the project.

Delays include Greek power grid operator IPTO’s entry into the EuroAsia Interconnector consortium with a 25 percent stake. A strategic agreement was announced at the end of June but the matter has not progressed further as due diligence remains unfinished.

The EU has insisted on IPTO’s participation as, on the one hand, the project will be connected to the Greek operator’s networks in Crete, and on the other, IPTO, it is believed, would ensure the project’s technical integrity and operational viability.

EuroAsia Interconnector has also been held back by the consortium’s delay in signing a contract with Norwegian company Nexans, to manufacture the project’s subsea cable.

This delay threatens to deprive EuroAsia Interconnector of its intended production slot at Nexans because the manufacturer faces high demand for cables from countries such as Germany and the Baltic countries as a result of Russia’s war in Ukraine.

 

 

 

IPCEI support sought by DESFA, Bulgartransgaz for hydrogen projects

Greek gas grid operator DESFA and its Bulgarian counterpart Bulgartransgaz, which have strengthened ties in recent years, aim to secure development support for two common hydrogen-related projects via IPCEI (Import Projects of Common European Interest) status, which, if obtained, would pave the way for EU funds stemming from the Connecting Europe Facility (CEF).

One of the two projects concerns an upgrade of existing gas infrastructure belonging to the two operators so that – in the future, when the technology is ready – they may also transmit renewable gas, in other words, hydrogen made using renewable energy or biomethane produced from organic waste such as human or animal sewage or food.

The second of the two DESFA-Bulgartransgaz projects eyeing CEF funding support entails developing a brand new main system of pipelines, exclusively for renewable gas transmission, between Greece and Bulgaria.

This project would serve as a key decarbonization tool for the two countries, as well as the wider region, aiding climate-neutrality efforts by incorporating hydrogen into the energy mix.

New gas project support to end, aid until 2029 for conversions

EU funding support for new natural gas and oil-related projects is expected to end soon, but will remain available over a transition period until December 31, 2029 for natural gas projects and gas transportation and storage infrastructure conversions catering to hydrogen, natural gas and biomethane needs before ultimately serving as hydrogen transportation and storage facilities, exclusively.

The council of EU energy ministers accepted Trans-European Energy Networks (TEN-E) regulation revisions incorporating these funding support changes at a meeting in Luxembourg.

The revisions, designed to help the EU achieve carbon neutrality by 2050, are planned to be implemented in 2022, if ratified.

The revisions also include measures designed to offer sustained protection for market competition and energy supply security.

The proposed revisions identify 11 priority energy corridors and three thematic priority areas for projects of common interest funded through the Connecting Europe Facility (2021-2027).

Kavala gas storage unit an independent grid project

A prospective underground gas storage facility at a depleted offshore gas field in the south Kavala region will operate as an independent grid project, the energy ministry has decided, sooner than expected, through a joint ministerial decision reached following a favorable opinion offered by the Legal Advisor of the State.

Just weeks ago, the ministry had indicated it would soon launch a tender for the project’s development but defer a decision on whether the storage facility would operate as an independent or national grid project. However, a deferral may have led to ambiguity, unsettling investors.

As a next step, RAE, the Regulatory Authority for Energy, will head an effort for the preparation of a cost-benefit analysis in cooperation with the privatization fund TAIPED, the objective being to complete this study as quickly as possible.

Concurrently, TAIPED intends to begin preparations for an international tender offering the project’s development, usage and exploitation rights for a period of up to fifty years.

TAIPED will most likely stage the tender in June, energypress sources informed.

Besides private-sector investors, the tender will also be open, under equal terms, to Greek gas grid operator DESFA and its stake holders.

Local authorities are pushing to make up for lost time and secure financing for this PCI-categorized project through the EU’s Connecting Europe Facility.

 

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.

South Kavala gas storage facility facing tough PCI schedule

Despite being regarded as pivotal infrastructure for the country’s energy sector, a prospective underground gas storage facility at a depleted offshore gas field south of Kavala has remained stagnant in recent months, prompting fears that the required momentum needed for utilizing related wider developments could be lost.

The project’s inclusion on the EU’s PCI list offers financing opportunities, which, according to certain analysts, are crucial for the investment’s sustainability. However, this privilege comes with a strict schedule that must be maintained.

If the underground gas storage project is to qualify for funding offered by the EU’s Connecting Europe Facility (CEF) program, then authorities must submit a related application within 2020.

This essentially means a project promoter must be selected to prepare a business plan and apply for financing, all within the second half of this year.

Also, a tender for the storage facility’s privatization will need to be staged by privatization fund TAIPED by the end of the first half, experienced officials have pointed out.

A joint ministerial decision establishing a legal framework for the facility’s operation will need to precede the sale procedure. In addition, RAE, the Regulatory Authority for Energy, must, prior to the privatization, establish general guidelines determining pricing policy, regulated earnings, WACC, and a minimum capacity vacancy level that investors will need to maintain for national security reasons.

The chances of CEF financing are now starting to tighten up as the month of January is just about gone and there is no sign of a joint ministerial decision. When delivered, it should serve as a catalyst for ensuing initiatives.

 

 

 

 

 

Ministry amendment to unblock Kavala storage legal complexity

The energy ministry has prepared a legislative amendment needed to overcome a legal complexity that has emerged concerning the development of an underground gas storage facility in the offshore South Kavala region through the utilization of a depleted natural gas field.

The amendment, which could be submitted to parliament today, will not lead to any fundamental changes concerning the project but purely focuses on resolving the legal obstacles obstructing its development, sources informed.

Once ratified, this amendment will pave the way for the publication of a related joint ministerial decision in the government gazette ahead of the asset’s eventual privatization.

Meanwhile, RAE, the Regulatory Authority for Energy, needs to prepare general guidelines determining the project’s pricing policy, regulated earnings, WACC level, as well as a minimum capacity level that will need to be kept vacant by the project’s investor for national energy security reasons.

RAE will have three months to prepare the guidelines once the joint ministerial decision has been published in the government gazette.

TAIPED, the privatization fund, has received an amount worth 1.6 million euros from the European Commission’s Connecting Europe Facility (CEF) to finance engineering studies required for the underground gas storage facility ahead of the privatization tender. This financial development was included in a updated Asset Development Plan (ADP) presented by TAIPED a fortnight ago. The investment’s cost is estimated between 300 and 400 million euros.

France’s Engie, 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.

New effort for East Med agreement at Athens energy summit

Greek gas utility DEPA and Italian energy giant Edison, collaborating on a plan to develop the East Med pipeline, envisioned to link the Greek, Cypriot and Israeli natural gas systems, are looking to take a crucial technical step ahead of construction.

Their YAFA Poseidon joint venture – spearheading the ambitious project, a 1,900-km pipeline stretch with an investment cost of between 6 and 7 billion euros – is gearing up for the launch of FEED (Front-End Engineering Design), environmental and detailed underwater research studies.

The European Commission has approved 34.5 million euros from the EU’s Connecting Europe Facility (CEF), a funding instrument, for these studies. The CEF amount will cover half the cost of the aforementioned preliminary studies, which will push the plan ahead to a mature stage.

The pipeline project is planned to carry southeast Mediterranean natural gas, primarily deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan”, along a route stretching from Israel to Europe.

An agreement between Greece, Cyprus, Israel and Italy, where the pipeline is planned to conclude, is still needed.

East Med plans have been at a standstill ever since the current Italian government announced it was stalling the project.

According to sources, the Greek, Cypriot and Israeli energy ministers will seek to restart procedures and also send out a message of encouragement to the Italian government when they meet at an Athens energy summit tomorrow. US Assistant Secretary Francis Fannon will also participate.

East Med, still at a theoretical stage, promises geostrategic might for Greece, Cyprus and Israel, as well as the USA, on southeast Mediterranean energy matters, especially against Turkey’s opposition to hydrocarbon exploration within Cyprus’ Exclusive Economic Zone (EEZ).

The pipeline plan also promises to break Russia’s dominance of gas supply to the EU.

 

 

Crete link national development ‘will not burden consumers’

A separation of the Crete-Athens grid interconnection project from the wider PCI-status Greek-Cypriot-Israeli interconnection, appearing highly likely, will not financially burden Greek consumers but instead offer surcharge-related benefits, leading energy ministry officials told energypress on the sidelines of the just-completed Delphi Economic Forum.

Swift development of the Crete-Athens link, as a national project, promises to spare consumers of public service compensation (YKO) surcharges costing approximately 400 million euros per year, energy ministry officials stressed.

These YKO surcharges are added to electricity bills to cover high-cost electricity production at power facilities maintained on non-interconnected islands.

The Crete-Athens grid will cost the country roughly one billion euros to develop, regardless of the development option chosen, the energy ministry officials supported.

Euroasia Interconnector, a consortium of Cypriot interests heading the wider PCI-status Greek-Cypriot-Israeli project, has claimed a withdrawal of the Crete-Athens grid project from the consortium for development as a national project would deprive Greece of EU funding worth 355 million euros from the CEF (Connecting Europe Facility).

Electricity consumers in Greece will need to cover this amount through increased network surcharges over the long term, the Euroasia Interconnector consortium has warned.

The Delphi Economic Forum was held to identify and assess global trends and their impact on decision makers of the wider eastern Mediterranean region.

IPTO plans Crete link tender for Euroasia’s neglected 39%

Greek power grid operator IPTO has announced it will stage a tender offering investors, especially European operators, a stake in Ariadne Interconnector, an SPV established by the grid operator for the development of a Crete-Athens interconnection.

The move was prompted by the neglection of a pre-emption right, for a 39 percent stake in the SPV, by Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status Greek-Cypriot-Israeli electricity grid interconnection project. Euroasia Interconnector had been set a December 31 deadline to accept the offer for 200 million euros.

IPTO and the Cypriot consortium have been embroiled in a dispute for control of the wider grid interconnection project’s Crete-Athens segment.

RAE, the Regulatory Authority for Energy, which appointed IPTO project promoter of the Crete-Athens link, required to prevent a looming energy shortage threat on Crete, will need to approve IPTO’s plan for a tender before this procedure can go ahead.

Euroasia Interconnector will now need to participate in IPTO’s prospective tender should it ultimately decide to become involved in the development of the Crete-Athens grid interconnection.

IPTO has already begun contacting European energy transmission operators, Manos Manousakis, chief executive at IPTO, informed yesterday. The Greek operator had approached Belgium’s Elia and France’s RTE in the past. A new invitation for their participation cannot be ruled out.

Euroasia Interconnector is widely expected to launch a legal challenge.

Earlier this month, the European Commissioner for Climate Action and Energy Miguel Arias Canete forwarded a letter to Greek energy minister Giorgos Stathakis informing him that RAE’s decisions have led to delays in the wider PCI project, according to Greek daily Kathimerini.

The commissioner has apparently asked Greece to decide whether the Crete-Athens grid interconnection will be developed as a PCI project, enabling EU funding advantages, or as a national project, which would eliminate the project’s promoter from the Connecting Europe Facility (CEF), a key EU funding instrument. The repercussions would spill over onto tariffs paid by consumers.