DEPA

DEDA’s 9.99% WACC proposal for 2024-26 above RAAEY goal

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Italgas, the Italian buyer of gas company DEPA Infrastructure and distribution subsidiaries EDA THESS, EDA Attiki and DEDA, has proposed a 9.99 percent weighted average cost of capital (WACC) level for DEDA in negotiations with RAAEY, the Regulatory Authority for Waste, Energy and Water, for the rest of a four-year regulatory period covering 2023 to 2026, well above the level envisaged by the regulatory authority, expected to push for a rate below 8.57 percent.

A ratified legislative revision that had been forwarded by the energy ministry on the WACC level of the then-DEPA Infrastructure company, now reorganized, had set a WACC level of 8.57 percent for the current year, leaving the rest of the four-year regulatory period pending until the corporate reorganization of the gas company was completed.

The process has now been completed, as officially announced by Italgas, through a merger of gas distributors EDA THESS and EDA Attiki, both subsidiaries of the former DEPA Infrastructure Group, and absorption by DEDA.

In its DEDA negotiations with Italgas, RAAEY is pushing for a WACC level, for 2024 to 2026, below the 8.57 percent level set for 2023.

RAAEY will propose the precise WACC level it desires after DEDA has provided the authority with data on its borrowings and leverage. RAAEY aims to finalize the matter by the end of the year, so that tariffs can be set immediately afterwards.

As a result of DEPA’s restructuring, DEDA has undertaken the development and operation of the gas distribution network in all areas of Greece where DEPA Infrastructure, now a full-owned subsidiary of Italgas, is active. The company currently manages around 7,700 km of network and serves over half a million customers.

 

Crucial DEPA, Gazprom talks on gas price, take-or-pay clause

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Greek gas utility DEPA’s negotiations with Gazprom on new natural gas prices for 2024 and the Russian company’s insistence on activating a take-or-pay clause for a payment of approximately 400 million euros as compensation for unused gas quantities in 2022 and 2023 have reached a crucial stage and could end up in court.

A current price agreement between the two sides, signed in 2021, is 80 percent linked to the TTF index at the Dutch energy exchange and 20 percent linked to the price of oil.

DEPA is seeking an improved price level for 2024 as well as a retroactive price cut from January 1, 2023, which, if agreed on, would result in a reimbursement.

Also, DEPA disagrees with Gazprom’s insistence on triggering a take-or-pay clause in response to the Greek company’s failure to absorb a minimum natural gas amount of 17 TWh per year. DEPA contends its shortfall resulted from the Russian company’s failure to honor a crucial price-related term for gas supply at a price level that would ensure a competitive advantage for DEPA in the Greek market.

Over the past few months, Gazprom has supplied LNG and natural gas to at least one other customer in Greece at price levels lower than those offered to DEPA, sources at the gas utility have claimed.

Despite the introduction of EU measures designed to restrict Russian gas imports into Europe, they remain high in Greece, representing approximately 40 percent of the country’s overall gas imports – both LNG and pipeline gas – compared to just 9 percent in the EU.

Greek energy minister Thodoris Skylakakis, responding to journalists’ questions, contended he remains unperturbed by Gazprom’s dispute with Bulgaria over the Russian company’s refusal to meet a Bulgarian network usage surcharge demand of 10.2 euros per MWh.

Though this dispute could result in a disruption of Russian supply to Bulgaria and, by extension, Greece, the outcome would rid Greece of Russia’s high-cost demands, the minister contended.

The cost of the DEPA-Gazprom take-or-pay clause for 2022 is 150 million euros and is estimated to reach 300 million euros in 2023, according to the minister.

 

Italgas’ Greek EBITDA goal for ’23, €106m, highlights local importance

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Italian energy group Italgas’ 2023 EBITDA target of 106 million euros for its Greek portfolio, representing 9 percent of the group’s overall EBITDA objective this year, highlights the strategic importance of the group’s business plan in Greece.

Italgas’ CEO, Paolo Gallo, highlighted this importance during his presentation yesterday of the Italian company’s strategic plan for 2023 to 2029 to investors and analysts in London.

According to Italgas’ seven-year strategic plan, the Greek portfolio’s EBITDA will contract slightly to 8 percent of the group’s overall EBITDA in 2029.

Italgas plans to greatly increase the group’s activities in the Greek market and subsequently boost their value from 700 million euros in 2022 to 1.2 billion euros by 2029, at an annual growth rate of 7.3 percent.

A key objective for the group in the Greek market is to expand natural gas distribution to new areas through the addition of 42 municipalities to the network, either through pipeline distribution or LNG stations.

Italgas has acquired DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA THESS and DEDA.

The Italian group is currently working on a plan to merge its three Greek gas distribution subsidiaries, a development expected to offer significant benefits in terms of efficiency, effectiveness and transfer of know-how. According to Italgas officials, this procedure is expected to be completed by the end of the year.

 

DEPA cancels 2 LNG orders submitted to TotalEnergies

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A sharp reduction in domestic natural gas consumption has prompted gas utility DEPA to cancel two LNG orders submitted to TotalEnergies a few months ago as part of the country’s overall effort to bolster energy security ahead of this winter period, energypress sources have informed.

The cancellation will not come without repercussions as DEPA, based on the agreement’s terms, will be required to pay TotalEnergies compensation of approximately 10 million euros for each cancelled order. This sum may be covered by the Energy Transition Fund, as foreseen by law.

DEPA’s cancellations concern two LNG orders submitted in September, each for 10 TWh quantities. These orders were secured at particularly competitive prices as other indices besides the TTF were also factored into the pricing formula to lower the price level. At the time, the TTF was as much as 90 euros per MWh higher than other platforms also used for such transactions in the European market.

The two DEPA orders were planned for delivery between November, 2022 and March, 2023 as cover in the event of a disruption of Russian gas supply to Greece. But the orders have ended up proving excessive given the prevailing conditions.

Turbine installed at GEK TERNA-Motor Oil gas-fueled power station

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A Siemens HL-class gas turbine, the first to be used in Greece, has been installed at a prospective 877-MW state-of-the-art combined cycle, gas-fueled power station being developed by GEK-TERNA and Motor Oil Hellas in Komotini, northeastern Greece, planned to be launched in early 2024, Motor Oil Hellas has announced.

The project, Thermoilektriki Komotinis, an investment estimated to be worth 375 million euros, promises to be one of the most efficient power plants in Greece. Once operational, it will emit 75 percent less CO2 than lignite-fired power plants.

Thermoilektriki Komotinis is the second gas-fueled power station that has undergone development in Greece over recent years, following the construction, by the Mytilineos group, of an 825-MW unit in Viotia, northwest of Athens, whose commercial launch is imminent.

Construction of a third gas-fueled power station, in Alexandroupoli, northeastern Greece, as a joint venture by power utility PPC, gas utility DEPA and the Copelouzos group, is scheduled to officially commence this Saturday.

The country requires at least three additional power stations to secure energy sufficiency, according to a recent study conducted by power grid operator IPTO for 2025 to 2035.

Four LNG shipments planned for Revythoussa terminal in January

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Four LNG shipments totaling 443,130 cubic meters are scheduled to be delivered to gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens, in January, a quantity that is roughly half the amount planned for this month.

More specifically, for January, the Mytilineos group has ordered an LNG shipment of 147,710 cubic meters, gas utility DEPA has placed an order for 73,855 cubic meters, Elpedison has ordered 147,710 cubic meters and Swiss company KOLMAR has ordered an LNG shipment of 73,855 cubic meters.

 

 

Revythoussa LNG slot prices soar, driven by Balkan exports

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Driven by LNG export potential to Bulgaria and the wider eastern European region, energy companies have submitted bids of between 3.5 and 4 million euros for slots at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens.

These bids, made at an ongoing DESFA auction offering slots for the next four years, are roughly three-and-a-half times higher than price levels recorded last year.

Two Bulgarian companies, Bulgargaz and Kolmar, as well as Greece’s power utility PPC and Motor Oil, were the winning bidders at the auction’s session yesterday, securing four of eight Revythoussa slots offered. The other four slots are expected to be taken by bidders today.

Earlier in the week, on Monday, gas company DEPA secured eight slots for 4 TWh, Mytilineos secured five slots for 5 TWh, as did and Bulgaria’s MET.

Greece’s recent transformation as a strategic gas exporter for the wider region has prompted a surge in demand for slots at the Revythoussa LNG terminal.

During the year’s first nine-month period, the country’s gas exports increased by 293 percent, representing over 20 TWh. Bulgaria was the main recipient. Greece has been covering the neighboring country’s gas needs for some months now, following natural gas pipeline disruptions from Russia.

 

Natural gas, heating oil retail prices level for November

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The recent plunge in international gas prices appears to have neutralized a retail price advantage that had been gained by heating oil, made possible by generous subsidies. Natural gas and heating oil are now at similar price levels for November.

Though natural gas suppliers have yet to announce retail prices for November, their price levels for the month are widely expected to remain unchanged compared to October, at a level of between 11 and 12 cents per KWh.

Besides a subsidy offered by gas utility DEPA, gas prices are also shaped by the TTF benchmark average of the previous month. Amsterdam’s TTF benchmark ended October at levels of between 135 and 145 euros per MWh, well below levels of 200 to 210 euros per MWh a month earlier.

In response, DEPA has greatly reduced its subsidy for consumers from 9 cents per KWh to 2.5 cents per KWh. Deducting the reduced 2.5 cent subsidy results in a retail natural gas price of 11 to 12 cents per KWh.

Heating oil will also be sold at roughly this level, or marginally higher, announcements made yesterday by the country’s refineries and their retail arms, for an extended period of heating oil subsidies, have shown.

ELPE announced it would extend its 6 cent heating oil subsidy (7.5 cents with VAT) until November 15, while Motor Oil informed it will continue offering a price as competitive as that of October.

As a result, consumers can expect heating oil to be priced at less than 1.40 euros per liter for at least another 15 days.

Heating cost comparisons for November still unclear

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Heating energy cost comparisons for November regarding natural gas and heating oil remain unclear. Should gas utility DEPA reduce its subsidies, as is anticipated following a sharp recent drop in international gas prices, heating oil would become marginally cheaper, even if heating oil subsidies at refineries are disrupted, as long as the Brent index does not continue rising.

The retail price of natural gas in Greece is currently at 11 to 12 cents per KWh, a level that would exceed 20 cents per KWh without DEPA’s subsidy of 9 cents per KWh. Subsidies of such extent are currently unnecessary as a result of the recent plunge in natural gas prices, dropping to 99 cents per MWh (TTF) yesterday.

This major drop in gas prices will inevitably prompt a reduction in gas subsidies. It is still unclear if energy minister Kostas Skrekas will make any related announcements today or hold back for a latter date.

Heating oil prices have been subdued at a level of 1.35 euros per liter, or 12 to 13 cents per KWh, as a result of two separate subsidies, a state subsidy, to be provided until at least the end of the year, worth 25 cents per liter, and an additional subsidy of 7.5 cents per liter, being offered by refineries until the end of October, according to their announcements. It remains unclear if refineries will continue subsidizing heating oil beyond October.

November power prices at 15-16 cents/MWh after subsidies

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Retail electricity prices for November are expected to fall to levels of about 15 to 16 cents per MWh following subsidies, set to be announced tomorrow by energy minister Kostas Skrekas.

The state budget will benefit greatly as a result of the sharp drop in natural gas prices, but, for consumers, final retail electricity prices will more or less remain unchanged compared to October levels.

Given current price levels in markets, budget money will probably not be needed for the government’s energy-crisis support effort to consumers as this support will most likely be fully covered by the Energy Transition Fund through electricity producer windfall earning injections into the fund.

Subsidies for the bulk of consumers, using up to 500 KWh per month, are expected to be set slightly below 24 cents per MWh.

Power utility PPC, the dominant market player, last week announced a November price of 39.7 cents per KWh for a month’s first 500 KWh of consumption, which, following the subsidy deduction, drops to between 15.7 and 15.9 cents.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Consumers using electricity of over 500 and 1,000 KWh per month will receive inversely related lower subsidies.

It remains unclear whether natural gas will be subsidized in November. With the TTF benchmark down to 100 euros per MWh, gas company DEPA does not need to subsidize households at a rate of 90 euros per MWh, as it had done in October.

Gas subsidy cut a disincentive considered for lower demand

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Reduced natural gas consumption, not just in the industrial sector, but for households as well, is emerging as a key strategy in the government’s battle against the energy crisis as a very challenging winter approaches.

Government officials are looking to drastically reduce, or even eliminate, subsidies offered for natural gas – both state subsidies and gas utility DEPA subsidies – according to one proposal already being discussed.

Natural gas subsidies offered in Greece peaked in April at 40 euros per thermal MWh, double the level of the rate offered a month earlier. A total of 540,000 households, along with all business and industrial consumers, regardless of size, earnings or workforce, were eligible for these subsidies.

However, the country’s fiscal leeway has tightened, eroding the government’s ability for gas subsidy support packages worth 90 to 100 million euros per month.

At current gas price levels, support packages, as they stand, would exceed an annual cost of 15 billion euros, representing 7 percent of GDP.

Last April, when international gas prices were lower compared to current levels, the month’s gas subsidy support package – state and DEPA, combined – reached a total cost of 88.74 million euros.

Reducing or eliminating gas subsidies would serve as a disincentive for new gas connections, especially if gas prices remain high. However, such an initiative would place existing consumers under increased pressure, which could result in political cost. The next Greek legislative election will be held by July, 2023.

PM office emergency meeting over Nord Stream I fears

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The country’s leading energy authorities have been summoned to an emergency meeting today at Prime Minister Kyriakos Mitsotakis’ office following yesterday’s troubling announcement by Kremlin-controlled energy giant Gazprom, which noted it could not guarantee the safe operation of the Nord Steam I gas pipeline because of doubt over the return of a turbine from Canada.

At today’s meeting, top officials representing RAE, the Regulatory Authority for Energy, the market operators, power utility PPC, and gas company DEPA will seek emergency solutions amid fears Russia’s dwindling gas supply cuts to Europe could worsen.

Nord Stream I, a subsea pipeline linking Russia with Germany through the North Sea, was shut down on July 11 for a 10-day period of maintenance work, according to Gazprom.

Should the pipeline not reopen next Thursday, turmoil in European energy markets would also impact the Greek market, both in terms of prices and supply sufficiency, as the development would prompt a drastic increase in electricity exports from Greece to interconnected neighboring countries.

DEPA Chief: ‘Holistic approach to energy matters needed more than ever’

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Mr. K. Xifaras, CEO of Public Gas Corporation of Greece (DEPA) SA., writes for International Energy Exhibition of Greece 2022

DEPA Commercial is Custodian of Greece’s energy security and of the smooth operation of the domestic energy market. Today, the energy sector, both in Greece and worldwide, is faced with a series of challenges and unforeseen factors which highlight, now more than ever, the need for a holistic approach to energy matters. The need to contain energy costs and support the society, on one hand, and the process of energy transition, on the other, have created a situation in which the market needs to find a balance which will ensure both the country’s energy efficiency and its survival in sustainable terms.

While trying to solve this difficult equation, the role of natural gas, as a bridge, fuel proves to be decisive for shaping the future of the energy market, given the diversification of energy sources and routes of supply and transport, as well as the expansion of storage capacity. DEPA Commercial, which consistently serves these strategic priorities, has been developing a multi-level strategy for the last three years that has proven to be particularly effective. A strategy with double focus: the verticalization and expansion of corporate activities, and the seamless transition to “green” energy, both of which are national goals described in the National Energy and Climate Plan and the European Green Agreement, enhancing our country’s role as a regional energy hub for the wider Southeast European region.

In order to cover the country’s immediate energy needs and to shield its energy security, DEPA Commercial is increasing the supply of LNG either through current contracts or through the spot market, while having already secured long-term agreements on more favorable terms. At the same time, the company is investing in important infrastructure projects and programs, which are drastically reshaping the energy status quo of the region and are contributing decisively to the process of Europe’s independence from Russian gas, such as the Greek-Bulgarian pipeline – IGB and the offshore LNG terminal (FSRU) in Alexandroupolis. Both, projects which will significantly increase the capacity of supply and storage of both Greece and the neighboring countries it serves.

TAP, Poseidon and EastMed are equally important pipeline projects, with the latter returning dynamically to the forefront as a result of the energy crisis, since it will enable the transport of natural gas from the fields of the Eastern Mediterranean to Europe. To that direction, DEPA Commercial is currently in advanced discussions with trading companies from Israel and Egypt.

In this way, a safety net is established regarding the security of supply in the wider region, which upgrades Greece’s geopolitical status by transforming it into a regulatory factor in the energy landscape.

Simultaneously, given the enhanced importance of natural gas, we have designed a comprehensive strategy aiming, on the one hand to expand the use of natural gas, both geographically and in terms of uses, and on the other hand to create the conditions for the development and utilization of renewable and alternative forms of energy. Keeping this in mind, DEPA Commercial is leading the developments towards the transition to a greener economy by designing and implementing initiatives that promote the further penetration of natural gas in the country’s energy mix, as a transitional fuel on the way to cleaner energy forms. The company also contributes substantially to the promotion of gas mobility and the use of cutting-edge technologies, such as Small-Scale LNG and CNG, thus expanding even further the natural gas network and ensuring distribution even in the most inaccessible areas. At the same, time, emphasis is placed on the development of a sustainable and efficient LNG supply chain for maritime transport that will increase the growth prospects of the Greek shipping sector.

With its sights on the future, DEPA Commercial is already active in the field of Renewable Energy Sources by creating a “green” portfolio that exceeds 200 MW of photovoltaic parks, and is also developing projects, infrastructure and technologies which will be able to serve in the future even “greener” energy such as hydrogen and biomethane.

Moreover, at DEPA Commercial we have proven that we operate always considering pertinent societal issues and, for this reason, with a true sense of responsibility we are contributing decisively to the absorption of a significant percentage of the rise in international gas prices, through the implementation of targeted market interventions aimed at supporting households and businesses, in full cooperation with the Ministry of Environment and Energy.

With a solid vision and through hard work, DEPA Commercial is today an integrated energy company, with strong bases, operating vertically and according to modern corporate governance terms. We are meticulously planning our next steps and we are creating the conditions to successfully meet the ever-changing needs of the market and the economy.

 

IGB nearing completion, Bulgarian PM to visit Komotini

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The Greek-Bulgarian IGB gas pipeline, whose construction is expected to be completed by mid-April, promises to contribute to the EU’s effort for drastically reduced reliance on Russian gas.

The IGB gas pipeline, a 50-50 joint venture of the ICGB consortium, involving Greek-Italian company IGI Poseidon (DEPA and Edison) and Bulgaria’s BEH, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria and be linked with the TAP pipeline that runs across northern Greece for supply of Azerbaijaini gas to the region.

The IGB pipeline will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

Last week, EU officials announced a new energy strategy, Repower EU, aiming to reduce Russian gas imports to the continent by two-thirds. The establishment of alternative energy supply routes into Europe is now a priority on the Brussels agenda.

Bulgarian prime minister Kiril Petkov is scheduled to visit the IGB project contactor AVAX’s construction site in Komotini this Friday. His Greek counterpart Kyriakos Mitsotakis has been forced to miss the occasion after being sidelined by the Covid-19 virus. Energy minister Kostas Skrekas will fill in.

Escalating war increases threat of gas shortages, prices surging

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The escalating war in Ukraine following last week’s invasion by Russian forces has increased fears of natural gas shortages in the European market, which has led to a new price surge, adding to the price ascent prompted by the preceding energy crisis.

Markets are now jittery over concerns that the ongoing bombardments in Ukraine could damage gas pipelines running across the country. The prospect of a Russian retaliation to stricter sanctions threatened by the west is another concern pressuring markets.

Greece is in a somewhat sheltered position as the country imports Russian gas quantities via the Turkstream pipeline, crossing the Black Sea, but, given the overall developments, Athens cannot remain complacent.

The country’s crisis management committee will be meeting again today to discuss measures should the adverse conditions created by Russia’s war in Ukraine deteriorate further.

Greek authorities are expected to try and maintain reserves at the country’s LNG terminal on the islet Revythoussa, just off Athens, as close as possible to full capacity, and use pipeline gas to the fullest extent.

The country’s gas needs for March have been fully covered by four LNG shipment orders – two by Elpedison, and one each by Mytilineos and DEPA – expected at the Revythoussa terminal. Additional orders could be placed if needed. LNG orders have yet to be placed for April.

Natural gas prices surged yesterday, ending the day at 121 euros per MWh. At such a level, retail electricity prices could reach close to 300 euros per MWh. Today’s retail electricity price is 254.94 euros per MWh.

Europe now appears determined to reduce its dependency on Russian gas, covering between 40 and 45 percent of the continent’s needs. The issue has become a top priority on the EU agenda, but the road towards achieving this objective remains unclear.

DEPA discounts for consumers on a month-by-month basis

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Gas company DEPA plans to offer discounts to household consumers on a month-by-month basis, depending on its ability to maneuver, international market prices and market needs, energypress sources have informed.

DEPA also plans to offer a certain level of gas discounts to industrial producers in the medium voltage category.

The gas company has just reached a pricing-formula deal with Russia’s Gazprom for supply in 2022 whose price is 80 percent indexed with the Dutch TTF gas hub, the other 20 percent oil-indexed, deemed.

The Gazprom deal, deemed as a fair agreement by analysts, offers DEPA some leeway for discounts  over the coming months.

Based on current market conditions, DEPA’s agreement with Gazprom results in a wholesale gas price of 77.40 euros per MWh, 12.60 euros less than yesterday’s gas futures prices for February.

DEPA-Gazprom gas talks now focused on pricing formula

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Gas utility DEPA’s negotiations with Russia’s Gazprom over a pricing formula for gas supply in 2022 are continuing with some apparent progress but no agreement as yet.

The Russian side went into the talks demanding a gas pricing formula fully indexed with the Dutch gas platform TTF index, but this appears to have now been succeeded by a revised proposal for a gas price 80 percent indexed with the TTF, the other 20 percent oil-indexed.

Gazprom also wants the new pricing formula to run until the end of 2026, when the company’s supply agreement with DEPA expires, not just for 2022.

Another demand by the Russian gas company for reduced annual quantities was flatly rejected by DEPA as a proposal crossing the red line. This Gazprom demand appears to have been taken off the negotiating table, the Russian company now seeming willing to accept an unchanged annual quantity of two billion cubic meters until 2026.

Talks, as a result, now appear to be entirely focused on the pricing formula.

DEPA’s agreement with Gazprom, its main supplier, expires in 2026 but is subject to annual talks concerning pricing formula and take-or-play clause revisions.

DESFA joining Alexandroupoli FSRU, development imminent

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Gas grid operator DESFA is set to sign a contract next week for the acquisition of a 20 percent stake in Gastrade, the consortium established by the Copelouzos group for the development and operation of Alexandroupoli FSRU, a floating LNG terminal planned for Greece’s northeast, energypress sources have informed.

The European Commission offered its approval of DESFA’s entry into the Gastrade consortium approximately three weeks ago. The endorsement was needed as DESFA, operator of Greece’s gas grid, will also be entering an independent gas system by acquiring a 20 percent of Gastrade, making the operator the fifth member of the consortium.

Besides the Copelouzos group, currently holding a 40 percent stake, the Gastrade consortium is also made up of Gaslog Cyprus Investments, a fully owned subsidiary of Gaslog Ltd, owning and operating over 35 LNG tankers; Greek gas utility DEPA; and Bulgartransgaz, each holding 20 percent stakes. DESFA’s entry will give all partners equal 20 percent shares.

A finalized investment decision on the Alexandroupoli FSRU is expected within the first few days of 2022 so that the project can be developed and ready for launch within 2023.

The Alexandroupoli FSRU has, for years, been included on the EU’s projects of common interest (PCI) list, making the prospective facility eligible for favorable EU funding support, as its actualization will contribute to energy source diversification and also bolster energy security and competition in the wider region.

The Alexandroupoli FSRU will become the country’s fourth entry point for natural gas. It is planned to supply up to 944,000 cubic meters of natural gas per hour, or 8.3 billion cubic meters annually, and offer an LNG storage capacity of 170,000 cubic meters.

Gazprom negotiations to shape DEPA’s discount ability

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A favorable gas supply agreement for gas utility DEPA with Russia’s Gazprom, not too far from the existing deal – indexed to the Dutch TTF gas platform with a 40 percent coefficient, the other 60 percent oil indexed – would enable DEPA to increase its discount rate for December and the first quarter of 2022 from 15 percent to 30 percent, otherwise the discount rate will need to be smaller, Prime Minister Kyriakos Mitsotakis and energy minister Kostas Skrekas have noted.

DEPA, currently locked in negotiations with Gazprom, cannot take any discount-policy initiatives until its talks with the Russian gas company, Greece’s dominant supplier, have concluded.

DEPA chief executive Konstantinos Xirafas (photo) will be continuing talks, via video calls, with Gazprom today.

At this stage, it appears that the Russian company’s initial demand for a 2022 pricing formula 100-percent TTF-indexed has now fallen to 80 percent, the other 20 percent oil indexed. The TTF index has risen by over 500 percent over the past year.

Greece is aiming for an improvement in the pricing formula, negotiated annually as part of a Gazprom supply agreement with DEPA expiring in 2026.

Agreement still not reached in Gazprom formula negotiations

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Greek officials have yet to make any progress in negotiations with Russia’s Gazprom for an improved pricing formula concerning gas supply to gas utility DEPA in 2022, as indicated by the government’s failure to make any related announcements yesterday following a meeting in Sochi between Greek Prime Minister Kyriakos Mitsotakis and Russian President Vladimir Putin, their first as heads of state.

Greece is aiming for an improvement in the pricing formula, negotiated annually as part of a Gazprom supply agreement with DEPA expiring in 2026. Whatever the outcome of these negotiations, price levels will be higher than a year ago, given the energy crisis, but Greek officials are striving to subdue the Gazprom price increase as much as possible.

Gazprom, Greece’s main gas supplier, went into the negotiations with a 2022 pricing formula proposal that would index its gas supply price with Dutch gas platform TTF’s index at a coefficient of 100 percent, up from the current 40 percent level. Under the current pricing formula, the remaining 60 percent of Gazprom’s supply price for DEPA is oil-indexed.

The TTF index has risen by over 500 percent over the past year, meaning Gazprom’s proposal would lift gas supply prices to DEPA by five times, a prospect that has been flatly rejected by the Greek government.

A compromise deal entailing TTF indexing between 60 and 80 percent, for example, would offer some improvement compared to Gazprom’s initial offer, but gas prices will nevertheless end up being higher for households, businesses and industrial producers in Greece.

DEPA Commercial privatization decision expected in January

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A decision on whether to defer the final binding-bids stage in the 100 percent privatization of gas company DEPA Commercial is not expected until January, according to sources. Officials are delaying the progress of this sale fearing negative impact that could stem from the energy crisis and an unresolved legal dispute between the gas company and fertilizer industry ELFE.

The country’s privatization fund TAIPED is waiting to see how the government decides to move ahead on a number of issues, and is also awaiting the stance of ELPE (Greek Petroleum), which holds a 35 percent stake in DEPA Commercial, before reaching a decision, the sources noted. TAIPED controls the Greek State’s 65 percent share of DEPA Commercial.

Though the legal dispute between DEPA and ELFE could drag on for months, the DEPA Commercial sale has not been put on hold as authorities are pursuing a solution, according to TAIPED sources.

ELFE is seeking compensation from DEPA, contending the gas company overpriced gas supply between 2010 and 2015, while DEPA has filed a case seeking overdue amounts from the fertilizer producer, based in Kavala, northern Greece.

On the other front, ELPE is likely to seek to sell its 35 percent share of DEPA Commercial regardless of what the government and TAIPED decide to do with their 65 percent share, sources informed.

One alternative being contemplated is to divide DEPA Commercial so as to enable the sale of subsidiary gas supplier Fysiko Aerio Elladas. Another possibility examined by TAIPED is to list DEPA Commercial on the Athens Stock Exchange, though this is seen as highly unlikely given the insecurity the ongoing ELFE legal case would cause among investors.

Results of push for improved Russian gas deal seen today

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A meeting today in Sochi between Greek Prime Minister Kyriakos Mitsotakis with Russian President Vladimir Putin – their first as heads of state – will made clear if preceding negotiations between officials of the two countries have come to anything for an improved Gazprom gas supply contract for Greek gas utility DEPA in 2022.

Any improvement for DEPA is regarded as a challenging task and would represent a major surprise if pulled off, given the unfavorable conditions, internationally.

The Greek Prime Minister is seeking an improved gas supply deal from Russia, the country’s main supplier, in an effort to boost support offered to Greek households and industry, struggling in the energy crisis, through further energy cost discounts.

Russia currently supplies 45 percent of natural gas consumed in Greece as well as nearly 10 percent of the country’s crude oil.

DEPA’s agreement with Russia’s Gazprom Export, its main supplier, expires in 2026 but is subject to annual talks concerning pricing formula and take-or-play clause revisions.

The Russian side has pushed for the 2022 agreement with DEPA to be fully indexed to the Dutch TTF gas index, but this index has risen 500 percent since last year, prompting Greek officials to resist.

According to energypress sources, Russia has maintained a tough stance in its negotiations with Greek officials, as was highlighted at a meeting yesterday in Saint Petersburg between Greek energy minister Kostas Skrekas and Gazprom’s chief executive Alexey Miller over the pricing formula to apply for Russian gas supply to Greece in 2022.

Greek officials want to avoid a DEPA-Gazprom agreement that is fully indexed to the Dutch TTF gas index and are believed to be aiming for a TTF pricing coefficient of between 60 and 70 percent, which would enable an oil-indexed price for the other 30 to 40 percent.

Crucial Gazprom pricing formula talks in St. Petersburg

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Energy Minister Kostas Skrekas is scheduled to meet Russian gas company Gazprom’s chief executive Alexey Miller in Saint Petersburg today for crucial talks over the pricing formula to apply for Russian gas supply to Greece in 2022.

Russia currently supplies 45 percent of natural gas consumed in Greece as well as nearly 10 percent of the country’s crude oil, making today’s talks pivotal for the competitiveness of Greek industry and living standards of households amid the energy crisis.

Gazprom, aiming to capitalize on the sharp rise in natural gas prices, wants the pricing formula to be fully indexed with the Dutch TTF gas hub index, which the Greek side says it cannot accept, according to comments offered by a senior official to energypress.

Greek gas utility DEPA’s agreement with Gazprom is currently entirely oil-indexed. The two sides had agreed to an extraordinary revision for 2020 and 2021 indexing prices with the TTF gas index as oil prices were considerably higher. The opposite is now the case, with LNG prices well above oil prices in recent months. Gazprom officials now prefer prices to not be fully indexed to oil.

DEPA’s pending agreement with Russia’s Gazprom Export, its main supplier, expires in 2026 but is subject to annual talks concerning pricing formula and take-or-play clause revisions.

Natural gas a leading issue at upcoming Greek-Russian talks

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Energy matters, especially sharply risen natural prices, will be high on the agenda at a forthcoming 13th Greek-Russian Joint Interministerial Committee scheduled to take place in Moscow on November 29 and 30.

Gas utility DEPA’s current contract with Russia’s Gazprom runs until 2026 but the two sides renegotiate, each year, the details of its pricing formula and a take-or-pay clause incorporated into the agreement.

DEPA’s supply agreement with Gazprom is entirely oil-indexed but an extraordinary revision was made for 2020 and 2021 as oil prices were extremely high, well over LNG price levels. A large proportion of Russian gas received by DEPA was indexed with the TTF gas hub in the Netherlands.

The situation has overturned this year, LNG prices rising well above oil prices. As a result, Gazprom wants to avoid a fully oil-indexed agreement for gas supply to DEPA in 2022 and prefers a hybrid solution that would partially index its gas prices with the TTF.

DEPA and Gazprom have yet to reach an agreement, but the two sides will need to converge by the end of this month, which would enable the Greek gas company to set prices and establish deals with customers in the Greek market.

Prime Minister Kyriakos Mitsotakis is scheduled to travel to Moscow on December 8 for a meeting with Russian President Vladimir Putin, the first direct meeting between the two leaders since Mitsotakis assumed office in July, 2019.

 

DEPA in gas supplier talks for ’22 prices, Gazprom deal crucial

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Gas company DEPA is currently engaged in negotiations with its suppliers for agreements  covering 2022, its talks with main supplier Gazprom being the most crucial. The pricing formula to be agreed on by DEPA with Gazprom will greatly shape the prices to be offered by the Greek company to its customers – electricity producers, industrial producers and retail energy suppliers.

Though there are signs of a possible price de-escalation, gas prices remain elevated. The percentage of Gazprom supply to be oil-indexed will be a pivotal factor in price levels offered by DEPA to customers.

DEPA has already reached an agreement with Algeria’s Sonetrach for a one-year extension to a deal expiring at the end of 2021, energypress sources have informed. A hybrid pricing formula primarily based on the Dutch TTF index has been agreed to, the sourced added.

Greece’s agreement with Turkey’s BOTAS, for natural gas originating from Azerbaijan, is set to expire at the end of this year, but no moves have been made for a renewal as Azeri gas has been supplied by Azerbaijan Gas Supply to the Greek market since the end of 2020 through the new TAP route. This supply contract, fixed and not subject to negotiation, is valid until 2044.

DEPA’s pending agreement with Russia’s Gazprom Export, its main supplier, is the most crucial. It expires in 2026 but is subject to annual talks concerning pricing formula and take-or-play clause revisions.

DEPA’s agreement with Gazprom is currently entirely oil-indexed. The the two sides had agreed to an extraordinary revision for 2020 and 2021 indexing prices with the TTF gas index as oil prices were considerably higher. The opposite is now the case, with LNG prices well above oil prices. Gazprom officials now prefer prices to not be fully indexed to oil.

 

DEPA Comm., ELFE appeals this week, key for privatization

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An Athens Court of Appeal will, on Thursday, hear three appeals submitted by gas utility DEPA and fertilizer industry ELFE following a Court of First Instance verdict in 2019 concerning an ongoing legal dispute between the two companies.

ELFE is seeking 302 million euros in compensation from DEPA, contending the gas company overpriced gas supply between 2010 and 2015.

DEPA has also filed a case seeking 86.7 million euros from the fertilizer producer, based in Kavala, northern Greece, in overdue amounts. The Court of First Instance had issued a verdict trimming this amount to 60 million euros. It is now the turn of the Athens Court of Appeal to decide.

Much attention is being paid to this case as, should it drag on, it could impact the ongoing 100 percent privatization of DEPA Commercial. In addition, a decision vindicating ELFE can be expected to also prompt other gas consumers to file overpricing cases against DEPA.

If the legal battle is prolonged, TAIPED, the privatization fund, could temporarily shelve the privatization until a final legal decision is reached. Another option being considered by the government is for the Greek State to cover any resulting compensation claims if ELFE is vindicated, as a form of guarantee for the prospective buyers.

The Greek State’s 65 percent stake is being offered by TAIPED, the privatization fund, and Hellenic Petroleum ELPE is also selling its 35 percent stake.

DEPA: CNG, LNG supply in remote areas must be competition-based

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Gas company DEPA Commercial has objected to a RAE (Regulatory Authority for Energy) proposal calling for the development of distribution networks at remote areas for CNG and LNG supply, noting, in related public consultation, that such a move would not reflect international practices, according to which CNG and LNG compression and transportation activities are taken on by suppliers based on free market competition conditions and prospects.

The RAE proposal for CNG and LNG distribution networks covering supply in remote areas is extremely restrictive and does not allow for alternatives that would facilitate greater competition and reduced costs for consumers, DEPA Commercial contended.

Also, any decision to develop virtual pipeline networks in remote areas should serve as a temporary solution and ensure that the normal development of distribution networks is not undermined, DEPA Commercial noted.

Gas grid operator DESFA, in its contribution to the public consultation procedure, noted that if a virtual pipeline network is regarded as part of the national grid, then this would help boost social welfare, minimize any potential burden on existing gas consumers, and maximize the positive impact of natural gas penetration in Greece.

 

 

Power producer LNG orders unaffected by higher gas prices

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Increased natural gas prices in international markets have not restrained LNG imports at gas grid operator DESFA’s Revythoussa islet terminal just off Athens, data provided by the operator has shown.

LNG orders at the Revythoussa terminal for the two-month period covering August and September, placed primarily by power producers, seeking international market opportunities to subdue fuel costs, as well as gas company DEPA, total more than 742,000 cubic meters, the DESFA data showed.

This quantity represents six LNG tanker loads, ordered by as many key domestic natural gas market players for the two-month period.

Two loads, the first for power utility PPC and Motor Oil Hellas, and the second for Elpedison, arrived during the first half of August. A third tanker carrying LNG orders placed by Mytilineos and Heron will follow this month, bringing August’s LNG orders total at the Revythoussa terminal to 376,000 cubic meters.

Three more LNG shipments are scheduled to arrive at the Revythoussa facility in September. The first of these concerns orders placed by PPC and Motor Oil Hellas totaling 146,000 cubic meters. The second shipment will be for a 73,000-cubic meter order placed by DEPA, while the third concerns a 147,000-cubic meter order made by Elpedison.

Natural gas prices have remained high in international markets, currently about triple the price of levels in March.

Greek enterprises face April 27 date for hydrogen project proposals

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Leading Greek energy players are gearing up to participate in a European Commission effort concerning the development of the continent’s first major investments in eco-friendly hydrogen production, a key aspect in Brussels’ decarbonization drive.

Interested parties face an April 27 deadline to submit proposals concerning a number of categories, including PCI-supported sustainable low-emission hydrogen production, the emphasis placed on RES-generated hydrogen.

The White Dragon project, as it has been dubbed, has brought Greece’s biggest industrial corporations closer, as they prepare to jointly bid for project categories Brussels will subsidize in the context of the Hydrogen Europe program.

The White Dragon project provides for investments of 2.5 billion euros in electrolytic hydrogen production by means of solar energy from photovoltaic parks with a capacity of 1.5 GW. They are planned for northern Greece’s west Macedonia region, a lignite-dependent economy.

Gas utility DEPA, gas grid operator DESFA, petroleum group Motor Oil, the Mytilineos group, Terna, Hellenic Petroleum ELPE, Polish company Solaris, as well as the Demokritos National Center for Scientific Research and the Center for Research and Technology Hellas (CERTH) are taking part.

The hydrogen to be produced will be used for district heating, fuel to be exported via the Trans Adriatic Pipeline, and as fuel for large vehicles such as lorries and buses.

 

EastMed alliance broadens, eight countries express support

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Support for the EastMed pipeline, planned to transport natural gas from offshore Levantine Basin gas reserves in the southeast Mediterranean to Greece and further into Europe, is growing in numbers with an initial Greek-Israeli-Cypriot alliance promoting this project now joined by five additional partners, Bulgaria, Romania, Hungary, Serbia and North Macedonia.

Energy ministers representing these eight countries forwarded a letter of support for the EastMed project to the European Commissioner for Energy Kadri Simson late last week, Greece’s energy and environment minister Kostas Skrekas has told local media.

The pipeline, to be developed by IGI Poseidon SA, a 50-50% joint venture between Greek gas utility DEPA and Italian gas utility Edison, is planned to cover a 1,470-km distance.

IGI Poseidon plans to develop EastMed all the way to Italy via Cyprus, Crete, the Peloponnese, mainland Greece and Epirus, the country’s northwestern flank.

This latest move, bringing the eight energy ministers together for the joint letter, was initiated by Skrekas, Greece’s energy minister, sources informed, following an initiative taken two months earlier by his Israeli counterpart Yuval Steinitz to organize a joint virtual conference involving ministers of all eight countries.

In their letter to Simson, the EU energy commissioner, the eight ministers highlight the importance of EastMed, noting the project promises to contribute to the wider region’s energy security and offer benefits to consumers as a result of increased competition and reduced natural gas price levels.

Regional gas interconnections, including the Greek-Bulgarian IGB, Bulgarian-Serbian IBS, Bulgarian-Romanian IBR and the Romanian-Hungarian IRH would be utilized to extend EastMed’s reach, the letter notes.

Greece and North Macedonia are currently planning a new gas pipeline interconnection whose Greek segment is being promoted by gas grid operator DESFA.