Long-standing DESFA northern Greece pipeline plan scrapped

Gas grid operator DESFA has scrapped plans for a natural gas pipeline that had been envisioned to run across northern Greece, from Komotini in the northeast to Thesprotia in the northwest, after maintaining the project in the company’s business plans for about a decade.

DESFA reached this decision as Russian President Vladimir Putin is supporting Gazprom’s development of a second branch for the wider Turkish Stream gas project, deviating Ukraine, to supply the Balkans and central Europe via Bulgaria, not Greece, as was initially considered.

A first Turkish Stream branch supplying Russian gas to Turkey is already operating.

“The project remained on the business plan for approximately ten years without progressing to the construction stage, while there is no sign of conditions leading to its construction in the immediate future,” DESFA announced.

The Komotini-Thesprotia pipeline project was budgeted at 1.8 billion euros.

The total cost of projects included in DEFSA’s development plan for 2021-2030 is now budgeted at 545.5 million euros.

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The CEO of PPA Panagiotis Tsonis stated:

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

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

RAE’s WACC reduction for operators ultimately neutralized

A recent decision by RAE, the Regulatory Authority for Energy, reducing the WACC rate amid a fixed four-year period for energy market operators, as a result of the government’s corporate tax reduction from 29 to 24 percent, is ultimately expected to be neutralized as the authority has asked operators to submit updated data based on latest market conditions, including borrowing costs, all factors applied by the authority to its WACC formula.

Gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess and DEDA, initially reacted against RAE’s intention to reduce the WACC rate, determining earnings, within the preset four-year period. It is supposed to be adjusted every four years.

However, RAE’s latest call for updated data from operators and distributors, effectively promising to offset any WACC rate adjustment, has been well received.

 

DEDA wants review of decision dropping 8 cities from 5-year development plan

Gas distributor DEDA wants RAE, the Regulatory Authority for Energy, to review its recent decision removing the entire Peloponnese and provincial cities Veria and Giannitsa from the distributor’s five-year development plan covering 2020 to 2024. DEDA has lodged a review request to RAE, sources informed.

In addition, the gas distributor has also delivered an upgraded 2020-2024 development program to the authority that envisions swifter development of natural gas distribution networks in Veria and Giannitsa.

Completion of these two network projects faced an 18-month delay, according to the previous schedule, prompting the authority to drop both from the DEDA five-year plan.

As for DEDA’s network development plan in the Peloponnese, covering six provincial cities, Tripoli, Corinthos, Argos, Nafplio, Sparti and Kalamata, the distributor intends to resubmit a revised and expanded five-year plan in September.

Regional Peloponnese authorities expect NSRF support to become available by September.

Gas grid operator DESFA is also planning to develop related projects needed for the Peloponnese grid.

Also, DESFA’s new business plan includes LNG truck-loading supply plans for Sparti and Kalamata, from the Revythoussa islet terminal off Athens.

Meanwhile, tenders offering construction contracts for gas networks covering northern Greece’s east Macedonia, Thrace and central Macedonia regions, as well as central Greece, are expected be launched in early July.

Gas firms look to hydrogen for maintenance of EU funding

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

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

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

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

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

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

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

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

 

Energy exchange preparing spot market for natural gas

The Greek energy exchange has started working on the creation of a modern gas trading platform, energpress sources have informed.

A related study taking into account the needs and interests of companies has been completed as part of the preliminary work. A finalized decision on the effort’s schedule is soon expected.

At present, Greece does not possess an organized wholesale market for natural gas. Commercial transactions are mainly based on two-way agreements between producers and suppliers.

The Greek energy exchange, combining its efforts with gas grid operator DESFA, intends to create a spot market offering conditions that will determine natural gas prices through supply and demand amid a transparent environment to be trusted by all parties involved.

Energy exchange officials believe Greece’s geopolitical role will be pivotal in establishing the country as a central natural gas supply route to markets in southeast Europe.

Authorities, market players to discuss LNG terminal’s slot reservation rules

The latest developments of a plan aiming to revise slot reservation rules at gas grid operator DESFA’s LNG terminal on the islet Revythoussa just off Athens will be discussed between authorities and market players at a one-day conference planned by RAE, the Regulatory Authority for Energy, for this Thursday.

A latest proposal delivered by DESFA to RAE as part of consultation will serve as the basis of the discussion.

The new slot-reservation formula being worked on for the Revythoussa terminal will aim to maximize LNG shipments to the facility while also restricting time slots registrations made by traders purely for the sake of protecting gas market shares.

Power utility PPC and Motor Oil were both left off the Revythoussa facility’s unloading plan for 2020 after failing to secure slots amid conditions of heightened demand.

Authorities want to avoid a repeat of such a situation. PPC and Motor Oil had used the LNG terminal a year earlier.

Participants at this Thursday’s event will be offered the opportunity to present observations before Revythoussa rules are revised and implemented for next winter.

The event should offer LNG importers a clearer indication of the terminal’s new rules before ordering plans for 2021 are pursued. As has been the case this year, LNG demand is also expected to be elevated in 2021.

DESFA considering west Macedonia pipeline expansion

Gas grid operator DESFA’s next ten-year development plan, for 2021 to 2030, may include gas network extension projects in areas that have not featured in previous plans, including northern Greece’s west Macedonia region.

The shape and extent of the pipeline network expansion plan will depend on the development, or not, of regional natural gas-fired power stations by electricity producers.

Preliminary considerations for DESFA’s new ten-year development plan come just weeks after a delayed approval by authorities of the operator’s ten-year plan covering 2020 to 2029.

A prospective decision by power grid operator PPC on whether its Ptolemaida V power station will operate as a natural gas-fired unit will be instrumental in shaping DESFA’s investment decisions for pipeline network expansions in the west Macedonia area.

DESFA also intends to develop metering stations at TAP project corridor points as the capacity to be offered by the TAP project will not suffice to cover regional needs if natural gas-fired power stations are developed in the west Macedonia region.

DESFA plans to construct three new metering and regulating stations in the Eordea, Kastoria and Aspros (Edessa, Naoussa, Giannitsa) areas, their budget totaling 8 million euros. These stations, whose completion is expected by the end of 2022, will enable the development of a mid and low-voltage network for natural gas transmission to these areas.

 

Gas imports up 17% in first four months, LNG at the forefront

Gas imports for both large and small-scale consumers increased by 17 percent in the year’s first four-month period, defying unprecedented market conditions brought about by the pandemic, especially during March and April, the peak of the lockdown.

Gas imports totaled 21,393 GWh between January and April this year compared to 18,211 GWh during the equivalent period a year earlier, according to data provided by DESFA, the gas grid operator.

During the four-month period, gas imports at DESFA’s LNG terminal on the islet Revythoussa just off Athens rose to 11,679 GWh, a 45 percent increase compared to a year earlier. This terminal was the national gas grid’s biggest entry point.

Sidirokastro, at the Greek-Bulgarian border, followed with a pipeline-gas quantity of 7,952 GWh, an 8 percent drop compared to the equivalent four-month period a year earlier. Even so, Sidirokastro remains an important entry point.

The country’s other pipeline-gas entry point, Kipoi, in the Evros region, northeastern Greece, registered a 13 percent year-on-year increase of natural gas imports to reach 1,762 GWh.

The aforementioned data reconfirms a market overturn that emerged last year to show LNG imports exceed incoming pipeline gas amounts via the grid’s Sidirokastro and Kipoi entry points.

This trend highlights the fact that major Greek energy market players have been able to secure competitively priced LNG and favorable delivery solutions.

Revythoussa at full capacity in May, 10 LNG orders scheduled

A total of nine LNG shipments are scheduled to be delivered to the Revythoussa islet terminal just off Athens in May, taking the facility to full capacity for yet another month, data provided by gas grid operator DESFA has shown.

Three LNG tankers are scheduled to bring in three big orders for a total of ten recipients in May.

The inflow has already begun. Last week, the Maran Gas Ulysses, a tanker belonging to the Aggelikousis group, imported 149,254 cubic meters for four buyers, Motor Oil, Heron, gas utility DEPA and Mytilineos, whose share, 74,627 cubic meters, was the biggest.

The next shipment, scheduled to be delivered to the Revythoussa terminal on May 20 by the Gaslog tanker belonging to the Livanos group, will deliver 147,710 cubic meters of LNG for Elpedison and power utility PPC, taking the bigger share of the two buyers, 127,031 cubic meters.

A third and final LNG shipment for the month is scheduled to arrive May 31 on the British Saphire tanker, owned by BP. This vessel will bring in 121,123 cubic meters of LNG for DEPA and Elpedison, the bigger of the two buyers with a 64,993 cubic-meter order.

A total of five big LNG shipments are expected in June for orders placed by Mytilineos, Elpedison and DEPA.

Senfluga allocates €500,000 to Greek health and non-profit sectors

Senfluga, the company owned by Italy’s Snam (54%), Spain’s Enagas (18%), Belgium’s Fluxys (18%) and Coupelouzos Group’s DAMCO ENERGY SA (10%), has allocated 500,000 euros for the Greek health system and non-profit sector, the company announced in a statement.

These Senfluga funds enabled the purchase of 90,000 isolation suits from a Chinese supplier. The medical material will be shipped to Greece in the next few days.

The donation is also aimed at supporting social initiatives advanced by foundations. Funds have already been primarily allocated to the national health system as well as NGOs such as ActionAid Hellas, Doctors of the World Greece and IASIS, which, together, have activated a helpline and are contributing to efforts made by the Greek State for relief and support measures.

Senfluga is the main shareholder of Greek gas grid operator DESFA with a 66 percent stake.

Kavala gas storage unit cost-benefit study nearing completion

A cost-benefit analysis being prepared by the privatization fund TAIPED for the development of a gas storage facility at a virtually depleted offshore gas field south of Kavala is nearing completion.

This analysis is needed for the facility’s privatization procedure, whose first-round tender will most likely be launched early in the second half of this year, energypress sources have informed.

TAIPED and RAE, the Regulatory Authority for Energy, are currently exchanging information on project details ahead of the tender.

A joint ministerial decision – another privatization prerequisite – issued last month offers terms and conditions.

Once the cost-benefit analysis has been completed, RAE, according to the ministerial decision, will have four months to determine a pricing policy formula for the south Kavala facility.

Besides private-sector investors, gas grid operator DESFA operator and its shareholders will also be able to participate in the tender on equal terms. The project will operate independently, even if DESFA emerges as the winning bidder.

 

DESFA 10-year plan approved, virtual pipelines not included

Gas grid operator DESFA’s ten-year development plan has been approved by RAE, the Regulatory Authority for Energy, following a lengthy procedure, including consultation, that lasted several months.

A virtual pipeline proposal envisioning LNG supply to Crete, the north Aegean islands and the Dodecanese via tankers from the operator’s Revythoussa terminal just off Athens was left out of the approved plan. This is the ten-year plan’s only notable change compared to the draft forwarded for consultation.

LNG virtual pipelines serve as a substitute for conventional gas pipelines to enable the transport of LNG to points of use by sea, road or a combination of these.

The virtual pipeline proposal was removed from the DESFA ten-year plan following concerns expressed by consultation participants over higher surcharge costs for consumers that could have been imposed as part of the project’s cost recovery procedure.

The gas grid operator’s ten-year plan includes, for the first time, a natural gas outlet along the TAP route for the west Macedonia region in Greece’s north.

This TAP outlet, a project budgeted at 3 million euros and expected to be launched late in 2022, is intended to supply natural gas to the area’s provincial cities of Kozani, Ptolemaida, Florina and Amynteo for use at telethermal facilities as well as other energy needs in the post-lignite era.

The area’s telethermal system currently relies on energy produced by power utility PPC’s lignite-fired power stations, soon set for withdrawal as part of the country’s decarbonization effort.

 

Ministry seeking to reignite stalled energy sector initiatives

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

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

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

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

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

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

Kavala gas storage unit an independent grid project

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

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

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

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

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

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

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

 

Utilities prepare emergency coronavirus plan for energy security

The country’s energy utilities have prepared an emergency plan – comprised of alternatives – designed to ensure ongoing operations at strategically important energy facilities amid the coronavirus outbreak, now also a growing concern in Greece.

The emergency plan, prepared by leading officials at power utility PPC, power grid operator IPTO, distribution network operator DEDDIE/HEDNO, gas grid operator DESFA and gas utility DEPA, in agreement with the energy ministry, is designed to offer maximum coronavirus protection to personnel, especially staff employed at energy production and distribution management posts.

The plan includes three alert levels, mild, medium and pandemic conditions.

Preventive disinfection operations are being carried out at utility facilities. Emphasis is being placed on IPTO’s national and regional energy control centers, DESFA’s LNG storage station on the islet Revythoussa, off Athens, as well as PPC’s power stations.

The plan also includes shift replacements and personnel transfers in the event of coronavirus spreads within utility ranks, as well as secluded on-site accommodation for personnel at energy infrastructure locations and power stations.

Online preparations are also being made to enable headquarter-based personnel to work from home should the outbreak worsen.

Overall, preventive measures promoted by national health authorities are being applied.

Energy utility officials who took part in a related energy ministry meeting have assured government authorities that the country’s electricity and natural gas supply will remain uninterrupted.

 

Energy firms react against RAE plan for WACC reduction

The prospect of upcoming WACC level reductions reportedly planned by RAE, the Regulatory Authority for Energy, for gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess, DEDA and their parent company DEPA, the gas utility, has unsettled the administrations of all these companies.

Though RAE has not yet reached a decision on the matter, the aforementioned energy companies understand the authority is working to soon lower their WACC levels as a follow-up adjustment to the government’s business tax rate reduction, from 29 to 24 percent.

RAE has endorsed the current WACC levels for a four-year period. A revision at this point would cancel out this endorsement.

The energy companies will push for a delay of any WACC rate revisions until the four-year period has expired, it is believed.

DESFA officials have already pointed out a need for stability and predictability, also stressing the company has invested heavily in the operator during a difficult period for the country.

DEPA’s gas distribution companies fear a WACC revision may negatively impact an ongoing privatization procedure for DEPA Infrastructure, a new DEPA entity established for the privatization.

DEPA and its associated firms have warned DEPA Infrastructure would become a less attractive prospect for nine candidates who have expressed first-round interest, while a revision before the WACC level’s four-year period has been completed could be interpreted as a signal of uncertainty by investors.

DESFA wants stricter slot reservation rules for LNG terminal

Gas grid operator DESFA aims to significantly revise slot reservation rules for its LNG terminal on the islet Revythoussa, just off Athens, the operator’s objective being to prevent reservations of expediency made by traders purely interested in protecting their market shares by fending off other users from the facility.

A related proposal of new regulations, already forwarded by DESFA to RAE, the Regulatory Authority for Energy, will instead aim to support use of the LNG facility for actual market needs.

RAE will need to stage a public consultation procedure before the plan is finalized. DESFA hopes it will be ready and implemented by summer, giving companies enough time to assess the new rules for the LNG terminal before they make business plans for 2021.

Recent congestion problems at the Revythoussa LNG terminal left a number of companies without slots for 2020.

Slot reservation applications submitted by companies last year for 2020 represented a total capacity three to four times the size of Greece’s overall annual gas consumption.

Under the new rules, slot reservations are expected to be legally binding, committing applicants to all related costs.

Lawmakers behind the facility’s existing set of rules, shaped nearly a decade ago, viewed LNG as a supplementary fuel, but it has taken on a far more significant role in the Greek energy market over the past few years.

 

Italy’s Snam, Italgas face off in DEPA Infrastructure sale

Snam, Italy’s gas grid operator, and Italgas, the neighboring country’s biggest natural gas distribution company, have emerged as rivals, despite sharing common interests, in a Greek privatization offering a full stake in DEPA Infrastructure, a new entity formed by Greece’s gas utility DEPA.

The Snam group holds a 13.5 percent stake in Italgas. Also, the two companies have a common key shareholder, CDP Reti, holding a 28.98 percent stake in Snam and a 26.05 percent share of Italgas.

The showdown between Snam and Italgas could end up leaving both bidders out of the DEPA Infrastructure privatization, whose deadline for first-round expressions of interest expires today following a slight extension.

The participation of both players in the DEPA Infrastructure privatization would represent a violation of the sale’s terms, privatization fund TAIPED has already pointed out following a related query.

Fully aware of the situation, Snam has sought a solution. The Italian firm could form another consortium as it had done for the sale of Greek gas grid operator DESFA. Snam led a consortium, Senfluga, joined by Fluxys and Enagas, for the acquisition of a 66 percent stake of DESFA.

Two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to submit expressions of interest today. Two other funds, both undisclosed, one from China, the other from the Middle East, could also participate. Additional entries have not been ruled out.

Strong turnout seen for DEPA Infrastructure sale tomorrow

A solid build-up to tomorrow’s first-round deadline for a tender offering a full stake in DEPA Infrastructure, a new entity formed by gas utility DEPA, has indicated at least ten European operators as well as funds from beyond the continent will submit expressions of interest.

Snam, Fluxys, Enagas, Italgas, two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to turn up.

Two undisclosed funds, one from China, the other from the Middle East, are also believed to be among the prospective bidders.

Candidates see DEPA Infrastructure’s investment plan as an opportunity for prospective synergies. Budgeted at 400 million euros, it envisions the development of a series of pipeline projects and other infrastructure in the wider southeast European region over the next five years.

Snam, Fluxys and Enagas, who formed a consortium named Senfluga to acquire a 66 percent of Greek gas grid operator DESFA in 2018, are expected to move independently for the DEPA Infrastructure tender’s first round, fearing antitrust regulations, before regrouping later on.

DESFA wants key role in country’s infrastructure projects

Gas grid operator DESFA, controlled by Senfluga, a consortium formed by Snam, Enagas and Fluxys for their acquisition of a 66 percent stake of the operator in 2018, is determined to play a leading role in all the country’s infrastructure projects as well as Greece’s wider natural gas-related developments.

“We see our role as being that of the leader in Greece’s gas sector and the wider region. We are interested in every gas project and want to be able to claim it. We also have the know-how and strong shareholders to play such a role,” a DESFA official told energypress.

According to sources, DESFA’s emergence as a prospective buyer of DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization procedure, prompted officials to slightly extend the sale deadline.

More specifically, Snam, the Senfluga consortium’s chief member with a 54 percent stake, requested a deadline extension for the DEPA Infrastructure as it has yet to decide on its partners for this bidding quest. Enagas and Fluxys each hold 18 percent stakes in Senfluga. The Copelouzos group’s Damco recently joined this consortium, buying a 10 percent stake.

DESFA’s influence is also believed to have persuaded officials to delay a decision on whether to classify the development of a natural gas storage facility at a depleted offshore gas field in the south Kavala region as a national or independent grid project.

Snam, Enagas and Fluxys are part of the six-member Trans Adriatic Pipeline (TAP) consortium.

DESFA, which has signed a Memorandum of Understanding for the Alexandroupoli FSRU, is now seriously considering to acquire a 20 percent stake in this venture, headed by Gastrade.

Other projects being considered by DESFA include a 175 million-euro Cretan LNG terminal that promises to resolve the island’s energy sufficiency concerns, as well as a 57.3-km gas pipeline connection linking the Thessaloniki area with North Macedonia, already included in the operator’s ten-year strategic plan.

 

DEPA Infrastructure sale luring bidders, deadline Friday

The government and privatization fund TAIPED are expecting strong investor interest in the full sale of gas utility DEPA’s new entity DEPA Infrastructure, a procedure whose deadline for non-binding expression of interest expires this Friday at 5pm.

Authorities will not offer a deadline extension despite requests for more time, sources informed.

Italy’s Italgas, France’s Engie, Spain’s Reganosa as well as two major US funds, KKR and Blackrock, and, possibly, Australia’s Macquarie, are believed to be among the field of players eyeing the DEPA Infrastructure privatization. Senfluga, a consortium made up of Greek gas grid operator DESFA shareholders, is also considering participating in what should be a last-minute decision following related preparations.

Italgas, Italy’s biggest distribution network operator and third biggest in Europe, is believed to have held talks with fellow Italian company Eni for the acquisition of a 49 percent stake of gas distributor EDA Thess, covering the Thessaloniki and Thessaly areas. This stake is currently held by Eni subsidiary Eni Gas e Luce.

France’s Engie, also eyeing other opportunities in the Greek market, has partnered with Energean Oil & Gas and GEK-Terna with the intention of jointly bidding for an underground gas storage facility to be developed at a depleted offshore gas field in the south Kavala region.

TAIPED, the privatization fund, is offering DEPA’s 65 percent share in DEPA Infrastructure while Hellenic Petroleum ELPE is selling its 35 percent stake.

RAE given 5 months to set Kavala underground gas storage charges

RAE, the Regulatory Authority for Energy, has been given five months to determine the pricing policy, regulated earnings and WACC for a planned underground gas storage facility at a depleted offshore gas field in the south Kavala region, according to an imminent joint ministerial decision, energypress understands.

The launch date of the project’s tender will depend on funding for project studies through the EU’s Connecting Europe Facility (CEF) program. This essentially means that the privatization fund TAIPED will need to officially launch the project within the first half of this year to avoid missing out on CEF funds.

The project’s investment cost is estimated at between 300 and 400 million euros.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

The project, promising gas storage capacity of 360 million cubic meters, is considered vital for Greece as it will be able to maintain strategic reserves for considerable time periods.

Its development will help boost the performance level and strategic role of the Revythoussa LNG terminal just off Athens, and the prospective Alexandroupoli FSRU in the country’s northeast, as these will be able to supply the wider region greater gas quantities via the IGB and TAP gas pipelines.

The south Kavala project has been classified as a PCI project, offering EU funding opportunities, seen as crucial for the investment’s sustainability, according to some analysts.

DESFA’s Cretan FSRU proposal troubles RAE, considering tender

The board at RAE, the Regulatory Authority for Energy, needs to determine whether a proposal by gas grid operator DESFA for a floating storage and regasification unit at Atherinolakkos, Crete, is fit to be added to its national gas grid development plan for 2020 to 2029.

The investment plan, budgeted at 175 million euros, has been widely criticized by companies and market authorities through a public consultation procedure as DESFA wants national grid users to cover its cost. This demand has also troubled RAE, heading towards staging a tender.

According to sources, the authority will most likely ask DESFA to not include the FSRU project in its development plan this year and call for specific prerequisites that would give the investment social dimension.

RAE officials have reiterated the need for the development of the authority’s proposals to help cover Crete’s energy needs until a major interconnection project, to link the island with Athens, is completed. This intermediate period may exceed three years, it is believed. An FSRU will need to contribute to the overall effort.

RAE has asked the energy ministry to make legislative revisions needed ahead of tenders concerning the development of projects for energy sufficiency on Crete.

One of these entails a conversion of power utility PPC facilities totaling 100 MW from diesel-fueled to gas-fueled units. Another project concerns the construction of a new 100-MW gas-fueled power station, plus an FSRU. RAE also wants new wind and solar energy units installed for a total capacity of 100 to 150 MW, as well as energy storage batteries with a capacity of between 40 to 50 MW.

DESFA, responding to the criticism, explained that it does not intend to construct a gas-fueled power station, noting such a task is beyond its realm.

Also, its FSRU proposal for Crete purely represents a solution to secure energy sufficiency on the island, DESFA officials told energypress. The project already carries social dimension as it aims to supply gas to a non-interconnected area, they added.

DEPA Infrastructure yield, 8.2% + 1.5%, a drawcard for bidders

Though not yet officially announced, a new annual regulated yield for distribution network operators, now set, represents one of the strongest drawcards for the sale of DEPA Infrastructure, a new entity established by gas utility DEPA for privatization.

Prospective bidders engaged in preliminary contact with authorities linked to the DEPA Infrastructure sale ahead of a February 14 deadline for non-binding expression of interest have been told the WACC figure has been set at 8.2 percent plus a 1.5 percent premium if certain investment objectives are achieved.

These objectives include swift network development in areas covered by gas distributor EDA, achievement of pipeline addition goals, specified in kilometers, as well as the development of projects not included in DEPA Infrastructure’s initial development plan.

Prospective participants, including funds, will enter this privatization procedure knowing their investment’s potential yield can reach 9.7 percent, far higher than WACC performances enjoyed by network operators in central Europe.

This higher yield offering has generated all-round optimism for a solid turnout by participants Friday week.

Potential bidders, so far, are believed to include Greek gas grid operator DESFA, France’s Engie, Italy’s Italgas and Germany’s Eon.

Besides European operators, the privatization is also expected to attract a number of funds, seen partnering with operators for the sale’s second round of binding bids.

DEPA Infrastructure has taken under its wings DEPA’s interests in the distribution networks of wider Athens (EDA Attiki), Thessaloniki and Thessalia (EDA Thess) and the rest of Greece (DEDA).

 

Motor Oil wants Corinth FSRU included in DESFA 10-year plan

Petroleum group Motor Oil wants a prospective FSRU project for Corinth, west of Athens, included in gas grid operator DESFA’s ten-year plan, it has noted in a letter forwarded to RAE, the Regulatory Authority for Energy, as part of a related public consultation procedure.

A floating LNG terminal at Corinth would offer multiple benefits for the natural gas markets of Greece and the wider southeast European region and, therefore, must be included in DESFA’s ten-year plan, Motor Oil supported in its letter.

RAE has already awarded a license for the project but a decision concerning a future capacity commitment at this new national grid entry point has remained pending since last June.

The project is strategically important as a very large proportion of Greece’s current – and near-future – gas imports enter via Turkish territory, Motor Oil pointed out. The Corinth FSRU would further diversify Greece’s supply sources, without geopolitical risks or restrictions, as the facility will be able to absorb supply from anywhere in the world, the petroleum group added.

This FSRU would ease congestion at the existing Revythoussa unit off Athens and contribute to energy supply security, Motor Oil, operating a major refining facility in Corinth, also noted among other factors.

ESAI/HAIPP, the Hellenic Association of Independent Power Producers, has also expressed support for the Corinth FSRU, noting, in its letter, the facility would offer a new gas grid entry point, desaturate Revythoussa and help offer more competitively priced natural gas to the Greek market.

Gov’t to hasten hydrogen market development amid investment interest

Procedures leading to the establishment of Greek hydrogen market appear set to progress faster than expected, the government’s strategic decision for greater renewable energy penetration of the energy market, investment interest and Germany’s upcoming EU presidency being catalysts. The government will aim to implement related regulatory framework by July.

Hydrogen tariffs, sector support, technical prerequisites for the infusion of hydrogen into the natural gas network, as well as the determination of maximum mix levels for the two fuels are among the issues included in the new framework, to be accompanied by a sustainability study on related facilities.

Feasibility studies examining the level of competitiveness of such infrastructure as well as costs do not exist at present. They need to be conducted so as to enable authorities to determine the number of units that can enter the Greek market.

Hellenic Petroleum (ELPE) has publically expressed interest to develop the country’s first hydrogen refueling station for vehicles. Greek utility DEPA and Italy’s Snam have also expressed interest. Snam reiterated its interest at a New Year company event staged yesterday by Greek gas grid operator DESFA. Snam is a main shareholder, along with Enagas and Fluxys.

A recent McKinsey study commissioned by Snam for the Italian market showed that hydrogen can cover 23 percent of domestic energy demand in 2050 amid a 95 percent decarbonized market.

Operator DESFA seeks role in Greek infrastructure projects

Greek gas grid operator DESFA, driven by the three-member consortium of Snam, Enagas and Fluxys now controlling the company with a 66 percent stake, appears determined to stretch beyond its operator role and become one of the biggest and most pivotal players in the domestic energy market, judging by its interest in major Greek-related natural gas projects now in progress.

According to energypress sources, DESFA’s administration is looking to acquire stakes in three key energy infrastructure projects: the prospective floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece; the planned underground gas storage facility at a depleted natural gas field in the offshore south Kavala region; and DEPA Infrastructure, one of gas utility DEPA’s two new corporate entities heading for privatization.

The chief executives of Snam, Enagas and Fluxys, major European operators also holding respective stakes in the TAP project, met yesterday with Greek Prime Minister Kyriakos Mitsotakis.

The officials requested first-hand information on the government’s energy market decisions following the delivery of a new and more ambitious National Energy and Climate Plan and the signing of a trilateral agreement between Greece, Cyprus and Israel for the East Med gas pipeline.

The Greek operator’s controlling consortium also presented investment plans supporting the country’s decarbonization strategy and aspirations to become a regional energy hub.

DESFA seeking FSRU, LNG tankers for Crete energy solution

Greek gas grid operator DESFA is looking to further establish its FSRU proposal for LNG supply to Crete, an initiative included in its ten-year development plan.

DESFA, nowadays controlled by a three-member consortium consisting of Snam, Enagas and Fluxys, has begun exploring FSRU solutions and their cost for Crete, where gas supply would be used for electricity generation to help make up for the  closure of high-polluting diesel units totaling 100 MW.

DESFA has set a January 20 deadline for the submission of FSRU rent or purchase offers by interested parties.

The gas grid operator requires a facility with a 125,000 cubic-meter capacity that can anchor close to the Atherinolakkos power station in southeast Crete.

The overall project will also require an LNG tanker for transportation purposes – minimum capacity of 20,000 cubic meters. This tanker will also be used as a storage facility.

In addition, the DESFA plan includes a 10,000 cubic-meter LNG carrier to execute approximately 75 shipments per year.

As has been previously reported, RAE, the Regulatory Authority for Energy, has asked DESFA to further process its proposal for the installation of an LNG terminal off Crete to counter energy shortage issues until 2023, when submarine grid interconnections with the mainland are expected to be completed.

In addition, RAE plans to install a new 100-MW natural gas-fueled unit on the island as well as new RES units, for solar and wind energy, with a total capacity between 100 and 150 MW.

The installation of batteries for energy storage totaling 40 to 50 MW also features in the Crete plan.