DEPA sales down by €210m in 2019, LNG, competition factors

Gas utility DEPA’s sales, down by approximately 210 million euros in 2019, a year in which gas consumption and import records were broken, highlight the domestic gas market’s intensified competition and impact on the corporation, which has just posted its annual results for last year on the company website.

Gas consumption in the Greek market last year reached 57.4 TWh, up from 52.4 TWh in 2018, while gas imports in 2019 totaled 57.7 TWh, the majority, 54.5 percent, in the form of LNG and the remaining 45.5 percent as pipeline gas.

Intensified competition and lower LNG prices were cited as key reasons behind DEPA’s reduces sales, from 970.9 million euros in 2018 to 760 million euros last year.

“International gas market conditions during 2019 were characterized by significant price reductions at international hubs and an LNG oversupply, which led to a corresponding reduction of LNG prices in spot markets,” DEPA noted.

These conditions encouraged opportunistic imports by major consumers in Greece who generally cover a great part of their needs through DEPA long-term supply contracts, the gas utility noted.

Besides lower LNG prices, DEPA’s long-term contracts for pipeline gas supply were another factor behind DEPA’s reduced sales figures in 2019.

DEPA’s administration successfully negotiated a supply contract revision with Russia’s Gazprom, effective as of the second half of 2019, enabling greater LNG indexing on pipeline gas prices. This revision will help bring about a rebound, the company anticipates.

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.

 

DEPA Commerce 5-year business plan includes turn to RES sector

Gas company DEPA Commerce’s five-year business plan for 2020-2024, containing investments estimated at 200 million euros, aspires to broaden the company’s interests by also incorporating renewable energy projects totaling 200 MW, either through independent development or acquisitions of mature plans.

Privatization fund TAIPED and the energy ministry are expected to approve the DEPA Commerce business plan within July.

DEPA Commerce was formed by gas utility DEPA as a new entity for its privatization procedure.

Besides RES projects, the DEPA Commerce business plan also includes hydrogen and biomethane projects, as well as electromobility initiatives.

The company’s expansion of business activities is expected to lead to greatly increased EBITDA and profit figures.

Once finalized and approved, the DEPA Commerce five-year business plan will be included in the due diligence package for prospective bidders.

DEPA, DESFA, Port of Patras sign MoU for LNG bunkering

Gas utility DEPA, gas grid operator DESFA and the Port Authority of Patras (PPA) have signed a memorandum of understanding, its objective being to promote the use of LNG as marine fuel, given the new opportunities and development prospects for the Port of Patras and the wider region, the three partners have announced in a joint statement.

In particular, the memorandum provisions to jointly explore the LNG market growth capacity in terms of the use of LNG as a marine fuel in Patras, as well as to study all the required actions and the business cooperation framework for the construction of small-scale LNG facilities, as stipulated in the Port of Patras’ master plan, the statement noted.

Furthermore, the three parties agreed to promptly establish a joint task force for the implementation of the MoU and the completion of the required studies so as to:

  1. a) explore the feasibility and the conditions for the construction of small-scale LNG facilities
  2. b) the formulation and submission of the proposal regarding the facilities’ construction financing by European or national resources and
  3. c) the determination of the terms and scheme of a potential cooperation of the companies from a legal and business standpoint, for the promotion of the project.

For its part, PPA will train the Port’s personnel that will support LNG supply procedures and will adapt the Port Regulation so as to include the supply of ships with LNG.

The signing of the MoU is the first step towards the implementation of LNG bunkering at the Port of Patras, expecting to add value to the Port, as it will enhance its competitiveness in the wider Adriatic and Ionian region. At the same time, it will have a positive impact on the environment through the use of LNG as marine fuel.

The use of LNG as a marine fuel has multiple social, economic and environmental benefits, such as the creation of new employment opportunities, reduced public health damage – caused by ship emissions in urban centers near ports and coastal areas – the upgrade of the natural environment by reducing emissions and noise pollution, as well as further development of local economies through the dynamics resulting from using LNG.

Compared to conventional marine fuels, LNG contributes to the reduction of carbon dioxide (CO2) emissions, sulfur oxide (SOx) emissions, nitrogen oxide (NOx) emissions and suspended particulate matter (PM).

It is noted that the Port’s master plan was updated in terms of small-scale LNG facilities under the co-financed by the European Union program Poseidon Μed ΙΙ (PMII), which is a practical roadmap towards the wide adoption of LNG as a safe, environmentally efficient and viable alternative fuel for shipping,  helping East Mediterranean marine transportation propel towards a low-carbon future. DEPA is the coordinator of the Poseidon Med II program, DESFA is the technical coordinator and Patras Port Authority  one of the main partners.

On the occasion of the signing of the Memorandum of Understanding, the CEO of DEPA, Konstantinos Xifaras, stated:

“DEPA is one of the key LNG suppliers in Greece, with great experience in related activities. In addition, as the coordinator of the European programs POSEIDON MED II and BlueHUBS, our company decisively contributes to the development of a comprehensive LNG supply chain for shipping and ports in the Eastern Mediterranean. In this context, DEPA is proceeding with the construction of a new LNG bunkering vessel for maritime use and the acquisition of two LNG Tanker Trucks that will serve the port of Piraeus. With this MoU, we join forces with DESFA and PPA to develop LNG facilities in the port of Patras, supplying the ships of the wider area with an environmentally friendly and, at the same time, competitive fuel as required by the EU’s and International Maritime Organization’s latest directives”.

For his part, the CEO of DESFA, Nicola Battilana, stated:

“Infrastructure is a key condition for the development of the regional and national economy. DESFA, as the Operator of the National Natural Gas System, is a strong supporter of any cooperation that contributes to the sustainable development of energy infrastructure. This MoU paves the way for examining the feasibility and the conditions for the construction of small-scale LNG facilities in one of the country’s main ports, while bringing Greece one step closer to developing a core LNG refueling network in maritime and inland ports by the end of 2025 and 2030, respectively, as defined by the DAFI Directive. Having as an ally sustainable development, the port of Patras strengthens its competitiveness to other ports in the Adriatic and Ionian region, while boosting local job openings and improving the environmental conditions of the city of Patras”.

The CEO of PPA Panagiotis Tsonis stated:

“Today is a great day for the Port of Patras. With the signing of the Memorandum of Understanding, we are taking an important step towards making our Port more modern and more competitive domestically and internationally. I want to thank the Management of DEPA and DESFA for the cooperation and I am confident that we will enter the implementation stage”.

Photo (left to right): Nicola Battilana – CEO DESFA, Konstantinos XifarasCEO DEPA, Panagiotis Tsonis- CEO PPA

DEPA Commerce sale may change gas, electricity markets

Ongoing procedures in the sale of DEPA Commerce could serve as a catalyst for major changes in the retail gas and electricity markets, leaving fewer players in these markets.

Challenges of the new era, from electromobility to renewable energy, are expected to soon lead to the establishment of various energy-sector mergers and partnerships in Greece.

Talks between company officials for potential partnerships have proliferated since seven consortiums were confirmed as the qualifiers through to the second and final round in the sale of gas utility DEPA’s commercial division.

Hellenic Petroleum (ELPE) chief executive Andreas Siamisiis, during a press conference yesterday, left open the prospect of an entry by an additional partner into the consortium formed by ELPE and Italy’s Edison. This consortium is among the sale’s seven qualifiers.

Such a development could even influence the line-up of electricity supplier Elpedison, a joint venture formed by ELPE and Edison for Greece’s retail market, Siamisiis admitted.

It is believed that fellow qualifiers Motor Oil and Greek power utility PPC, who also joined forces for the DEPA Commerce sale, are moving to expand their consortium for this sale.

Highlight the importance of the DEPA Commerce sale, and its potential to lead to sweeping changes, six major Greek energy companies are involved in the DEPA Commerce sale, a record level of interest for any local energy-market sale in recent years.

Besides the three aforementioned Greek players, Mytilineos, GEK-TERNA and Copelouzos are also vying for DEPA Commerce.

Electricity producers are the market’s biggest gas consumers, which entwines the interests of gas and electricity players.

Six Greek heavyweights among DEPA Commercial contenders

Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

Seven bidders through to DEPA Commercial sale’s final round

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF), during today’s meeting decided, that seven interested parties meet the criteria to participate in Phase B (Binding Offers Phase) of the tender process for the acquisition of 65% of the share capital of DEPA Commercial (Trade) S.A., with an option of acquiring the total of its issued share capital by virtue of a Memorandum of Understanding (MoU) between DEPA S.A. shareholders, HRADF and Hellenic Petroleum S.A. (HELPE), the development fund has announced in a statement.

The prequalified interested parties to participate in Phase B of the tender are (in alphabetical order):

  1. C. G. GAS LIMITED
  2. Consortium HELLENIC PETROLEUM SA & EDISON INTERNATIONAL HOLDING N.V
  3. Consortium MOTOR OIL HELLAS CORINTH REFINERIES SA & PPC SA
  4. GEK TERNA SA
  5. MET HOLDING AG
  6. MYTILINEOS SA
  7. SHELL GAS BV

Following the signing of the relevant Confidentiality Agreement, the prequalified interested parties will receive the documents of Phase B (Binding Offers Phase) and will grant access to the virtual data room (VDR), where data and information related to DEPA Commercial S.A. are uploaded, the statement added.

 

 

 

 

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.

 

Gas firms look to hydrogen for maintenance of EU funding

Natural gas distribution and trading companies around Europe, including Greece, are turning to eco-friendly hydrogen in an effort to overcome European Commission financing prohibitions, following 2021, for fossil fuel-linked pipelines and other infrastructure.

Greece’s gas grid operator DESFA and gas utility DEPA are currently seeking ways to secure financial support for projects through EU funding and the European Investment Bank.

Converting these investment plans into eco-friendly projects by turning to hydrogen, a RES-generated fuel, is one alternative.

DESFA, counting on the experience of its main shareholders, Snam, Fluxys and Enagas – the trio’s Senfluga consortium controls the operator with a 66 percent stake – is examining the prospect of transmitting hydrogen through the national gas grid, the Greek gas grid operator’s chief executive Nicola Battilana told the four-day Delphi Economic Forum, ending tomorrow.

This DESFA investment plan could be revealed as part of the operator’s next ten-year business plan, now being put together.

DEPA chief executive Kostas Xifaras also spoke of the opportunities offered by hydrogen. The Greek gas utility and its Italian partner Edison are believed to be open to the prospect of establishing partnerships with third parties for hydrogen transmission through the prospective East Med pipeline.

Hydrogen has the potential to play a key role in energy transition and climate-change objectives, noted Aristotelis Chantavas, head of Enel Green Power Hellas.

Representatives of eight EU member states, Greece, Bulgaria, the Czech Republic, Hungary, Lithuania, Poland, Romania and Slovakia, among them Greek deputy energy minister Gerassimos Thomas, recently stressed the significance of maintaining EU funding support for natural gas projects.

 

DEPA Trade sale short list this month, sooner than expected

Privatization fund TAIPED is expected to announce its short list of final-round qualifiers in a tender offering a stake of at least 65 percent, possibly even 100 percent, of DEPA Trade – a new entity formed by gas utility DEPA as part of its privatization – within the next few weeks, far sooner than expected.

Deteriorated international investment conditions have prompted fears of a slower sale procedure.

The privatization fund, now close to finalizing its appraisals of nine first-round bids, has requested clarification from participants.

The DEPA Trade privatization was expected to drag well behind that of DEPA Infrastructure, seen as a lower-risk sale effort offering investors regulated earnings, but the two privatization efforts now appear likely to move ahead almost concurrently, or a few weeks apart.

A list of six final-round qualifiers in the DEPA Infrastructure sale was announced a week ago. Authorities are aiming to complete this sale towards the end of the year.

As for DEPA Trade, this entity promises the winning bidder an immediate advantage in Greece’s natural gas market as more than 200,000 customers around the country will be gained.

DEPA Trade’s wholesale gas trading activity is another appealing factor, despite the fact that it shrunk to 40 percent of the market’s total last year, as the growing southeast European market offers huge potential.

DEPA Trade’s nine first-round bidders are: C.G GAS LIMITED; MET HOLDING AG; POWER GLOBE LLC; SHELL GAS B.V.; VITOL HOLDING B.V.; GEK TERNA; HELLENIC PETROLEUM (ELPE) & EDISON INTERNATIONAL HOLDING N.V. consortium; MOTOR OIL HELLAS & GREEK POWER UTILITY PPC (consortium); MYTILINEOS.

 

DESFA trio may return to DEPA Infrastructure sale, Italgas link-up seen

Italgas, one of six bidders through to the second round of a tender offering DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization, intends to join forces with Snam, Fluxys and Enagas, the three members of the Senfluga consortium that acquired a 66 percent of Greek gas grid operator DESFA late in 2018.

The trio of companies controlling DESFA had expressed first-round interest in the DEPA Infrastructure sale but failed to show up for the procedure’s second round.

Snam, head of the Senfluga consortium with a 60 percent stake, is associated with Italgas as it has held a 13.5 percent stake since 2016.

Italgas is widely tipped to emerge victorious in the DEPA Infrastructure sale.

Besides Italgas, the five other qualifiers through to the second round of the DEPA Infrastructure sale are: EP Investment Advisors; First State Investments (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); Macquarie (MEIF 6 DI Holdings); and the Sino-Cee Fund & Shanghai Dazhong Public Utilities consortium.

Once they have signed confidentiality agreements, the six qualifiers will receive second-round texts and access to a virtual data room hosting DEPA Infrastructure data and information.

DEPA Infrastructure privatization shortlist minus some initial candidates

Fewer than nine of the initial candidates expressing interest in the sale of DEPA Infrastructure, a new entity formed by gas utility DEPA as part of its privatization, will make the second round’s short list, which could be announced early next week by the privatization fund TAIPED, energypress sources informed.

One or two funds that had emerged for the first round will not remain contenders as a result of the pandemic’s impact on their investment plans, representatives have informed Greek privatization authorities.

Also,  another candidate not fulfilling qualification criteria will be excluded from the next round, sources said.

A shortening of the initial list of candidates is normal for any sale, privatization officials noted, stressing there is no reason for concern about the DEPA Infrastructure sale.

DEPA Infrastructure, backed by a fixed WACC rate of between 7 and 8 percent, one of Europe’s highest in this sector, is regarded as one of Greece’s most secure privatization prospects, local officials noted.

Investors will be offered a full 100 percent stake in the company.

The privatization’s initial list of nine candidates is comprised of: ANTIN INFRASTRUCTURE PARTNERS SAS; CHINA RESOURCES GAS (HONG KONG) INVESTMENT LIMITED; EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ISQUARED CAPITAL ADVISORS (UK) LLP; ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MAQOUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

Greece, Cyprus, Israel, with US, plan for EastMed meeting next month

The energy ministers of Greece, Cyprus and Israel plan to stage a trilateral meeting next month, with US involvement, for talks on the prospective EastMed gas pipeline, to transport gas from Israeli and Cypriot fields to Europe via Greece and Italy.

It remains uknown if Francis Fanon, the US Assistant Secretary of State and head of the country’s energy portfolio, will participate at this meeting.

It also remains unclear if participants will stage a virtual conference as a result of pandemic measures or meet in person.

The Greek, Cypriot and US governments were waiting for the new Israeli government to be sworn in before shaping plans for the EastMed meeting, to also serve as a second energy conference between the four nations following an inaugural session in Athens last August.

Yuval Steinitz has been reappointed at Israel’s top energy post, meaning the line-up of last year’s session between the Greek, Cypriot and Israeli energy ministers can be repeated at the next meeting. Greece’s Costis Hatzidakis and Cyprus’ Giorgos Lakkotrypis are still at their posts.

The Greek, Cypriot and Israeli government officials are expected to reaffirm the commitment of their respective countries to the EastMed gas pipeline, as well as commitment to cooperation for regional peace and prosperity, sources said.

Also, the energy ministers of Greece, Cyprus and Israel, along with the session’s US representative, will seek to send Turkey a unified message on its provocative actions against Greece as well as increased aggression in the wider southeast Mediterranean region.

A trilateral EastMed gas pipeline agreement was approved in Greek Parliament last January.

Israel could soon reach a decision on the financing of some of the studies needed for the international pipeline’s link to the national grid.

Also, IGI Poseidon, a consortium comprising Greek gas utility DEPA and Italy’s Edison, is moving ahead with studies for the pipeline’s underwater and overland route between Greece and Italy. IGI Poseidon wants to make an investment decision on this project within the next two years. Meanwhile, Cyprus is making progress on licensing matters.

DEPA Trade, Infrastructure sales delayed for after summer

The final rounds of privatization procedures for DEPA Infrastructure and DEPA Trade, two new entities formed by gas utility DEPA to facilitate its sale, will be postponed until after summer as a result of the pandemic’s impact on global economic activity and investments, pressuring asset values, sources have informed.

Investors are being offered the Greek State’s 65 percent stake and Hellenic Petroleum ELPE’s 35 percent share of DEPA Infrastructure and DEPA Trade.

However, the privatization fund TAIPED, combining its efforts with the energy ministry and RAE, the Regulatory Authority for Energy, intends to press ahead with a June launch of a privatization procedure for a depleted offshore gas field south of Kavala planned to be developed as an underground gas storage facility.

An appraisal of first-round offers submitted by nine investment teams for DEPA Infrastructure and that many more for DEPA Trade is expected to be completed within June.

Barring unexpected developments, TAIPED should announce its list of finalists for both sales next month. This will be followed by the opening of a virtual data room facilitating due diligence procedures for both companies.

DEDA to challenge RAE removal of 8 cities from 5-year development plan

Gas distributor DEDA is examining legal options in order to challenge a decision by RAE, the Regulatory Authority for Energy, to remove the entire Peloponnese and the provincial cities of Veria and Giannitsa from the distributor’s five-year development plan covering 2020 to 2024.

The authority excluded these areas as estimated completion dates for projects exceeded deadlines by more than 18 months.

At the very least, DEDA is expected to ask RAE to reconsider its decisions and request further details concerning the exclusion of a total of eight cities from its five-year development plan.

Besides Veria and Giannitsa, both in the north, RAE removed six Peloponnesian towns, Tripoli, Corinth, Argos, Nafplio, Kalamata and Sparti, from DEDA’s development plan.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, covers areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

It remains unclear whether DEDA will publish the shortened five-year plan in the government gazette. Failure to do so would delay procedures for the remainder of projects on the list, including the setting of customer tariffs. The company’s administration wants to avoid such delays.

 

Revythoussa at full capacity in May, 10 LNG orders scheduled

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.

DEPA Infrastructure bidder shortlist expected end of month

A shortlist of second-round bidders for DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, is anticipated towards the end of May, while the cut for DEPA Trade bidders, the utility’s other new division being privatized, could be announced a month later, government sources have informed.

DEPA Infrastructure, whose earnings are regulated by RAE, the Regulatory Authority for Energy, is less vulnerable to the impact of the pandemic, which is not the case for DEPA Trade, fully exposed to market forces.

“We will not rush, for any reason, to take action that would lead us to much lower offers than the prices we are seeking,” Aris Xenofos, president of the privatization fund TAIPED, told Reuters yesterday.

Weighted Average Cost of Capital (WACC) levels set for network operators by RAE before the coronavirus crisis emerged offer protection to certain privatizations against the global economic uncertainty, government sources told energypress.

Though absolute safety can never be assured, DEPA Infrastructure, whose WACC level has been set at around 7 to 8 percent, is less susceptible to financial volatility compared to other companies on Greece’s privatization list.

DEPA Trade, Hellenic Petroleum ELPE, and power grid operator IPTO – its earnings are regulated but the company is listed through IPTO (ADMIE) Holding – are all far less resilient.

Gas distributor DEDA’s 5-year development plan minus 8 cities

Gas distribution network projects in eight provincial cities have been removed from gas distributor DEDA’s five-year development plan approved by RAE, the Regulatory Authority for Energy, as their estimated completion dates exceeded deadlines by more than 18 months.

Projects in a total of six Peloponnesian cities as well as northern Greece’s Veria and Giannitsa had been included in the previous version of the DEDA development plan, covering 2020 to 2024.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, distributes to Greece’s areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

According to DEDA’s initial five-year plan, Tripoli, Corinth, Argos and Nafplio, all in the Peloponnese, were planned to gain network infrastructure enabling gas supply via a high-pressure pipeline operated by gas grid operator DESFA.

The plan also entailed the development of infrastructure for LNG supply from DESFA’s Revythoussa terminal, close to Athens, to the Peloponnesian cities Kalamata and Sparti.

Projects for CNG supply to Veria and Giannitsa in the country’s north were also excluded by RAE from the five-year DEDA plan it approved.

 

Motor Oil, PPC Renewables in talks for major wind energy park

Talks between PPC Renewables and the Motor Oil Hellas group for joint development, installation and operation of an island-based wind energy farm with a capacity of approximately 100 MW have reached an advanced stage, sources have informed.

The project’s feasibility, however, will depend on the development of a grid interconnection with the mainland system.

PPC Renewables and Motor Oil are currently examining details concerning the prospective wind farm’s sustainability, interconnection and financing. Once they have reached conclusions, the two sides will decide on whether to proceed with the project.

PPC Renewables and Motor Oil have already joined forces to express first-round interest in a tender offering a stake in DEPA Trade, a new entity established by gas utility DEPA.

PPC Renewables has set as a strategic objective the formation of partnerships with domestic and foreign players for new projects not included in the existing portfolio of parent company PPC, the power utility. PPC Renewables intends to develop these new projects without involvement by PPC.

The company’s wind energy park plan with Motor Oil could serve as a base for more projects involving the two sides.

PPC Renewables has already planned a series of collaborations with foreign partners, including Germany’s RWE, UAE group Masdar Taaleri Generation  D.O.O. (MTG), as well as EDP Renoveis, a Portuguese company with a Chinese main shareholder. PPC Renewables is striving to have developed RES projects with a total capacity of 1.5 GW by 2024.

Motor Oil has made clear its plan to broaden its portfolio with emphasis on green energy. The refining group wants to establish a solid presence in the renewable energy market through acquisitions and partnerships.

Motor Oil has already completed two acquisitions, a wind-energy purchase from Stefaner and a solar energy project acquisition from Metka EGN, a member of the Mytilineos group.

 

‘Firm steps for privatizations but pandemic’s impact considered’

Decisive steps are being taken for Greece’s energy-sector privatizations, representing two thirds of the country’s overall privatization program, but the pandemic’s impact on international markets will not be neglected, energy minister Costis Hatzidakis has pointed out in an interview with Greek daily To Ethnos.

There is no need to rush a plan to reduce the Greek State’s stake in Hellenic Petroleum (ELPE) as this sale is not one of restructuring character, the minister noted.

A government decision to sell stakes in DEPA Infrastructure and DEPA Trade, two new entities emerging from a split at gas utility DEPA, is moving ahead as planned, Hatzidakis informed.

First steps have been taken to reduce, below 51 percent, the Greek State’s share in power grid operator IPTO, “but this does not mean we will proceed tomorrow morning,” he said.

State-controlled power utility PPC is preparing terms of an international tender for the sale of at least 49 percent of distribution network operator DEDDIE/HEDNO, a subsidiary, the minister said. This procedure is scheduled to commence in the third quarter of this year, he added.

DEPA Infrastructure board soon, bidders shortlist in June

Corporate revisions at gas utility DEPA, shaped by legislation ratified in December, have just about been completed ahead of the enterprise’s privatization plan.

All that remains, according to sources, is an announcement of the board members at DEPA Infrastructure, one of the new corporate entities established as part of the utility’s transformation.

This announcement is expected to be made within the next one or two weeks. DEPA Infrastructure will be established as an entirely new company with its own tax file number.

DEPA Trade, another new entity emerging from the wider corporate revision, will succeed the existing DEPA utility.

The utility’s other division, DEPA International Projects will, for the time being, remain a subsidiary of DEPA Trade before it is broken away 60 days prior to the submission of bids for its parent company.

Then, as the final step of its process, DEPA International Projects will be merged with EDEY, the Greek Hydrocarbon Management Company, the government has announced.

Nine bidding teams that have expressed official interest for DEPA Infrastructure are currently providing data to the privatization fund TAIPED, expected to shortlist candidates around June, sources estimate.

Meanwhile, DEPA is preparing its video data room as well as financial and technical reports that will be examined and evaluated by investors before they shape their bids. DEPA is expected to complete these reports in May.

Ministry seeking to reignite stalled energy sector initiatives

The energy ministry is seeking to resume coronavirus-interrupted actions on a number of fronts, which, prior to the crisis, were expected to lead to major energy sector changes in 2020. These include the decarbonization effort, privatizations, green-energy infrastructure investments and a launch of the energy exchange.

The ministry’s strategic plan aiming to inject new impetus into these initiatives includes market liquidity protection through support mechanisms and bank loans for operators and key market players such as power utility PPC.

Efforts will also be made to accelerate decarbonization initiatives and keep alive pending energy sector privatizations, including those of gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade; the prospective sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; as well as an underground gas storage facility at a depleted offshore gas field south of Kavala.

Green energy investments, a key party of Greece’s revised and more ambitious National Energy Climate Plan, are expected to regain dynamic momentum as of 2021, following this year’s pandemic-induced disruption.

This is also the case for major infrastructure projects such as power grid operator IPTO’s grid interconnections for Crete, the south, west and north Cyclades and other areas. These interconnection projects require investments totaling more than 4 billion euros. These are expected to be completed by 2030.

Grid interconnection projects are also being worked on for the gas sector. Gas grid operator DESFA is looking to expand its network to cover 39 cities.

Continual flow of LNG imports reshaping gas market

LNG is continuing to enter the Greek market through gas grid operator DESFA’s Revythoussa terminal just off Athens at a continual and elevated flow that is reshaping the overall gas market.

The Mytilineos group was the market leader in the first quarter, capturing a market share of more than 40 percent of gas imported into Greece either via the Revythoussa LNG terminal or pipeline infrastructure.

Gas utility DEPA, a more subdued LNG player in the first quarter as a result of take-or-pay costs linked to the company’s pipeline gas orders with Russia’s Gazprom and Turkey’s Botas, registered a first-quarter market share of approximately 30 percent.

Elpedison, propelled by the increased use of its gas-fueled power stations, captured a higher share of 15 percent.

The Greek gas market’s remaining 15 percent was shared by Prometheus Gas, power utility PPC and Heron.

PPC’s gas market share is expected to increase over the coming months as it has placed LNG orders via the Revythoussa terminal.

 

DEPA International Projects, EDEY, the hydrocarbon company, to merge

An amendment permitting a prospective merger between DEPA International Projects – a new entity resulting from a split at gas utility DEPA – and EDEY, the Greek Hydrocarbon Management Company, is now being prepared at the energy ministry, energypress sources have informed.

A number of DEPA-related projects have been added to the DEPA International Projects portfolio, including the Greek-Italian IGI interconnection, EastMed and the Greek-Bulgarian IGB pipeline interconnection.

In addition, any future DEPA-related projects – directly or indirectly – concerning development, construction or management of interconnection infrastructure linking Greece with neighboring countries will also be added to the DEPA International Projects portfolio.

EDEY, the hydrocarbon project licensing authority in Greece, has assets of approximately 12.5 million euros. The company reported a post-tax profit of 4.3 million euros in 2019.

EDEY’s range of activities will be broadened as a result of the company’s merger with DEPA International Projects.

Special categorization for the new company that would exempt personnel remuneration packages and hiring policies from strict state monitoring is likely, sources noted.

The merger plan’s legal details could be attached to an energy ministry draft bill on environmental matters that is expected to be submitted to parliament following the Greek Easter break.

 

Gazprom gas supply clauses now a major burden for DEPA

Gas utility DEPA, whose long-term pipeline gas supply agreements with Gazprom have developed into a heavy burden amid a changing market of sharply reduced gas prices, is seeking more favorable terms.

Talks between the two sides have commenced but Gazprom officials do not appear willing to reexamine details at any great depth, sourced informed.

DEPA’s agreements with Gazprom, which include take-or-pay clauses, are no longer competitive. The Greek utility, on one of its unfavorable fronts, is pushing for a favorable revision to its take-or-pay clause concerning supply in 2019.

DEPA absorbed approximately 500 million cubic meters less than it had agreed last year, a shortage expected to cost about 100 million euros, based on the current supply terms agreed with Gazprom.

It is believed DEPA may escape with a smaller payment for 2019 and have leftover quantities transferred to future years.

Even so, the gas utility still faces a major problem for 2020. DEPA recently had its Gazprom supply contract for the year revised so that 40 percent of supply is indexed to the Dutch gas trading platform TTF, one of Europe’s biggest hubs. The other 60 percent has remained oil-indexed.

DEPA’s oil-indexed 60 percent of Gazprom supply for 2020 is far more expensive than LNG prices currently available in the market, meaning the gas utility will not be able to sell this proportion to  customers.

Essentially, DEPA’s ability to sell its Gazprom supply of gas in 2020 will be restricted to the TTF-indexed 40 percent proportion.

DEPA’s first-quarter results are not impressive and the situation seems set to deteriorate as international LNG prices keep sliding amid the global financial impact of the coronavirus pandemic. It is feared DEPA’s take-or-pay clause cost for 2020 will exceed the 500 million amount estimated for 2019.

DEPA set to rebate customers for Botas legal battle cost

Gas utility DEPA is preparing to rebate customers who had been burdened with costs linked to an older international court verdict against the utility in a now-resolved case with Botas, Turkey’s state-run crude oil and gas company.

The utility’s gas-supplier customers need support as they do battle amid toughened market conditions resulting from the coronavirus pandemic’s lockdown.

Earlier this month, on March 5, DEPA received a 230 million-euro retroactive sum from Botas after Stockholm’s ICC (International Court of Arbitration) vindicated the Greek utility in its overcharging case against the Turkish energy company.

The dispute began when DEPA claimed the Turkish company was overcharging the Greek utility for its purchases of Azerbaijani natural gas delivered through Turkish pipelines since 2011.

DEPA will draw from this 230 million-euro sum to rebate its customers. The utility has completed the initiative’s preparations and will start delivering payments next week, sources informed.

The biggest amount will go to customers who have supply contracts with DEPA, as they effectively took on the cost of a 180 million-euro amount paid by the utility to Botas as a result of an older unfavorable court decision against the Greek utility.

Some of DEPA’s customers had challenged this demand and avoided making payments. As a result, DEPA will be left with a considerable sum once all rebates have been made.

Thes leftover amount will prove useful as DEPA has take-or-pay clause payments to make to Botas and Gazprom for 2019.

Alexandroupoli FSRU market test offers total 2.6 bcm, viability assured

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.

IPTO, DEPA Trade, DEPA Infrastucture sales put on hold

Energy-sector privatizations planned for launch in the second quarter, as well as sales already in progress, are being put on hold as a result of the coronavirus pandemic’s impact on the global economy and the plans of the government and privatization fund TAIPED.

Two thirds of Greece’s privatization program this year concerns energy utilities, as energy minister Costis Hatzidakis has noted.

The freeze on plans includes the sale of an additional stake of power grid operator IPTO, which was planned for the second quarter.

State Grid Corp of China (SGCC), already holding a 24 percent share of IPTO and possessing first-offer rights, has expressed an interest to boost its stake.

However, IPTO and SGCC officials have not been able to meet for talks as a result of the extreme conditions. Greece’s deputy energy minister Gerassimos Thomas had planned a trip to China one-and-a-half months ago but was unable to travel as a result of a travel ban imposed by the Chinese government following the coronavirus outbreak in China early this year.

Two privatization procedures for gas utility DEPA’s new entities, DEPA Trade and DEPA Infrastructure, both of which have drawn considerable interest, have also been put on hold.

The DEPA Trade sale attracted nine bidding teams, domestic and international, for its first round, a turnout interpreted as a vote of confidence for the Greek economy. The sale’s first-round expressions of interest could be appraised in the summer.

DEPA Trade sale’s PPC-Motor Oil union, Shell return surprise

The privatization of DEPA Trade – a new entity established by gas utility DEPA – offering the Greek State’s 65 percent stake in a procedure whose deadline for first-round offers expired yesterday, produced two surprises. Firstly, Shell reemerged in the country’s gas market following a withdrawal less than two years ago. Secondly, in an unanticipated move, power utility PPC teamed up with Motor Oil for a joint bid.

Shell departed from the Greek natural gas market in July, 2018 by selling its 49 percent stakes in gas supplier EPA Attiki and gas distributor EDA Attiki, both covering the wider Athens region, to DEPA.

Shell received a total of 150 million euros, 39 million for its 49 percent stake in EPA Attiki and 111 million euros for its 49 percent stake in EDA Attiki.

The company’s reemergence can be primarily attributed to an interest in DEPA’s long-term contracts with Gazprom, Sonatrach and Botas, with an eye on the wider Balkan and southeast European regions, sources said.

PPC and Motor Oil decided to join forces for the DEPA Trade sale as a result of the failure of both to secure slots for 2020 at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. PPC holds a 30 percent stake in its partnership with Motor Oil, sources informed.

Following its Revythoussa failure, PPC has been more aggressive in a market test for the Alexandroupoli FSRU, expiring today. PPC wants to secure a capacity at this prospective unit in the country’s northeast as the company is determined to have LNG access. A successful bid in the DEPA Trade sale would bolster this position.

Hellenic Petroleum (ELPE) and Edison did not submit a joint bid for DEPA Trade through Elpedison, their joint venture for Greece’s retail energy market, as had been speculated. Instead, they are believed to have made separate bids. The two had not shaped a common action plan in the event of a successful DEPA Trade bid, sources said. However, the establishment of a new joint venture by the two firms at a latter stage, specifically for DEPA Trade, cannot be ruled out.

The country’s planned privatizations, including DEPA Trade, face likely delays as a result of the coronavirus pandemic’s repercussions. The progress of these sales will depend on the course of the pandemic.

DEPA Trade’s first-round bidders forwarded their offers on-line and must follow up with deliveries of official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

DEPA Trade offers due today, at least 7 players interested

Five Greek and two international investment groups are expected to submit bids for the DEPA Trade privatization, whose first-round deadline expires today at 5pm.

DEPA Trade was established as a new gas utility DEPA entity for the privatization, offering the Greek State’s 65 percent stake.

Bidders may also submit their expressions of interest online, via email, as a result of restrictive measures prompted by the coronavirus crisis, but will need to follow-up with official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

The local bidders expected to submits bids, all leading energy players, are Mytilineos, GEK Terna, Motor Oil, Hellenic Petroleum (ELPE) and the Copelouzos group.

ELPE plans to submit a joint bid in partnership with Edison, possibly through Elpedison, their joint venture for Greece’s retail energy market, sources informed.

The Copelouzos group is also working on delivering a joint offer, with Czech firm KKCG.

Shell is among the foreign companies looking interested, despite its sale, two years ago, of stakes in DEPA gas supply and distribution companies.

Dutch firm Vitol is the other foreign player believed to have been drawn to the DEPA Trade sale. Vitol had reached the final stage of an ELPE sale with Algeria’s Sonatrach as a bidding partner, but the pair ended up not submitting a binding offer.

Expressions of interest in DEPA Trade may also come from Swiss-based Hungarian firm Met Energy Holding, active in natural gas wholesale trade. This firm is already present in Hungary, Croatia, Italy, Serbia, Slovakia, Spain, Turkey and Ukraine. Qatar’s Power Global is another possibility.

DEPA Trade’s portfolio includes 409,000 customers – households and businesses.