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.

 

GEK TERNA, Elpedison close to decisions on gas-fueled units

GEK TERNA and Elpedison are expected to announce finalized investment decisions for new gas-fueled power stations with total capacity over 1,400 MW within the next two months, energypress sources informed.

GEK TERNA plans to develop a 660-MW power station at the industrial zone of Komotini, northeastern Greece, while Elpedison, a joint venture involving Hellenic Petroleum ELPE and Italy’s Edison, intends to construct units with a total capacity of 826 MW at the ELPE facilities in Thessaloniki.

These project plans are estimated to be worth a total of at least 600 million euros.

The energy companies have already received energy production licenses as well as other licensing requirements, including environmental permits, for these prospective units, regarded as mature investment plans.

Both companies are awaiting new CAT mechanism details for gas-fueled power stations before finalizing their investment plans. The economic uncertainty caused by the pandemic, plus the anticipation of a second wave, are also crucial factors influencing the thinking behind these investment decisions.

Market capacity exists for new combined-cycle gas-fueled power stations during the energy transition over the next ten to 15 years, electricity market officials insist.

The planned withdrawal of power utility PPC’s lignite-fired power stations over the next three or so years combined with a lack of development in RES energy storage systems offers gas-fueled power generation an opportunity to cover capacity to be lost by lignite-fired power station closures.

A recent BloombergNEF report noted big natural gas-fueled power stations are not necessary. However, market officials point to the National Energy and Climate Plan as proof of the need for such units.

The Mytilineos group is developing an 826-MW CCGT in the Agios Nikolaos area of Boetia, northwest of Athens, with the aim of a launch in late-2021.

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 Infrastructure VDR open, DEPA Commercial data soon

A virtual data room has just been opened for the six bidding teams preparing to make second-round offers in the privatization of gas company DEPA Infrastracture, an offshoot of gas utility DEPA.

Czech company EPH, Italy’s Italgas, the Australian investment funds First State Investments and Macquarie, US firm KKR and China’s Sino-CEEF & Shanghai Dazhong Public Utilities now have access to all relevant data concerning the DEPA Infrastructure sale.

Another VDR is expected to be opened within the next few days for bidders participating in the privatization of DEPA Commercial, DEPA’s other entity up for sale.

The participants in this sale, seven entries in total, are: Motor Oil Hellas-PPC, ELPE-Edison, Mytilineos, GEK-TERNA, the Copelouzos group, Dutch company Shell and the Swiss-based MET Group.

VDR information for the DEPA Commercial sale will be made available over three phases as a protective measure intended to ensure competition. The first phase, offering non-sensitive data, will be open for all. Access to VDR information during the second stage, offering sensitive data, will be restricted to consultants. Bidders will be offered conditional access to confidential information in the third phase.

Greece’s privatization fund TAIPED is aiming to declare preferred bidders for both sales in the final quarter of this year. Market officials, however, believe this is more likely to occur in the first quarter of 2021.

DEPA Commercial bidders are allowed to team up and establish consortiums but partnerships for the DEPA Infrastructure sale are not permitted.

Bidders participating in the DEPA Commercial sale are mainly eyeing the company’s prized asset, retail gas supplier and subsidiary Fysiko Aerio Attikis, covering the wider Athens area. This company already serves close to 400,000 households and 10,000 businesses.

Six Greek heavyweights among DEPA Commercial contenders

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

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

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

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

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

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

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

 

 

 

Seven bidders through to DEPA Commercial sale’s final round

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

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

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

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

 

 

 

 

Poseidon overland section plan kept alive, PCI status sought

IGI Poseidon, a 50-50 joint venture between Greek gas utility DEPA and Italian energy operator Edison, is keeping alive the development prospects of an overland Greek segment, across northern Greece, for its Poseidon pipeline, to cross the Ionian Sea for a Greek-Italian link.

DEPA and Edison have submitted an application to the European Commission for PCI status concerning the overland section of Poseidon, enabling EU funding support, sources informed.

The Poseidon pipeline’s onshore segment, planned to stretch 760 km across northern Greece, from Kipous in the northeast, to Florovouni-Thesprotia, in the country’s northwest, before crossing the Ionian Sea all the way to Otranto, on Italy’s east coast, is considered an extension of the EastMed gas pipeline plan to link Greece, Cyprus and Israel.

Poseidon’s onshore segment could be used to transport natural gas from east Mediterranean gas reserves to Balkan markets.

The Poseidon pipeline’s overland section can also be expected to be linked to the Greek-Bulgarian IGB gas pipeline, another project involving IGI Poseidon.

The Greek-Italian Poseidon pipeline has been incorporated into a trilateral agreement signed by Greece, Cyprus and Israel for the EastMed pipeline. This pact was ratified in Greek Parliament last month.

Greece, Cyprus and Israel recognize the overland section of the Poseidon pipeline as a project of national significance.

Capacity of the Poseidon pipeline has been increased to 15 bcm from an original capacity of 8 bcm, while a further capacity boost to 20 bcm is planned.

 

DEPA Trade sale short list this month, sooner than expected

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

Energean Power FPSO hull sails away from China

Energean Oil & Gas’ Enegean Power FPSO hull sailed away from the COSCO yard in China today and will now be towed to the Sembcorp Marine Admiralty Yard in Singapore, where the topsides will be integrated, before the completed FPSO is towed to the Karish field in Israel for installation and hook-up, the company has announced in a statement.

The sailaway of the hull from China represents the achievement of a key milestone in the Karish project timetable, the statement noted.

During the construction of the hull in China, more than 5 million man hours free of LTI’s have been completed. Including the construction of the topsides in Singapore and other relevant works, more than 10 million man hours free of LTI’s have been completed so far in the construction of the Energean Power FPSO.

Energean has also successfully completed the drilling of the three development wells in the Karish Main field and is confident that the three development wells can produce at combined rates of 800 mmscf/d, which is sufficient to fill the capacity of the FPSO (8 BCM per year), the company statement added.

On another important development, the Karish gas sales pipeline (30 & 24 inch) was shipped from Greece last week and offloaded successfully at Limassol Port, Cyprus.

The pipeline will be loaded from the Limassol port on PSVs and from them on the Karish Field pipe-laying vessel Solitaire.

The gas sales pipeline of approximately 90 km will transport gas from the Enegean Power FPSO to an onshore valve station at the Dor landfall in Israel.

First gas on the Karish project is on track for H1 2021.

Update on the Edison E&P acquisition

Also, Energean and Edison have entered into a formal amendment to the Sale and Pusrchase Agreement on 2 April 2020, in which:

  • the Algerian Assets shall be excluded from the scope of the acquisition of Edison E&P;
  • in recognition of the exclusion of the Algerian Assets, there will be an adjustment to the total consideration of the acquisition of approximately $150 million (as at the lock-box date of 1st January 2019).

Energean is working to complete the acquisition of Edison E&P as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant governments, the company statement noted. Thereafter, completion of Energean’s agreement for the sale of Edison E&P’s UK and Norwegian subsidiaries to Neptune for a consideration of $250 Million plus contingent consideration of up to $30 million (as previously announced), will be completed as soon as is reasonably practicable, it added.

 

 

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

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

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

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

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

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

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

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

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

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

DEPA Trade offers due today, at least 7 players interested

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

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

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

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

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

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

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

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

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

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

 

Improved Gazprom deal raises DEPA in the eyes of investors

Lower-price deals sealed or about to be sealed between gas utility DEPA and its international suppliers are among the factors the government is relying on for a successful privatization procedure of the gas utility, a procedure launched yesterday, beginning with DEPA Trade, one of DEPA’s two new entities formed for the sale.

DEPA is believed to have renegotiated a far more favorable supply deal with Russia’s Gazprom, the Greek utility’s biggest supplier.

Forty percent of DEPA’s natural gas orders from Gazprom will no longer be pegged to fluctuating international oil prices. Instead, this percentage of DEPA’s Gazprom orders will be linked to price levels of Dutch gas trading platform TTF, one of Europe’s biggest hubs. Just days ago, prices at TTF were about half those of pipeline gas. The other 60 percent of DEPA’s orders with Gazprom will remain oil indexed.

This development promises to make DEPA’s supply deals with Gazprom far more competitive. Prospective bidders already appear to be warming to the prospect.

Major Greek corporate groups such as Mytilineos, Hellenic Petroleum (ELPE) – already holding a 35 percent stake in DEPA and considering teaming up with its Elpedison partner Edison for the DEPA sale – GEK Terna and Motor Oil are believed to be gearing up for bids. The Copelouzos group’s involvement in the DEPA Trade sale is considered certain – in a partnership with Czech entrepreneur Karel Komarek, holding a key stake in Greek lottery OPAP.

ELPE-Edison granted extra 18 months for troubled Patras license

Hellenic Petroleum ELPE, the local partner of Gulf of Patras license in western Greece, has been granted an 18-month extension to complete second-phase work at the license. Project delays have been attributed to inadequate port infrastructure and bureaucracy.

ELPE, joined by Edison as a consortium partner for this hydrocarbon project, requested more time to complete the second phase, including exploratory drilling.

The consortium was expected to conduct its first drilling operation at the Gulf of Patras license this year but has been slowed down by insufficient port facilities at the regional Patras and Astakos ports, as well as environmental licensing procedures, according to sources.

ELPE and Edison require adequate port facilities, including storage, to ship in the project’s drilling equipment.

The Gulf of Patras drilling operation is seen as a project that could prompt further hydrocarbon investments, especially if this field’s probable oil deposit, estimated at 140 million barrels, is confirmed.

Bureaucracy and a lack of strategic planning for development of the country’s upstream sector has kept investors at a distance, oil company officials and industry experts have repeatedly noted over a number of years

The regional infrastructure’s inability to serve this venture’s needs has frustrated officials. The Gulf of Patras tender was launched back in 2012.

A previous extension had given the ELPE-Edison consortium until April 2, 2018 to complete the project’s second phase. This deadline has now been extended to October, 2, 2021.

 

Elpedison partners still undecided on joint bid for DEPA Trade

Hellenic Petroleum (ELPE) and Italy’s Edison, co-owners of energy company Elpedison through a successful 50-50 joint venture, have yet to decide whether they will submit a joint bid for DEPA Trade, a new entity formed by gas utility DEPA as part of its privatization.

The two partners, who now fully own Elpedison following last June’s departure by Ellaktor (22.73%) and Elvalhalkor (1.48%), are keen to place greater emphasis on energy production and retail supply growth at their venture, both in electricity and natural gas.

Investors will be offered the Greek State’s 65 percent stake in DEPA Trade. ELPE controls the other 35 percent.

Elpedison officials have held preliminary talks on the DEPA Trade sale but decided to delay a decision for later on, energypress sources informed. Privatization fund TAIPED has not yet launched the DEPA Trade sale. Bidders are expected to face a March deadline.

The Elpedison partners are believed to have tabled contrasting approaches in their effort to make a joint bid for ELPE Trade, according to some sources. However, both sides have hinted that a solution can be found. An announcement on final decisions will not take long, company officials told energypress.

Both sides have rejected rumors of a breakdown in talks and preparations for separate bids.

If they unite and submit the winning joint bid for DEPA Trade, the ELPE and Edison officials will need to forge a unification plan bringing together DEPA Trade and Elpedison.

 

Trilateral East Med agreement set to be signed in Athens today

The energy ministers of Greece, Cyprus and Israel are set to sign a trilateral agreement in Athens this afternoon for the development of East Med, a natural gas pipeline to carry gas to Europe via the three countries and Italy.

The pipeline, planned to measure 2,000 km and offer a capacity ranging between 10 to 20 billion cubic meters, promises to reinforce the Greek-Cypriot-Israeli alliance amid times of heightened Turkish provocation in the region.

Italian economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, has forwarded a letter of support for the project to Greek energy minister Costis Hatzidakis.

The Greek minister will sign the East Med agreement today with Giorgos Lakkotrypis and Yuval Steinitz, his Cypriot and Israeli counterparts, respectively. Italy is also expected to eventually join the partnership for this project.

Just hours before this signing ceremony, planned for 15:45, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, will sign a Letter of Intent at the energy ministry.

Importantly, this agreement promises to pave the way for a first commercial agreement reserving natural gas quantities ahead of the East Med pipeline’s construction, as DEPA will commit to purchasing natural gas quantities from Energean, extracting at Israeli gas field licenses. These quantities will represent approximately 20 percent of the East Med pipeline’s initial capacity.

The development prospects of East Med were recently propelled by a decision from IGI Poseidon, a 50-50 joint venture involving DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

An upcoming East Med Gas Forum, to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority, should help add further dimension to the alliance.

The East Med pipeline, planned as a complementary route to other projects in the wider region, stands as the most mature component of an EU plan entailing the development of an energy corridor to connect new energy sources in the east Mediterranean with European markets, including the southeast European market.

 

DEPA, pivotal for Greek energy plan, pushing ahead internationally

Through its strategic involvement in an array of pipeline and infrastructure projects, Greek gas utility DEPA is becoming a key driver of Greece’s geopolitical upgrade and the diversification of supply sources for the wider region of South-East Europe.

DEPA is establishing its position in the region through a series of significant international projects such as the acceleration of IGB pipeline construction, participation in the IGI Poseidon pipeline  interconnecting Greece and Italy, and, surely, booking capacity in TAP which, from 2020 onwards, will transport Caspian gas to Europe.

Developments around East Med Pipeline are also rapid, with the most recent being IGI Poseidon’s (the 50% – 50% JV between DEPA S.A. and Edison S.p.A ) BoD decision to fast-track the completion of all pending stages that will bring the project to maturity.  The €70 million Feasibility Study is being accelerated, along with every other stage, to complete the East Med pipeline’s design, which will also pave the way for the final investment decision.

All the above are just one part of DEPA’s multifaceted international activity. Prior to that, in October, a bilateral agreement was signed in Sofia for the start of IGB pipeline construction, a project overseen by ICGB AD, in which DEPA has a 25% stake.

The project is expected to go into operation in July 2021, with an initial capacity of 3 billion cubic meters. At first, the entire load of gas will come from TAP that will go into operation within 2020, delivering Azeri gas to European markets, in which DEPA has booked capacity of 1 billion cubic meters. Thus, through IGB, the company will supply the Bulgarian market with Caspian gas, “breaking” for the first time the existing Russian monopoly.

Another major development took place just yesterday, when the company’s Board of Directors approved the participation of DEPA, with a 20% stake, to the equity of GASTRADE, the company developing the FSRU project in Alexandroupolis.

The Terminal is complementary to the IGB pipeline and consists of an FSRU (Floating Storage Regasification Unit), anchored 10 km off the coastal area of ​​Alexandroupolis, with storage capacity up to 170,000 cubic meters of LNG and 22.7 million cubic meters daily regasification capacity, per day (8.3 billion m3 / year), as well as a 28 km long onshore and subsea pipeline system.

The international presence of the company is also enhanced by the Greek-Italian energy interconnection through the IGI Poseidon pipeline, as well as the CYNERGY program that “breaks” Cyprus energy isolation by establishing a natural gas supply chain in the country.

Apart from its participation in international projects, equally important are the company’s long-term supply contracts with Russian Gazprom, Turkish BOTAS, Algerian Sonatrach, IGSC (Azerbaijan) through the TAP pipeline, as well as the procurement of significant quantities of LNG through the global SPOT market, at competitive prices.

DEPA’s CEO, Konstantinos Xifaras, summed up the company’s international role:

“For thirty years, DEPA has been a leading player in the Balkan energy sector, as well as an integral part of the European strategy for energy diversification and security of supply both of Greece and Europe.

At the same time, by deploying multilayered energy diplomacy and participating in major international projects, DEPA establishes Greece as a regional energy hub and upgrades its economic and geo-strategic importance.”

DEPA’s footprint is solid in the domestic energy market as well, where it recently prevailed in a tender process for natural gas supply to PPC in 2020. The company acknowledged as one of the two bidders, with the ability to supply PPC with 2 million MWh.

IGI Poseidon in talks with Israeli firms for East Med agreements

The IGI Poseidon consortium, a 50-50 joint venture between Greek gas utility DEPA and Italy’s Edison, is engaged in talks with Israeli companies for direct and indirect involvement in its East Med gas pipeline project, planned to transport gas from Israeli and Cypriot fields to Europe via Greece and Italy.

DEPA and Edison are holding talks with Israel Natural Gas Lines Company, Israel’s gas grid operator, which could lead to a stake in the project for the latter, energypress sources have informed.

If these talks come to fruition, then the East Med project’s planned route, covering 2,000 km, will have made an import step towards actualization, securing gas transmission from the Levantine gas field, off the coast of Israel.

Besides its talks with Israel Natural Gas Lines Company, IGI Poseidon signed a Memorandum of Cooperation on December 2 with Tahal group member TMNG, a leading Israeli natural gas EPC company serving as a one-stop shop for natural gas and oil-related projects. This agreement concerns the development of an investment plan for exports of Israeli natural gas quantities to Europe.

However, much work is still needed before the aforementioned deals, or others, begin offering benefits, officials have stressed.

A period of at least two years will be needed before a finalized investment decision can be taken, according to the IGI Poseidon board, which recently approved funding worth 70 million euros for project-maturity studies.

 

Energean SPA for Edison E&P buy awaiting gov’t approvals

A previously announced conditional sale and purchase agreement (SPA) entered by Energean on July 4, 2019 for the acquisition of Edison E&P from Edison remains subject to relevant government approvals, including the consent of the relevant Algerian authorities in respect of the Edison E&P assets located in Algeria, Energean announced in a statement released today.

Energean notes that Edison has received a letter from the Algerian authorities, which invites Edison to discuss the transaction with Sonatrach. In parallel, discussions are ongoing between Energean and Edison to ascertain any requirement for amendments to the SPA. Energean and Edison are also working to agree an appropriate settlement on the total transaction consideration to take into account any exclusion of the Algerian Asset from the transaction perimeter.

Energean does not expect the Algerian discussions to impact upon its ability to close the transaction on the remaining assets in the Edison E&P portfolio. The required government approvals have already been obtained from UK, Norway, France and Greece.

Approvals from Italy and Egypt are anticipated in the near future. Energean is working to complete the Edison E&P acquisition as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant governments.

The sale of Edison E&P’s UK and Norwegian subsidiaries will be completed as soon as is reasonably practicable thereafter, the Energean statement noted.

DEPA, Edison firm on East Med amid Turkish provocation

Italy’s Edison, part of the Poseidon consortium formed with Greek gas utility DEPA for the development of the East Med gas pipeline – planned to transport natural gas from Israeli and Cypriot fields to the EU via Greece and Italy – has decided to accelerate pre-construction procedures following escalating provocation from Turkey, energypress has reported.

A decision was reached at a recent Poseidon meeting in Milan to assign all needed project studies, financially backed by the EU, within the next two months for swifter completion of preliminary procedures, and, by extension, the project itself, a 2,000-km pipeline.

Greece’s energy minister Costis Hatzidakis and his Israeli counterpart Yuval Steinitz reiterated their support for the project at a recent meeting.

Turkey, seeking to block the project, recently reached a maritime border agreement with Libya, which EU leaders are set to reject as invalid, insisting the pact interferes with the rights of other countries bordering the Mediterranean Sea.

Cypriot Foreign Minister Nikos Hristodoulidis has received reassurances from Israeli government officials that the country is not involved in talks with Ankara for the development of an alternative gas pipeline, according to a Cypriot newspaper report. Israel remains committed to the East Med plan, it added.

DEPA’s Poseidon stake will be transferred to the Greek gas utility’s division for international projects. DEPA is being split ahead of its upcoming privatization.

DEPA Infrastructure sale to be announced mid-December

Privatization fund TAIPED is preparing swift privatization action at gas utility DEPA to follow the government’s ratification of a restructuring plan at the company that will place for sale two new corporate entities, DEPA Trade and DEPA Infrastructure, emerging through this process.

A tender offering investors the Greek State’s 65 percent of DEPA Infrastructure – resulting from the Greek State’s equivalent stake in DEPA – will be announced no later than December 15, according to energypress sources.

Hellenic Petroleum ELPE’s 35 percent stake – resulting from the Greek State’s equivalent stake in DEPA – is expected to be included in the DEPA Infrastructure sale, sources noted. The petroleum group has indicated it is not interested in maintaining interests in DEPA Infrastructure. If this is so, then the potential buyer or buyers of DEPA Infrastructure will become full owner.

DEPA Infrastructure is the full owner of Attiki gas distributor, covering the wider Athens area, and DEDA, covering the rest of Greece. DEPA Infrastructure also holds a 51 percent stake in distributor EDA Thess (Thessaloniki and Thessaly). Italy’s ENI is the minority partner in this venture.

DEPA Infrastructure, through all its interests, has lined up a five-year investment program worth 250 million euros. Revenues at DEPA Infrastructure are regulated and worth a total of approximately 130 million euros.

Italy’s Italgas and Germany’s E.ON are believed to be among the potential bidders for DEPA Infrastructure. Belgium’s Fluxys and Spain’s Enagas, both part of a three-member consortium controlling Greek gas grid operator DESFA, may also participate in the DEPA Infrastructure sale.

The announcement of a sale procedure for DEPA Trade will follow and is expected by the end of January.

ELPE is not expected to offer its 35 percent stake to this sale, meaning bidders will most probably be bidding for the Greek State’s 65 percent.

The Mytilineos group, Motor Oil and a partnership comprised of Copelouzos and KKCG, the Czech company holding a stake in Greek lottery company OPAP, are seen as likely participants in the privatization fund’s ELPE Trade sale. International players ENI and Edison have also been mentioned by pundits.

 

LNG bunkering network for key Greek ports discussed in Rome

The development of an LNG bunkering network covering Greece’s main ports is one of the features included in a Greek-Italian Memorandum of Cooperation signed yesterday in Rome.

Italian officials, driven by increased LNG usage, internationally, proposed the development of LNG bunkering stations at major Greek ports during Prime Minister Kyriakos Mitsotakis’ visit to the neighboring country. The Greek leader was joined by energy deputy Gerassimos Thomas.

Discussion on the development of an LNG bunkering network in Greece goes back a number of years, steered by an EU directive from 2012 focused on the use of cleaner shipping fuel.

Unlike Italian ports, Greece’s ports have lagged behind in this department. In Italy, Edison has pushed ahead with many such investments, big and small-scale.

The objective, in Greece, is to develop a network to cover 15 percent of bunkering needs over the next decade and 25 percent by 2050. Italian know-how would provide valuable support.

Italgas, Italy’s biggest natural gas distributor, has displayed an interest in bidding for DEPA Infrastructure, one of two new gas utility DEPA entities emerging for the gas company’s upcoming privatization.

In a lesser-known development, Greece has received a proposal concerning the use of Italian gas storage facilities, for a fee, until an underground offshore facility south of Kavala is developed to bolster the country’s energy security, according to sources.

The Greek-Italian collaboration plan includes an upgrade of the existing submarine electricity grid interconnection linking the two countries. This line has been plagued by technical problems over recent years, often shutting down for repair work.

ELPE’s Gulf of Patras drilling delayed until ’21, red tape cited

Exploratory drilling by ELPE (Hellenic Petroleum) at its Gulf of Patras license in western Greece will be delayed until 2021 instead of the first quarter of 2020, as was officially planned, or, late 2020, the unofficial target, primarily as a result of bureaucratic obstacles, according to updates offered by company officials at an EAGE (European Association of Geoscientists and Engineers) event just held in Athens.

The Gulf of Patras license was awarded to a consortium comprising ELPE and Edison through an open-door tender launched in 2012 and completed in 2014. Energean Oil and Gas is also involved as a result of its recent acquisition of Edison’s E&P.

The license area, situated between Kefalonia, Achaia and Etoloakarnania, measures 1,419 square kilometers.

Preliminary research work has been completed, identifying wider areas to be explored, including specific drilling spots.

The delay of a concession agreement for a port in the wider region, needed to facilitate drilling needs, has held back the venture.

ELPE has, so far, unsuccessfully sought concession agreements with four ports, Patras, Kyllini, Aigio and Astakos.

Any port that would accept heavy drilling equipment needs to have included such activities in its official operating plan. The detail has prompted bureaucratic issues for ELPE in its effort to secure a port facility.

The project is a high-cost venture as it will be performed in deep-sea territory. Preliminary estimates put the size of the prospective reserves at 140 million barrels.

 

IGB bilateral agreement for construction start to be signed in Sofia

A Greek-Bulgarian bilateral agreement enabling the commencement of construction work on the IGB gas grid interconnector is set to signed in Sofia during a two-day meeting scheduled for October 9 and 10.

Complementary agreements concerning the project, the most significant of these being a shareholders’ agreement and a loan agreement with the European Investment Bank (EIB), will also be signed by officials over the two days.

The Greek-Bulgarian pipeline project, measuring 182 kilometers, will link Komotini, in Greece’s northeast, with Stara Zagora. It will serve as a second interconnection point for the Greek and Bulgarian gas systems, in addition to an existing station in nearby Sidirokastro.

The new project, to offer an annual capacity of 5 billion cubic meters, will commence operating at a lower level of 3 billion cubic meters.

The IGB pipeline is planned to be linked with TAP, running across northern Greece. Combined with the Bulgaria-Romania and Bulgaria-Serbia interconnections, the IGB will contribute to the establishment of the vertical corridor through the Balkans and connect central Balkan countries with Caspian gas and the TAP pipeline.

IGB’s planning, construction and operation has been taken on by ICGB, the project’s Sofia-based consortium, a 50-50 joint venture representing the state-controlled Bulgarian Energy Holding (BEH) and IGI Poseidon, involving Greek gas utility DEPA and Edison.

New effort for East Med agreement at Athens energy summit

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

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

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

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

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

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

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

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

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

 

 

Total seeking buyer for its 50% stake in Block 2, west of Corfu

French oil and gas multinational Total appears to be preparing to sell its 50 percent stake in an offshore license west of Corfu, Block 2, preferring instead to focus on other hydrocarbon interests in Greece, west and southwest of Crete.

Total, the operator of Corfu’s Block 2 license, established a consortium for this venture with Edison and Hellenic Petroleum (ELPE), each holding 25 percent stakes.

This license was signed in October, 2017 following the launch of a tender in 2014 that offered a total of 20 offshore blocks in the Ionian Sea and south of Crete.

Total is in partnership with US major ExxonMobil and ELPE for its licenses west and southwest of Crete.

Recent activity in Cyprus’ Exclusive Economic Zone (EEZ) – an area in which Total has joined forces with Italy’s Eni to take on Block 7 – as well as developments in the wider eastern Mediterranean, has turned the French oil and gas giant’s attention to this region, sources told energypress.

Further changes are expected in the Greek market. ELPE is believed to be seeking partners for exploration and production licenses it has acquired alone.

 

Energean up to 4th in European upstream with Edison E&P deal

Greece’s Energean Oil and Gas has risen to fourth place among Europe’s independent hydrocarbon exploration and production companies, in terms of proven reserves, following its acquisition of Edison’s E&P, a sale and purchase agreement announced yesterday.

Energean Oil and Gas, a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company, will, as a result, possess 639 million barrels.

Israel’s Delek Drilling, with one billion barrels, and Norway’s Aker BP, with 917 million barrels, and Lundin, also Norwegian, with 745 million barrels, make up Europe’s top three.

Energean anticipates it will capture first place within the next two to three years, in terms of daily hydrocarbon production, expected to rise to 200,000 barrels, when an FPSO at Israel’s Karish and Tanin reserves begins operating.

The company’s Edison E&P acquisition – expected to be finalized by the end of 2019 as it is subject to conditions for transactions of this kind, including Italian Economic Development Ministry approval – stands to place Energean at the forefront of Greece’s upstream as the company will gain licenses in western Greece.

Energean will take over Edison’s stakes in two consortiums, the first with Total and Hellenic Petroleum (ELPE) for Block 2 west of Corfu, and the second with ELPE for a license at the Gulf of Patras.

Energean also holds rights to a license in Etoloakarnania, western Greece, with Spain’s Repsol, the operator, as well as in the Ioannina region, in the northwest.

The Edison E&P acquisition will also broaden Energean’s portfolio, to possess 90 licenses in nine countries.

The agreement also adds 434 million dollars to Energean’s earnings before interest, tax, depreciation and amortization (EBITDA), up from 52 million dollars last year.

 

Edison agrees to sell exploration and production to Energean

Italian energy giant Edison has announced the signing of a sale and purchase agreement with Energean Oil and Gas to sell the 100% of Edison Exploration and Production (E&P) and its subsidiaries in the hydrocarbons exploration and production business (oil and natural gas). The Edison Board of Directors approved the transaction yesterday.
The price of the transaction is based on an enterprise value of USD 750 million, with an additional consideration of USD 100 million contingent on the commissioning of Cassiopea development gas project in Italy.

Additionally, Edison will be entitled to royalties associated with further potential developments in Egypt that would bring the aggregate value close to USD 1 billion. The transaction also includes the transferring to the buyer of all Edison future decommissioning obligations.

Edison Exploration and Production manages all of Edison’s activities, mining titles and corporate shareholdings in the hydrocarbons business in Italy and abroad. In particular, Edison E&P owns a portfolio of approximately 90 licences in 9 countries in the Mediterranean and Northern Europe, corresponding to approximately 49,000 barrels per day of net entitlement production as December 31, 2018.

Following the transaction, considering the first half 2019 developments, in particular in terms of regulations as well as brent and gas market trends, and the contractual terms currently being finalized, a 400-500 million euros writedown at Group level is expected.

Edison’s Board of Directors has reserved the right to perform suitable analyses to evaluate the possible capital surplus with respect to the guarantee requirements it is
called upon to meet, considering that the transaction means exiting from a highly volatile and capital-intensive segment, with a higher risk profile than Edison’s other strategic businesses.

This is with a view to possibly reducing the ordinary capital to an extent of covering prior losses as well as those that will be recorded in the 2019 financial statements.
Energean Oil and Gas, a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company with operations offshore Israel, Greece and the Adriatic, has committed to guaranteeing a future of development for the E&P business area and its employees, being the ideal operator to unleash all the potential of the business.

The workforce employed by Edison Exploration and Production amounts to 282 people as June 30, 2019.

Edison Exploration and Production counts also to the staff of the Egyptian Operating Company Abu Qir Petroleum (AQP). With regard to the acquired personnel, Energean Oil and Gas is committed to ensuring certain protections, taking into account the specific regulatory conditions governing the employment rules and
the existing market practices in the various countries.

The closing of the transaction with Energean Oil and Gas is expected to take place by the end of 2019 and it is subject to conditions for transactions of this kind, including Italian Economic Development Ministry approval.

The financial resources deriving from this transaction will support Edison’s strategic development plan, which envisages very significant investments in Italy in the 2019-2021 three-year period intended mainly for sustainable production from renewable sources and gas, as well as the strengthening of the Company’s activities in retail market and energy efficiency services.

Edison has a target to produce by 2030 40% of its energy from green sources and an emissions target of 0.26 kilogrammes of CO2 per kilowatt hour produced. In this way Edison contributes effectively to the energy transition providing Italy with a balanced production mix, able to guarantee the security and flexibility of the country’s energy system.

Edison, with 91 hydroelectric power stations (of which 53 mini-hydroelectric), 45 wind farms and 65 photovoltaic power plants, has an installed capacity in Italy of 1,900 megawatts in renewable sources, with more than 4,000 gigawatt hours of electricity generated in 2018 (21% of the Company’s total electricity production, of which 3,000 gigawatt hours from hydroelectric power plants and 1,000 gigawatt hours from
wind farms).

ND, if elected, wants 65% DEPA sale, not split and sale

The main opposition New Democracy party, if victorious in the July 7 snap elections, intends to privatize gas utility DEPA as one corporate entity, through the sale of a 65 percent stake, rather than through a split-and-sale procedure offering separate trading and infrastructure entities, as has been promoted by the ruling Syriza government, currently well behind in polls.

The role of Hellenic Petroleum (ELPE), holding a 35 percent share of DEPA, will be influential when the time comes to make decisions.

Up until now, ELPE has indicated it would be interested in acquiring a 65 percent stake of DEPA Trade – one of the two DEPA entities envisioned by the government for the utility’s split and sale – either alone or with Italy’s Edison, ELPE’s strategic partner.

However, ELPE’s main shareholder, the Latsis group’s Paneuropean Oil, holding a 45.5 percent share, could revise its stance if DEPA’s new sale procedure is redrafted from scratch, as would most probably be the case with a conservative ND election victory.

During a parliamentary debate in March, ND party representatives clearly opposed Syriza’s plan for a DEPA split, describing it as an unnecessary, excessive and complicated approach that would ultimately suppress DEPA’s market value.

The DEPA split, forged by the energy ministry, is not listed as a bailout term, but the country did commit itself to a reduced retail gas market presence for DEPA. This demand was met some time ago when DEPA withdrew from gas supply firm EPA Thessaloniki-Thessaly and acquired Shell’s stakes in EPA Attiki and EDA Attiki, respective supply and distribution firms covering the wider Athens area.

 

 

Heightened activity, consortium reshuffling as drilling nears

Following a wider trend observed in the southeast Mediterranean, consortiums holding hydrocarbon exploration and production licenses in Greek territory are moving to reshuffle their line-ups, especially for blocks in the Ionian Sea, as the first local drilling operations in decades draw nearer, energypress sources have informed.

The reshuffling activity, which has not involved blocks off Crete, has been attributed to a search by multinationals for additional partners in consortiums established with Hellenic Petroleum (ELPE) as a means of reducing high costs demanded by deep-water exploration in the Ionian Sea.

ELPE holds exploration and production rights for various blocks in the Ionian Sea through consortiums established with Total, Edison and Repsol.

Video Data Rooms have been set up to enable prospective participants to view seismic survey data for Ionian Sea blocks, as well as technical and financial information.

The current reshuffling activity could produce new consortium line-ups by the end of the year, sources have informed.

Greece’s first drilling operation in several decades, at the Gulf of Patras, is expected to commence early next year. Positive results promise to provide further impetus for more drilling in Greek territory.