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

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

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

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

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

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.

DEPA Commercial, Infrastructure sales delayed, new June bids deadline seen

The privatization schedule for gas utility DEPA’s two offshoots, DEPA Commercial and DEPA Infrastructure, appears headed for further delay as a result of four main issues holding back procedures, sources closely monitoring these sales have informed.

The privatization fund TAIPED had initially planned to accept financial offers for DEPA Commercial and DEPA Infrastructure this month but has since unofficially extended these offer deadlines to April. Further revisions cannot be ruled out, the most likely outcome being a deferral of these deadlines to the end of June.

As for the DEPA Commercial sale, lockdown restrictions have made it difficult for potential buyers to visit the company facilities for on-the-spot technical and financial appraisals as well as clarification on vague points. This has delayed the accumulation of information needed by possible buyers for a complete picture on the gas company’s financial standing.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

Two issues are also obstructing the DEPA Infrastructure sale. Firstly, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. As a result, two options are being examined. One entails DEPA Infrastructure buying Eni’s 49 percent stake in EDA THESS. The other involves incorporating EDA THESS into the DEPA Infrastructure sale.

The other concern holding back proceedings for the DEPA Infrastructure sale has to do with pending appraisals, by the possible buyers, of new distribution network development plans prepared by the gas company’s three distribution subsidiaries, which, besides EDA THESS, include EDA Attiki, covering Athens, and DEDA, covering the rest of Greece. Suitors may require as much as two months to complete their respective appraisals.

DEPA Commercial sale moving ahead as planned despite ELFE legal dispute

Privatization fund TAIPED intends to move ahead as planned with the next round of the sale of gas company DEPA Commercial by setting a spring binding-bids deadline for candidates, despite concerns that an ongoing legal dispute between the company and ELFE (Hellenic Fertilizers and Chemicals) could impact the privatization’s proceedings, sources have informed.

An appeal filed by gas utility DEPA, DEPA Commercial’s parent company, challenging an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE as a result of overcharging was yesterday deferred for September and will now probably be jointly heard along with a separate appeal case involving the two companies over a similar amount of unpaid receivables owed by the fertilizer and chemicals producer to DEPA.

This ongoing legal dispute has caused uncertainty among potential buyers of DEPA Commercial as it is complicating their bid calculations.

TAIPED is currently engaged in talks with the finance and energy ministries for the establishment of an appropriate formula concerning a related term in the privatization’s sale and purchase agreement that would offer candidates security to a great extent.

A court ruling in favor of ELFE, in the DEPA overcharging case, could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims. This could end up costing DEPA many hundreds of millions.

Outcome of DEPA appeal against ELFE crucial for sale

The outcome of tomorrow’s appeal filed by gas utility DEPA against ELFE (Hellenic Fertilizers and Chemicals) following an Athens Court of First Instance verdict ordering a 61 million-euro return from the gas utility for gas supply overcharging will be crucial for the privatization of DEPA Commercial, a new DEPA entity formed for the sale.

According to legal experts, tomorrow’s hearing could be deferred until September so that it may be concurrently heard with an ensuing appeal filed, in response, by ELFE against DEPA to challenge a separate Court of First Instance decision in October, 2019 that ordered ELFE to pay the gas company about 60 million euros in unpaid receivables. DEPA had sought 86.7 million euros. This ELFE appeal was given a September, 2021 date.

Combining appeal cases is commonly practiced by courts, the legal sources pointed out.

Postponement of tomorrow’s appeal case until September may prompt the privatization fund TAIPED to extend a March deadline it had set for binding bids concerning the DEPA Commercial privatization. Potential buyers would want to know the outcome of the DELA-ELFE legal dispute before placing any offers.

A court ruling in favor of ELFE could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims.

The Court of First Instance ruled DEPA overcharged ELFE between 2010 and 2015 by applying an oil-indexed gas pricing formula used by Russia’s Gazprom. ELFE sought 302 million euros, well over the a 61 million-euro return determined by the court.

Key issues in new minister’s first session with EC officials

Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

DEPA appeal against ELFE on January 28, deferral possible

A January 28 date has been set for an appeal filed by gas supplier DEPA Commercial to challenge a 2019 ruling by an Athens Court of First Instance that vindicated an overcharging claim by ELFE (Hellenic Fertilizers and Chemicals), awarding the producer a compensation amount worth 61 million euros.

ELFE was seeking a compensation amount of 302 million euros, arguing DEPA – the gas utility from which DEPA Commercial later sprung forth as a new group entity – overcharged between 2010 and 2015 for supply to the producer’s facility in Kavala, northern Greece, by passing on the increased cost of DEPA’s oil-indexed contract with Gazprom.

Also in 2019, the Athens Court of First had concurrently delivered a separate verdict in favor of DEPA, vindicating the gas company for unpaid receivables owed by ELFE. The producer was ordered to pay a sum estimated between 59.5 and 60 million euros.

In response, ELFE, too, filed an appeal opposing this 2019 decision, the hearing’s date set for September, 2021, sources informed.

Legal sources explained that the two appeals could end up being heard concurrently in September, based on a decision that may emerge from the forthcoming appeal ten days from now. Combining appeal cases is commonly practiced by courts, the sources noted.

If so, the amount of time needed to resolve this legal dispute will be extended, which would impact privatization fund TAIPED’s scheduling of the DEPA Commercial privatization.

TAIPED has set a March deadline for binding offers. This deadline could end up being stretched beyond September.

Should DEPA Commercial’s appeal against ELFE ultimately fail, then other customers of the gas company, primarily electricity producers and industrial enterprises, could also seek compensation amounts for overcharging.

Some pundits have pointed out that electricity producers were probably able to pass on to their customers any cost increase resulting from DEPA’s oil-indexed contract with Gazprom. On the contrary, industries did not have such leeway.

DEPA calls for RAE to prioritize Kipoi, Abelia compressor stations

Gas utility DEPA has underlined the gas-supply security importance of two prospective compressor stations in Kipoi, northeastern Greece, and Abelia, in the mid-north, urging RAE, the Regulatory Authority for Energy, to prioritize their development.

The two projects, on a RAE list of infrastructure projects for preventive action, are expected to significantly improve energy supply security in Greece over the mid and long-term by facilitating the transportation process of natural gas.

DEPA stressed the importance of the two compressor stations in a letter forwarded to RAE’s public consultation procedure on its preventive action plan.

The two compressor stations are vital for grid-connection and gas-flow purposes concerning the prospective Alexandroupoli FSRU and an underground gas storage facility (UGS) planned for development at an almost depleted offshore natural gas field in South Kavala, DEPA pointed out in its letter.

Also, the Abelia compressor station is needed to ensure hydraulic gas-flow sufficiency from north to south, via the TAP project, DEPA noted.

Both compressor station projects feature in gas grid operator DESFA’s ten-year development plan covering 2021 to 2030.

North Macedonia involvement in key Alexandroupoli projects

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

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

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

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

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

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

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

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

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

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

Outcome of ELFE legal battle crucial for DEPA’s privatization

The outcome of an appeal filed by gas supplier DEPA Commercial to challenge a 2019 ruling by an Athens Court of First Instance that vindicated an overcharging claim by ELFE (Hellenic Fertilizers and Chemicals), scheduled to be heard next week, is pivotal for the gas company’s privatization plan.

If ELFE overcomes the appeal lodged by DEPA Commercial – which, as things stand, is expected to return 63 million euros to the fertilizer and chemicals company for overcharged gas supply between 2012 and 2015 – then this precedent will prompt more overcharging cases, for the same period, by other customers, primarily electricity producers and industrial enterprises.

Such a development, which, according to sources, could end up costing DEPA Commercial a total of up to one billion euros in rebates, threatens to derail the company’s privatization procedure as investors would not want to take on such a financial burden. Worse still, DEPA Commercial’s sustainability would be severely tested, the sources added.

DEPA Commercial was formed by gas utility DEPA specifically for its privatization.

The appeals court will require some time before it delivers its verdict. If the ruling is in favor of ELFE, then DEPA Commercial is expected to take the case to the Supreme Court. A prolonged legal battle would surely impact the gas company’s growth plans.

In 2019, the Athens Court of First Instance ruled that DEPA passed on to its customers the cost of an oil-indexed purchase agreement with Russian gas company Gazprom without considering lower prices available at natural gas hubs.

Taking into account this ongoing legal battle, privatization fund TAIPED has set an early-spring deadline for binding bids by potential buyers of DEPA Commercial as well as DEPA Infrastructure, the gas utility’s other new entity.

DEDA appeals Peloponnese gas network plan exclusion

Gas distributor DEDA’s effort for a reversal of decision removing the Peloponnese from the company’s gas network development plan has been rejected by RAE, the Regulatory Authority for Energy.

In response, DEDA, a subsidiary of gas utility DEPA distributing to areas in Greece not covered by the group’s other distributors, has already taken its case to an appeals court.

RAE has granted gas distribution licenses for three Peloponnesian cities, Tripoli, Korinthos and Megalopoli, to Hengas, a successor of the firm Edil.

The Peloponnese was excluded by RAE from DEDA’s five-year network development plan covering 2020 to 2024 as time limits were exceeded, according to the authority.

RAE, however, has approved DEDA’s five-year development plan for 2021 to 2025, outlining the distributor’s development plan for natural gas networks in 34 provincial cities around Greece, Europe’s biggest gas network plan at present.

Networks representing a total length of 1,860 km and budgeted at 270 million euros are planned to be developed by DEDA, prospectively offering over 68,000 connections for consumers in the household, business and industrial sectors.

Gas market competition intensifies, TAP lowering prices

Competition has intensified in the country’s wholesale gas market at a time of changing conditions and negotiations for 2021 deals between importers and major-scale consumers, namely electricity producers and industrial enterprises.

Many gas supply contracts expired at the end of 2020, requiring a large number of players to renegotiate deals. Some of these big consumers have already reached new agreements with gas wholesalers.

Market conditions have changed considerably compared to a year earlier. Supply of Azeri gas through the new TAP route has already begun to Greece as well as Bulgaria, increasing overall supply, which has obliged, and permitted, gas utility DEPA to pursue a more aggressive pricing policy as the company pushes to absorb quantities it has committed to through clauses in existing contracts.

Also, the TAP-related increase of gas supply to Bulgaria, combined with this country’s inflow of Russian gas through oil-indexed price agreements, currently relatively cheaper, is now depriving Greek wholesale gas companies of entry into a neighboring market that was available for trading activity last year.

Furthermore, conditions have also been impacted by a competition committee decision no longer requiring DEPA to stage gas auctions to make available a share of its gas orders to rival traders. This measure was introduced and maintained to help liberalize Greece’s gas market.

The new conditions are pushing Greek traders towards more competitive pricing policies. They appear to have acknowledged that their profit margins will be narrower in 2021.

DEPA, helped by the fact that a sizeable proportion of its gas purchases is oil-indexed, is said to be playing a dominant role in the ongoing negotiations for new contracts with customers.

It should be pointed out that, unlike rival gas importers such as Mytilineos, Elpedison and Heron, all benefitting through self-consumption of a large part of their gas orders for gas-fired power stations they operate, DEPA does not self-consume.

Prometheus Gas, a member of the Copelouzos group, remains a formidable player, while the power utility PPC and petroleum company Motor Oil are less influential in the wholesale gas market.

Higher LNG prices, compared to pipeline gas, will decrease demand for LNG this year and weaken the interest of traders for LNG supply through gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens. Last year, this facility was a hot spot of trading activity as a result of lower-priced LNG.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

Azeri gas through TAP route now just a fortnight away

Just two weeks remain before the scheduled launch of the TAP gas pipeline on January 1, a development to facilitate the inflow of Azeri gas into the Greek market.

This coming Monday, in the final step before the launch, the TAP project, running across Greece’s north, Albania and the Adriatic Sea to Italy, will be interconnected with Greek gas grid operator DESFA’s domestic network.

Greek gas utility DEPA has already reached an agreement with Azeri officials for an annual amount of 1 bcm through the TAP route. Azerbaijan is offering customers discount prices for 2021.

TAP’s Azeri natural gas supply to the Greek market will represent a fifth gas source alternative for Greece, bolstering the country’s energy security while also promising to offer benefits to consumers and the national economy.

The technical details of the TAP-DESFA pipeline interconnection, situated in Thessaloniki’s Nea Mesimvria area, were completed several weeks ago. The link has undergone testing over the past month or so.

DEPA Commercial, reshaping, seeks electricity supply license

DEPA Commercial, one of gas utility DEPA’s new entities established as part of its privatization, has applied for a 500-MW electricity supply license, RAE, the Regulatory Authority for Energy, has announced.

This move by DEPA Commercial comes as part of the utility’s restructuring and transformation effort, sources said.

An electricity supply license promises to broaden DEPA Commercial’s portfolio, regardless of whether it will actually be used or not. In essence, the company, through this initiative, is making the most of tools available in the market, sources have concluded.

DEPA Commercial owns Fysiko Aerio – Hellenic Energy Company (EPA Attiki), a subsidiary already active in Greece’s electricity market. DEPA Commercial, however, could use its own electricity supply license for PPAs.

TAP trial test preparing launch, Azeri gas delivery by year’s end

The Trans Adriatic Pipeline (TAP) project, to enable the delivery of Caspian gas to destinations throughout southeastern, central and western Europe, is currently undergoing trial tests at its interconnection with the Greek grid in Thessaloniki’s Nea Mesimvria area, sources have informed.

As things currently stand, gas grid operator DESFA should be ready to receive Azeri natural gas through the Nea Mesimvria point within the next few weeks, a development that will offer the Greek gas grid a fifth alternative supply entry point.

Completion of the trial testing, expected to last until next month, will enable the project’s commercial launch. Greek gas utility DEPA and Bulgaria’s BEH have reserved respective capacities at preceding auctions.

The TAP project’s launch promises to benefit the Greek economy and also bolster the country’s energy supply security.

At present, the national gas grid possesses three entry points. Russian gas enters Greece via the Nea Mesimvria point after crossing the Bulgarian system. Kipoi in Evros, northeastern Greece, linked to a Greek-Turkish pipeline, and the LNG terminal at the islet Revythoussa, just off Athens, represent the Greek system’s two other entry points.

Besides Nea Mesimvria, the TAP project, running across northern Greece and through Albania all the way across the Adriatic Sea to Italy, will also offer the Greek gas grid a fifth entry point via Italy.

ELPE lockdown impact fears expressed amid poorer conditions

Hellenic Petroleum ELPE chief executive Andreas Siamissis has expressed fears of the latest lockdown’s impact on fuel consumption, which he will believes will be considerable, during a presentation of third quarter results to analysts.

Narrowed refining margins, which dropped to historic lows during the third quarter, combined with a drop in demand, resulted in unprecedently difficult conditions, ELPE officials noted.

However, rays of hope have emerged for an imminent improvement in refining margins, they added.

Elpedison, ELPE’s joint energy venture with Italy’s Edison, registered a strong power generation performance, up 31 percent in the nine-month period, aided by competitively priced LNG for its production units, company officials informed.

Electricity sales rose by 5 percent, while operating profit reached 43 million euros, from 15 million euros a year earlier.

As for the natural gas market, the commercial activity of gas utility DEPA, in which ELPE holds a 35 percent stake, increased in the third quarter.

DEPA – whose two new entities, DEPA Commercial and DEPA Infrastructure, are both headed for privatization in a procedure that is expected to be completed by March, 2021 – reported a 3Q volume-based sales increase of 48 percent. Its EBITDA figure moved up to 18 million euros, up from 6 million euros a year earlier.

ELPE’s list of imminent RES projects has more-than-doubled compared to last year, the company officials informed.

Bulgaria’s BEH reserves local capacity for gas market entry

Bulgaria’s state-owned Bulgarian Energy Holdings, participating in a gas auction staged by Greek gas grid operator DESFA, has reserved gas infrastructure capacity at the national grid’s crossing with the new TAP line in Nea Mesimvria, west of Thessaloniki, establishing a base for entry into the Greek gas market.

Greek gas utility DEPA reserved the biggest share, 29,000 MWh per day, at the auction, while Bulgaria’s BEH secured a smaller share of 3,300 MWh per day.

The DESFA auction offered Nea Mesimvria infrastructure capacities for the first quarter of 2021.

Local market authorities regard the Bulgarian company’s move as a positive step that reignites interest in the Greek market.

It remains to be seen if BEH can attract customers in the Greek market and supply here, or whether its share of TAP line gas, even if modest, will end up being used for Bulgarian market needs.

Either way, the Bulgarian company’s initiative can be interpreted as a positive move by an international player seeing potential in the Greek market.

Significant steps towards maturity have been made in recent years, but the Greek gas market still has ground to cover before reaching levels of liquidity and transparency achieved by major markets and hubs in central and western Europe.

DEPA Commercial invites RES companies for collaboration

DEPA Commercial, one of two new entities formed by gas utility DEPA for its upcoming privatization, has invited renewable energy companies with existing production units or advanced projects to express interest in prospective collaborations.

DEPA Commercial is aiming to transform into an energy company with emphasis on green energy activities, chief executive Costas Xifaras has noted.

According to sources, DEPA Commercial is looking to develop a RES portfolio totaling 240 MW.

Related investments at DEPA Commercial are expected to reach 120 million euros, the company head has stated.

DEPA Commercial, interested in both solar and wind energy projects, is looking to acquire RES production licenses and, especially, mature-stage projects, sources informed, adding the company is seriously considering takeovers.

For the time being, DEPA Commercial does not intend to partner with energy groups active in the RES market as well as the company’s privatization procedure.

Besides its plan to expand into the RES market, DEPA Commercial, currently developing major LNG projects, is also exploring the possibility of entering the hydrogen sector.

RAE approval of gas distributor tariffs paves way for DEPA Infrastructure sale

RAE, the Regulatory Authority for Energy, has approved tariffs for gas utility DEPA’s distribution companies EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, and DEDA, covering the rest of Greece, a move that paves the way for the sale of DEPA Infrastructure, one of DEPA’s new entities established for the utility’s privatization procedure.

DEPA Infrastructure is now the parent company of the three distribution firms.

RAE examined tariff-related data submitted by the gas distributors before giving the green light.

The authority hesitated to deliver a decision on distributor tariffs over concerns that connection term discounts offered by the distributors could be regarded as a form of state aid.

RAE also appears to have approved revisions made by the distribution companies to their five-year development plans from 2020 to 2024 after making slight alterations.

The revisions by the gas distributors concern the entry of certain areas to networks as well as more rational use of CNG solutions.

The regulatory authority’s approval of the tariffs, development plans of the distribution companies, and their connection term incentives were all a prerequisite for the continuation of the DEPA Infrastructure sale.

RAE set to permit gas link fee discounts after initial hesitation

Following initial hesitation, RAE, the Regulatory Authority for Energy, appears set to permit distribution network connection fee discounts offered by natural gas distributors to attract new customer. But this approval will only apply to areas where gas market penetration levels remain low.

RAE has hesitated to approve such discounts offered by gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – fearing the special offers could be regarded as a form of state aid by the European Commission’s competition officials.

However, DEPA Infrastructure, a new DEPA entity now controlling these three gas distribution subsidiaries, recently warned that RAE’s delays are undermining its privatization procedure. This warning was highlighted in a letter to the authority that was also shared with privatization fund TAIPED and the energy ministry.

RAE’s delay in endorsing EDA tariffs for 2019 to 2022 has consequently also placed the gas company’s development plan in turmoil, DEPA Infrastructure pointed out in the letter.

RAE has overcome its concerns and is now preparing to endorse the tariffs. The authority will also permit connection fee discounts in areas where natural gas market penetration levels do not exceed 25 percent.

In areas where natural gas market penetration levels are exceeded but not greater than 75 percent, RAE will permit connection fee discounts of up to 90 percent in 2022, 80 percent in 2023, 70 percent in 2024 and 60 percent in 2025.

The authority will not endorse any connection fee discounts for municipalities where natural gas market penetration levels exceed 75 percent.

 

DEPA Comm VDR open; 5-year stay for Infrastructure buyer

The video data room for the privatization procedure of DEPA Commercial, one of two new gas utility DEPA entities placed for sale, is now open to prospective bidders, but initial information made available is limited to non-financial details.

Financial details on DEPA Commercial will be made available as a second step to all consultants representing the potential buyers, while a third and final stage will follow to conditionally offer bidders confidential information in person at the DEPA headquarters.

As previously reported, the second-round, binding-bids deadline for the DEPA Commercial sale, offering investors a 65 percent stake, has been extended to March, 2021.

The field of second-round qualifiers is comprised of two partnerships, Hellenic Petroleum (ELPE) with Edison and power utility PPC with Motor Oil Hellas, plus Mytilineos, TERNA, the Copelouzos group, Shell, and the Swiss-based MET Group.

As for DEPA Infrastructure, the other new DEPA entity up for sale, energy minister Costis Hatzidakis is preparing a legislative revision that will require the winning bidder to retain its company shares for a period of at least five years.

This condition will also apply for the DEPA Infrastructure subsidiaries EDA Attiki, EDA Thess and DEDA, the gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively. DEPA fully owns DEDA and EDA Attiki and holds a 51 percent stake in EDA Thess.

The DEPA Infrastructure binding-bids deadline has also been extended to the end of February, 2021. Italgas, EPH, First State Investments, KKR, Macquarie and Sino-CEEF have qualified for the final round.

 

RAE issues undermining DEPA Infrastructure privatization

Delays, instability and flawed intervention by RAE, the Regulatory Authority for Energy, on important operating issues concerning gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – are undermining the privatization procedure for DEPA Infrastructure, a new DEPA entity placed for sale, DEPA Infrastructure has warned in a letter to the authority.

In the letter, also forwarded to privatization fund TAIPED and the energy ministry, DEPA Infrastructure complains of a RAE delay in endorsing EDA tariffs for 2019 to 2022, which has consequently placed the gas company’s development plan in turmoil.

Besides not having reached a decision on gas distribution pricing policy, the authority has changed the WACC level three times since last year, including recently, which has negatively impacted the yields of DEPA subsidiary investments, sources noted.

Also, RAE regards initiatives taken by the three gas distributors to attract more consumers to the natural gas market as a form of state aid, DEPA Infrastructure protests in the letter, referring to distribution network connection fee discounts offered by the distributors, as well as subsidy support for natural gas system installations.

Any moves to curb these initiatives promoting gas usage would derail the natural gas sector’s energy-mix penetration target for 2030, as specified in the National Energy and Climate Plan, DEPA Infrastructure contends.

These unfavorable conditions threaten to delay the DEPA Infrastructure privatization, company sources stressed.

The sale procedure’s video data room is still lacking vital information for prospective bidders, who could begin seeing the DEPA Infrastructure privatization as a high-risk investment, the sources noted, adding that WACC level reductions will ultimately reduce the market value of DEPA Infrastructure and the subsidiaries.

DEPA Commercial to enter RES field, starting with 200-MW goal

DEPA Commercial, the new entity emerging from gas utility DEPA, will enter renewable energy production as part of the company’s transformation from a gas to energy company, its administration has decided.

The firm has already held talks with green energy players with the aim of involving DEPA Commercial in solar and wind energy projects about to enter the construction stage or already being constructed, sources informed.

An initial objective for the accumulation of a green-energy portfolio comprising approximately 200 MW has been set by the company, sources added.

Careful steps are being taken in the RES sector, Dr. Konstantinos Karagiannakos, the company’s Coordinating Director of Trading Activities, recently noted.

Having lost a steady and reliable market share in gas distribution, a sector that guaranteed DEPA annual profit of about 25 million euros, DEPA Commercial is now eyeing new activities and revenues from domains that offer more consistency than trade, entailing higher risk.

Besides the RES sector, DEPA Commercial’s lower-risk approach has also led to an interest in the prospective Alexandroupoli FSRU in northeastern Greece.

The company is also broadening its activities to cover gas supply for the industrial sector and customers in areas without gas networks, through small-scale LNG and remote CNG solutions, as well as the gas-run vehicle market through the development of a nationwide network of refueling stations.

In addition, the company is also making plans to enter eco-friendly alternative fuel markets such as hydrogen and biomethane.

 

Committee checking relevance of DEPA gas auction measure

The Competition Committee is conducting research to determine whether gas auctions that have required gas utility DEPA to make available minimum gas amounts to suppliers for fairer competition are still necessary amid the liberalized market.

The committee imposed these gas auctions on DEPA in 2014 when the utility was dominating Greece’s natural gas market under completely different market conditions.

Much has changed since the sector’s liberalization. A total of 7 gas importers and 25 retail suppliers are now active in the Greek market.

The study was prompted following a request by DEPA. As part of the process, the competition committee is consulting gas companies as well as RAE, the Regulatory Authority for Energy, before deciding if the gas auctions should be abolished.

According to sources, RAE pointed out that, given DEPA’s greatly reduced market share – less than 40 percent in 2019 and the first half of 2020 – the measure’s maintenance, without any benefits for the utility in exchange, offers rival gas companies an advantage.

RAE supports that any such measures must be universally imposed on all gas suppliers based on certain criteria, such as market share levels.

In addition, price levels at the DEPA gas auctions are deemed too high by players, limiting buying interest.

At the time of the gas auction measure’s introduction, in 2014, DEPA was obligated to offer other players 10 percent of the annual gas amount it was importing. This figure was gradually increased, reaching 17 percent in 2018.

Greek law initially required any gas wholesaler with a market share of more than 60 percent to make gas quantities available to other traders through auctions. This level was reduced to 40 percent in 2018.

Business plan, better results, new activities in DEPA Commercial VDR

The virtual data room for a forthcoming privatization to offer a 65 percent stake in DEPA Commercial, an offshoot of gas utility DEPA, expected to be opened for potential buyers to assess by the end of this week, will present a business plan, improved financial figures at DEPA, new company activities envisaged, as well as DEPA’s outlook on the course of the country’s natural gas market and the company’s position within it.

According to privatization fund TAIPED’s revised Asset Development Plan, participants will submit binding bids in December.

The field of first-round entries, comprising two consortiums and five companies, will have roughly three months to prepare binding bids, according to the schedule.

Hellenic Petroleum ELPE and Italy’s Edison are one of the privatization’s two participating consortiums, the other formed by power utility PPC and Motor Oil Hellas. The five individual participants are: Mytilineos, TERNA, Copelouzos group, Shell and the Swiss-based MET group.

New partnerships could be established by the field of participants as long as they do not affect the sale’s competition standards and have been approved by TAIPED.

The sale of DEPA Commercial is a major attraction for potential buyers as it offers a big slice of the wholesale and retail markets, including gas supplier Fysiko Aerio Attikis, a subsidiary covering the wider Athens area. Fysiko Aerio Attikis already serves close to 400,000 households and 10,000 businesses.

DEPA Commercial VDR expected to open for bidders by end of week

A virtual data room offering financial and technical information concerning the privatization of DEPA Commercial, an offshoot of gas utility DEPA, will be opened to prospective bidders by the end of this week, sources have informed.

A final meeting between DEPA Commercial’s administration and privatization fund TAIPED may be staged today or tomorrow before the VDR is opened up for investors.

The sale of DEPA Commercial, expected to be fiercely contested by the country’s major energy players, should produce a result by December, according to an updated TAIPED schedule for its Asset Development Plan. This plan has already been approved by KYSOIP, the Government Council for Economic Policy.

A VDR for DEPA’s other privatization, DEPA Infrastracture, was opened in late August. Despite its earlier launch, binding offers are expected sooner for DEPA Commercial, whose conclusion has been scheduled for January, 2021 by TAIPED.

Well-informed sources have attributed this differing pace of schedules to a more complex sale procedure demanded for DEPA Infrastructure, requiring intervention by RAE, the Regulatory Authority for Energy. In addition, EU authorities will need to provide certification, needed for transfers of distribution networks and energy transmission systems.

For the time being, all of the country’s energy players are expected to gain access into the DEPA Commercial VDR as a first step before deciding on whether to place binding bids. Partnerships could be sought.