ELPE, renamed HELLENiQ ENERGY, looks to triple RES capacity in 1 ½ yrs

The chief executive of Hellenic Petroleum (ELPE), which has taken on a new name, HELLENiQ ENERGY, unveiled at a company event in Athens yesterday, took the opportunity to underline the enterprise’s interest in the renewable energy market and RES takeovers abroad, the objective being to triple its green portfolio in 18 months.

HELLENiQ ENERGY’s chief executive, Andreas Siamisiis, informed that the company is currently progressing with two RES company takeovers in foreign markets, without specifying in which countries.

According to sources, one of these two HELLENiQ ENERGY takeovers is in Italy, while the other is in one of Greece’s neighbors along the northern border.

The HELLENiQ ENERGY head told the company event that the Greek market is too small for RES takeovers, adding deals abroad serve the group’s interest to expand.

HELLENiQ ENERGY’s current portfolio of operating RES facilities is at 340 MW, which the company aims to increase to 1 GW within the next year and a half. Its RES portfolio, overall, totals 2 GW.

Crete’s Hydrocarbon Potential to be Unveiled by the End of 2023⏐Upstream Development Programme in Full Swing⏐HEREMA’s Role in the Advancement of Offshore Windfarms

Greece’s upstream exploration programme offshore Crete is proceeding without delays, with a first assessment of the two concessions’ natural gas potential expected by the end of 2023. This was the message delivered by the CEO of the Hellenic Hydrocarbons and Energy Resources Management Company (HEREMA), Aris Stefatos, during a press conference held alongside the company’s Chairman Rikard Scoufias. 

Following the withdrawal of TotalEnergies earlier this year from the blocks dubbed “West of Crete” and “Southwest of Crete”, U.S. energy giant ExxonMobil significantly upped its stake in both concessions, raising this from 40% to 70% for E&P activities, while also assuming the operatorship. Likewise, Greece-based Hellenic Petroleum increased its participation in both areas from 20% to 30%.

ExxonMobil has prepared an upgraded work programme for the first phase of upstream exploration activities – anticipating faster and higher quality results – with delivery expected within a 2-year period instead of the 3 years companies have at their disposal for said exploration stage.

According to Stefatos, any delays in the Cretan concessions can be attributed to the fact that the previous operator did not complete the minimum work programme within the stipulated three-year term. He added that HEREMA’s exploration program is well underway, in accordance with the company’s underlying strategy “Hydrocarbons 2.0”, underpinned by three pillars:

  • Accelerating the development of Greece’s upstream sector with a particular focus on natural gas.
  • Expanding the scope of HEREMA to new energy technologies that can support Greece’s country’s energy transition.
  • Strengthening governance and ensuring HEREMA has the capacity and resources to meet all aspects of its mandate.

Regarding the first pillar, in February 2022 the leadership of HEREMA launched an ambitious investor outreach programme targeting energy majors.  The company’s management noted that the results so far have being particularly encouraging.

Discussions are ongoing with companies that have expressed an interest in entering the Greek upstream sector, with priority being placed on concessions where there is a single investor. While Mr. Stefatos confirmed that another licensing round is not off the table, he stressed the importance of drawing in investors to pre-existing concessions.

HEREMA is also set to play a key role in the development of offshore wind parks in Greek seas, in accordance with its legally expanded work scope, leveraging upon the company’s wealth of expertise in offshore operations. It’s important to underline that offshore oil and gas installations boast strong similarities to the platforms used in offshore wind installations. To this end, the company is being strengthened with specialized technical personnel and the relevant logistical infrastructure to enable it to deliver upon its expanded remit.

HEREMA has been carrying out one-to-one discussions with interested parties, including potential domestic and foreign investors, in an effort to understand their concerns and priorities – deemed key for the development of Greece’s newly-established offshore wind sector. Last but not least, HEREMA recently inked a memorandum of cooperation with the Hellenic Centre for Marine Research (HCMR) focused on technical and environmental synergies.

Within the scope of new energy technologies, HEREMA’s expanded work scope additionally includes the licensing of carbon capture and storage (CCS) and underground gas storage (UGS) projects in Greece. Such projects could focus on the storage of natural gas and hydrogen in the future.  

Imminent key challenges 

While assessing key challenges moving forward, HEREMA’s Board of Directors underlined the importance of maintaining the momentum built during the last 12 months, while ensuring the company is provided with the necessary administrative and financial resources. Strengthening HEREMA’s capacity and resources is a primary challenge and will become even more critical as the company assumes its broader remit including natural gas storage, CO2 and greenhouse gas management, and supporting the offshore wind sector. It is noted that draft legislation for the modernization of HEREMA has been ready for adoption since January 2021 and will contribute to the creation of a more modern and efficient administrative framework.

More specifically, the board concludes “This is an important factor in maintaining investor confidence, but most importantly it serves to build an organisation with the staff, resources, and expertise required to manage a Greek “Hydrocarbons 2.0” programme that should only be initiated once the financial and human resources are in place to monitor and enforce the strictest standards for environmental protection and socio-economic impact management.” 

Ukraine war adds to complexity of Greek-Albanian EEZ dispute in Ionian

An unresolved exclusive economic zone dispute between Greece and Albania over territorial rights in the Ionian Sea has become even more complicated as a result of Russia’s war in Ukraine, a conflict that has turned the Ionian and Adriatic sea areas into a hotbed of confrontation between NATO and Russia.

According to a recent report published by Italian daily La Reppublica, numerous incidents, both minor and more intense, have taken place in the Adriatic and Ionian seas between the escorting forces of the US 6th Fleet aircraft carrier Harry Truman and Russian warships. At least one of these incidents took place off Corfu, military sources have informed.

The naval incidents in the region are a result of its increased strategic importance for NATO with regards to the war in Ukraine as well as military preparations for any possible spread of the conflict beyond Ukraine.

Greece and Albania, following an agreement between the two countries, have begun procedures to take their Ionian Sea EEZ dispute to the International Court of Justice in The Hague. The consequences of the Ukraine war add to the issue’s complexity.

Energean and ELPE (Hellenic Petroleum), both holders of licenses in the Ionian Sea, are working to explore the region’s hydrocarbon prospects.

Diesel totaling 500,000 cubic meters part of emergency plan

A total of approximately 500,000 cubic meters of diesel will be required by five natural gas-fueled power stations to run on diesel should Russian gas supply be totally disrupted, authorities involved in the country’s emergency energy plan have estimated.

The turn to diesel, along with lignite, is part of the country’s wider emergency plan. The strategy’s diesel refueling effort at the five power stations, a procedure to last 16 hours a day over a period of between 100 and 120 days, is feasible, officials representing the Hellenic Petroleum (ELPE) and Motor Oil refineries informed an energy ministry meeting yesterday that also involved RAE, the Regulatory Authority for Energy.

The refinery officials believe the emergency plan’s additional capacity required for a three-month period from January through March, 2023, seen is a crucial period, is feasible, despite heightened diesel demand expected in the industrial sector.

Logistical issues stand as the plan’s biggest challenge as the refineries will need to ensure uninterrupted overland diesel supply to power utility PPC’s power station in Komotini, northeastern Greece, and Elpedison’s facility in Thisvi, northwest of Athens, both geographically demanding as a fleet of fuel trucks will need to be assembled for overland supply to the two units. The number of trucks and this supply plan’s cost remain undetermined.

PPC’s power station in Lavrio, southeast of Athens, and Elpedison’s power station in Thessaloniki do not face such issues as both these facilities are situated close to ports.

 

 

 

Power producer diesel reserves focus of emergency meeting

Top-ranked officials representing the country’s Hellenic Petroleum (ELPE) and Motor Oil refineries, electricity producers, as well as RAE, the Regulatory Authority for Energy, will take part in an emergency meeting called for today by the energy ministry to address diesel safety reserves and a conversion to this energy source by a number of natural gas-fueled power stations should Russia completely disrupt its gas supply.

According to a RAE plan, five natural gas-fueled power stations will run on diesel should Moscow turn off the taps. These facilities will need to maintain an adequate level of diesel reserves covering the emergency plan.

Diesel reserve level requirements for these power stations have been increased, up from 5 to 20 days of consumption, or maximum storage capacity. Electricity producers must reach the increased safety levels by November 1.

PPC Renewables tender for big 550-MW solar farm imminent

PPC Renewables plans to announce a tender by next week, at the very latest, for the development of one of Europe’s biggest solar energy farms, a 550-MW facility in northern Greece’s Ptolemaida area, where sections of lignite mines owned by parent company PPC, the power utility, will be used for the renewable energy project.

The tender will concern the project’s construction. PPC Renewables will install the solar panels itself.

The Ptolemaida solar farm will not participate in RES auctions for tariffs as PPC Renewables intends to establish Power Purchase Agreements (PPAs) with buyers for direct purchases of the solar energy farm’s output.

PPC Renewables aims to have a construction company working on the project’s development by the end of this year for completion of the investment by 2024. The project’s budget is worth approximately 280 million euros.

Europe’s biggest solar energy farm at present, still under construction, is a 626-MW project in central Spain. It is being developed by Solaria Energia. Also in Spain, Iberdrola is developing a 590-MW solar energy farm.

Greece’s biggest solar farm, already operating, is a 204-MW facility owned by Hellenic Petroleum (ELPE) in Kozani, northern Greece.

 

HELLENIC PETROLEUM Group, Neste to Supply Sustainable Aviation Fuel in Greece and to AEGEAN

In a move of great significance, which is tightly connected to its strategy to reduce emissions, HELLENIC PETROLEUM Group has entered an agreement with Neste for the commercial distribution of Neste Sustainable Aviation Fuel TM (SAF) on flights by AEGEAN, the leading air carrier in Greece.

HELLENIC PETROLEUM Group, through its subsidiary EKO, will ensure the supply of SAF on AEGEAN flights departing from its Thessaloniki Airport “Makedonia” hub. Flights from Athens International Airport are expected to follow soon.

This important agreement brings together HELLENIC PETROLEUM Group’s expertise in the supply and distribution of jet fuel with Neste’s expertise in the production and supply of sustainable aviation fuel to provide safe and reliable SAF supply in Greece. SAF is recognized globally as the most feasible option to reduce aviation emissions in the near term.

The agreement is in line with HELLENIC PETROLEUM Group’s strategic goal to become a provider of low carbon energy solutions and to reduce its carbon footprint by 50% until 2030, while facilitating airlines and airports to align in a proactive manner with the upcoming European Union SAF targets by 2025.

Konstantinos Panas, Hellenic Petroleum RSSOPP Supply & Sales General Manager commented: “Our cooperation with Neste, a global leader in renewable and sustainable fuels, is a significant part in the implementation of our strategic plan ‘Vision 2025’ for the energy transformation of our Group. This initiative is one of others to follow for the gradual increased use of sustainable fuels and we are proud to partner with Neste to help AEGEAN and the Greek aviation industry to reduce its carbon footprint.”

Jonathan Wood, Vice President Europe, Renewable Aviation at Neste commented: “We are delighted to be working together with HELLENIC PETROLEUM to make our Neste MY Sustainable Aviation Fuel available in Greece and to AEGEAN. We share the ambition to contribute to reducing the carbon footprint of aviation and are committed to working together to achieve this. Neste is playing its part by increasing SAF production capacity to 1.5 million tons by the end of 2023 – more than the entire aviation pre-Covid fuel demand in Greece. We need to act now – SAF is a key and proven solution with clear climate benefits, and is already available today.”

Neste MY Sustainable Aviation FuelTM is produced from sustainably-sourced, 100% renewable waste and residue raw materials, such as used cooking oil and animal fat waste. In its neat form, and over the life cycle, Neste MY Sustainable Aviation Fuel reduces greenhouse gas emissions by up to 80%* compared to fossil jet fuel use.

* Calculated with established life cycle assessment (LCA) methodologies, such as CORSIA methodology

 

ELPE decision on Cretan offshore blocks within month or two

Hellenic Petroleum (ELPE) will finalize decisions on hydrocarbon exploration at licenses held for two offshore Cretan blocks, west and southwest of the island, within the next month or two, chief executive Andreas Siamisiis has told an annual shareholders’ meeting.

There has been confusion as to what the future holds for these offshore Cretan blocks following the recent withdrawal from their related consortium by Total, which held a 40 percent stake, along with US oil and gas multinational ExxonMobil, ELPE holding the other 20 percent.

Siamisiis, responding to questions on Total’s withdrawal from the Cretan venture, noted that participants were currently involved in talks, adding that a development is expected within the next month or two, without elaborating further.

Just weeks ago, Aris Stefatos, managing director at EDEY, the Greek Hydrocarbon Management Company, told state broadcaster ERT that Total’s withdrawal has prompted the need for another investor, suggesting a replacement is being sought for the Cretan offshore consortium.

Recent reports have indicated that ExxonMobil could also be on the way out from the consortium, which would further increase the need for a major investor.

Siamisiis, during the annual shareholders’ meeting, reiterated ELPE’s commitment for further seismic studies at both offshore Cretan blocks in an effort to determine their hydrocarbon prospects, even if ExxonMobil also withdraws from the consortium.

 

 

 

Shipping sector developing offshore wind farm interest

The shipping industry, domestic and foreign, is expressing growing investment interest for offshore wind farms and is awaiting the emerging sector’s regulatory framework to develop such projects in Greek sea territory, energypress sources have informed.

Though plans are still nascent, a considerable number of shipping companies and shipowners are already in talks with consultants for related feasibility studies.

Conditions for shipping industry players are favorable. Their earnings have skyrocketed amid abnormal market conditions, worldwide, ever since the outbreak of the pandemic in early 2020. These higher earnings have generated additional capital for investment, prompting shipowners to consider the potential of offshore wind farms.

Anticipating strong growth in this emerging sector, metals production group Viohalco plans to proceed with an investment estimated to be worth 70 and 100 million euros, which, through subsidiary Cenergy Holdings, will merge the knowhow of group members Hellenic Cables and Corinth Pipeworks for the establishment of the world’s first industrialized unit for floating wind turbines.

Norway’s Equinor, the world’s biggest developer of offshore wind farms, has already expressed interest to develop projects in Greece, proposing an area between the Cyclades islands of Tinos, Syros and Mykonos.

In addition, TERNA Energy has reached an agreement with Ocean Winds, a partnership between EDP Renewables and Engie, for co-development of offshore wind farms offering a 1.5-GW capacity. Also, Mytilineos has reached an agreement with Denmark’s Copenhagen Offshore Partners. Hellenic Petroleum (ELPE) is currently engaged in talks with a major foreign company and Motor Oil has signed an agreement with Abu Dhabi Future Energy Company (Masdar).

Power utility PPC is currently involved in talks with at least five foreign companies, including Australia’s Macquarie, which recently acquired a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, Greece’s distribution network operator. PPC is also believed to be in talks with American fund Quadum.

The Copelouzos group has joined forces with RF Energy to establish Aegean Offshore Wind Farms, a company planning to develop offshore parks offering an 850-MW capacity.

Greek shipowners own 5,514 ships, controlling 32 percent of the world’s tankers, 25 percent of bulk carriers and 22 percent of LNG carriers, the latter category being crucial for Europe’s effort to end its reliance on Russian natural gas.

 

DEPA Infrastructure sale certification obstacles cleared

Italgas, the Italian buyer of gas company DEPA Infrastructure, a deal yet to be finalized, has accepted certification terms set by RAE, Greece’s Regulatory Authority for Energy, for the gas company’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA, a development that paves the way for the finalization of the sale, worth 733 million euros.

RAE has forwarded its decision on certification conditions for publication in the government gazette after clarifying terms, accepted by Italgas, Europe’s second largest gas distributor.

Italgas officials have been in Greece since December, when the sale and purchase agreement was signed by the sellers, the Greek State and Hellenic Petroleum (ELPE), holding a stake, and the Italian buyer.

During this period, the Italgas officials have been collecting financial and other data concerning DEPA Infrastructure’s subsidiaries.

DEPA Infrastructure sale facing hurdle on final stretch

The yet-to-be-finalized sale of gas company DEPA Infrastructure, acquired by Italgas, Europe’s second largest gas distributor, has encountered a hurdle on the final stretch as a result of certification issues raised by RAE, Greece’s Regulatory Authority for Energy.

The unexpected issues faced by this privatization, promising to provide 733 million euros to TAIPED, the country’s privatization fund, are serious and threaten to derail a sale and purchase agreement signed last December by the two sellers, the Greek State and Hellenic Petroleum (ELPE), and the Italian buyer.

The sale’s procedure had progressed swiftly, leading to competition committee approval, but events over the past few days, instigated by RAE’s change of stance on the certification conditions of DEPA Infrastructure’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA, have suddenly led to confusion, bringing the sale to a standstill.

RAE has offered conditional certification for the three subsidiaries, setting terms that did not exist in the lead-up to the sale and its conditions, according to sources.

Consequently, certification offered to the subsidiaries will not be considered valid if the buyer proceeds with an equity capital increase within three years of the DEPA Infrastructure sale’s finalization. Also, the agendas of all three subsidiaries will need to remain unchanged for their certification to remain valid, according to the sources.

TAIPED officials are believed to have been angered by these initiatives, considering them to be beyond RAE’s authority. Officials at Greece’s finance and energy ministries, as well as Italgas, have also been annoyed by RAE’s decision.

TAIPED and Italgas officials are believed to be engaged in talks in search of a compromise solution.

 

ELPE, Motor Oil decide to cut Russian oil imports

Greece’s two refineries, Hellenic Petroleum (ELPE) and Motor Oil, are moving ahead with plans to replace Russian crude oil imports with orders from alternative sources.

Both energy groups have planned ahead of the EU’s proposal for a ban of all oil imports from Russia by the end of this year, company officials have informed. Reduced reliance on Russian oil imports has been a part of their strategies, whose implementation began last year, the officials added.

Neither energy group has been overexposed to Russian oil imports. Motor Oil’s Russian oil imports, over the years, have represented between 5 to 7 percent of its total oil imports, while ELPE’s Russian oil imports in 2021 reached 18 percent of the group’s total, according to its annual results.

Motor Oil’s deputy managing director Petros Tzannetakis informed a teleconference with analysts last month that the energy group had cut Russian oil imports in the fourth quarter last year.

ELPE’s leadership, which had joined a business delegation accompanying Greek Prime Minister Kyriakos Mitsotakis on a recent official visit to Saudi Arabia, reached an agreement with Aramco for bigger crude oil purchases, presumably to replace Russian oil.

Sanctions on Russia boost Greece’s upstream prospects

The EU’s revised natural gas strategy, seeking alternative solutions as a result of sanctions imposed on Russia, has created favorable conditions for Greece’s upstream sector as the Greek market could become a destination for upstream companies operating in Russia and now needing to shift.

EDEY, the Greek Hydrocarbon Management Company, has forwarded letters to upstream companies already maintaining interests in Greece, informing them of the government’s intentions for a renewed, more ambitious hydrocarbon strategy.

EDEY also intends to hold meetings with these upstream companies to determine their levels of interest in the Greek market and shape its actions accordingly.

Total and ExxonMobil maintain hydrocarbon interests in Greece as co-members of a consortium holding two offshore licenses, west and southwest Crete. The two companies each have 40 percent stakes in this consortium, Greece’s ELPE holding the other 20 percent.

The consortium, it is believed, aims to conduct seismic surveys next winter at the offshore Crete licenses, still at early exploratory stages.

Besides these two licenses, a further four licenses have been granted in Greece. Energean maintains an onshore block in the Ioannina area, northwestern Greece. The company also holds a 75 percent stake at Block 2, northwest of Corfu, with ELPE as its partner. Also, ELPE holds two offshore licenses in the west, Block 10 and Ionio.

These six licenses could generate total turnover of 250 billion euros by 2030, assuming a 20 percent success rate during exploration, according to a conservative forecast made by EDEY.

Drilling for natural gas to begin with licenses in country’s west

Exploratory drilling for natural gas deposits at a total of six licenses in Greece will begin in the country’s west with two Greek companies, Hellenic Petroleum (ELPE) and Energean, leading the way, according to the outcome of talks yesterday at the headquarters of EDEY, Greek Hydrocarbon Management Company, which were headed by Prime Minister Kyriakos Mitsotakis.

Drilling is expected to begin in mid-2023 at Energean’s onshore Ioannina block; followed, a year later, by drilling at Block 2, an offshore license northwest of Corfu that is held by Energean (75%) and ELPE (25%), following Total’s withdrawal; as well as Block 10 and Ionio, two offshore licenses held by ELPE.

Two further licenses, west and southwest of Crete, both held by a consortium that has brought together TotalEnergies (40%), ExxonMobil (40%) and ELPE (20%), are regarded as the most promising of all six licenses but, at the same time, are the least developed in terms or preliminary exploratory work. The consortium aims to conduct, next winter, seismic surveys covering 6,500 square kilometers.

Energean has already conducted a seismic survey at its Ioannina block, the most developed of all six licenses in Greece, and has set a drilling target.

ELPE to seek Ionian Sea partner, Crete delayed by case

Hellenic Petroleum ELPE has successfully completed seismic surveys at offshore blocks in the Ionian Sea and the Gulf of Kyparissia, west of the Peloponnese, for which the company holds 100 percent exploration and exploitation rights, and once results have emerged, will seek to establish partnerships for these ventures, CEO Andreas Siamisiis noted yesterday.

The chief executive, who was speaking at ELPE’s official launch for a solar energy farm in Kozani, northern Greece, one of Europe’s biggest, informed that the group’s hydrocarbon exploration activities for potential natural gas deposits, part of the group portfolio, will focus on offshore areas and be accelerated.

The results of data collected through seismic surveys at the Ionian Sea and Gulf of Kyparissia blocks will now be studied, while 3D seismic data will also be collected, a procedure to require a further 12 months.

As for ELPE’s interests at Cretan offshore blocks, for which the company has formed a consortium with France’s Total and America’s ExxonMobil, surveys conducted have shown similarities with areas in the eastern Mediterranean, where major hydrocarbon discoveries have been made.

ELPE’s chief executive attributed delays affecting exploration work at the Cretan blocks to a legal case filed with the Council of State, Greece’s Supreme Administrative Court, targeting the venture’s environmental impact study. No serious company would continue exploring with such a legal case pending, Siamisiis noted.

 

 

PPC capable of boosting lignite extraction by 43%, utility tells

Power utility PPC has the capacity to increase its lignite extraction to as much as 15 million tons annually, from 10.5 million tons at present, for a 43 percent increase to full-capacity lignite-fired generation, in the event of a Russian disruption of natural gas supply to Europe, according to an updated annual mining plan submitted by the utility to the energy ministry.

Even so, this increased production could still not be enough to fill the enormous gap that would be left by a Russian cut in natural gas supply.

The country’s lignite-fired electricity generation can increase to 6.5 TWh annually from the present plan of 4.5 TWh, according to the utility plan. However, PPC would need to hasten the development of a series of projects to boost productivity at its lignite mines and increase the amounts of lignite stocks at the yards of its seven lignite-fired power stations – five Agios Dimitrios units, as well as Meliti and Megalopoli.

The annual plan’s objective is to increase lignite stocks at each of the five Agios Dimitrios facilities to 1.75 million tons from 1.2 million, while also increasing the amount at Meliti to 300,000 tons from 220,000 tons this month, as well as the lignite stock at Megalopoli to 500,000 tons from 270,000 tons.

Prime Minister Kyriakos Mitsotakis is expected to comment on Greece’s lignite alternative, given the Russian threat, at the official launch, tomorrow, of a major-scale solar energy farm developed by Hellenic Petroleum ELPE at Livera, close to Kozani, northern Greece. Offering a 204-MW capacity, this facility is one of Europe’s biggest.

No need for lignite schedule revisions, officials determine

The country’s decarbonization plan, not responsible for the sharp rise in electricity prices, does not require any revisions, lignite continuing to contribute to the energy mix in accordance with the grid’s needs, government officials have determined following a weekend meeting during which the country’s energy mix was examined.

Lignite has played a bigger role in the country’s energy mix over the past few days, covering more than 20 percent of electricity generation needs, up from 10.5 percent in January.

According to data provided by power grid operator IPTO, six of power utility PPC’s lignite-fired power stations will operate today. Agios Dimitrios I, II, IV and V, Megalopoli IV and Meliti will all contribute to the grid, according to IPTO.

Officials participating at the weekend meeting also examined the progress of the country’s hydrocarbons sectors. EU member states are looking for ways to reduce their dependence on Russian gas.

Hellenic Petroleum (ELPE) recently conducted seismic surveys at its ‘Ionio’ license, an Ionian Sea block southwest of Corfu. EDEY, the Greek Hydrocarbon Management Company, is now awaiting the investor’s next steps.

Hydrocarbon prospects reassessed following invasion

The prospects of Greece’s hydrocarbon sector, given the latest conditions shaped by Russia’s war on Ukraine, which has highlighted the need for natural gas source diversification, will be reassessed at a meeting scheduled to take place at the Prime Minister’s office tomorrow, with participation from the leadership of the energy ministry and EDEY, the Greek Hydrocarbon Management Company.

The meeting’s participants are expected to examine if and how the country’s hydrocarbon prospects and can be more effectively incorporated into Greece’s energy policies.

On a wider scale, Russia’s attack on Ukraine has prompted the EU to look for ways to revise its energy policy in order to reduce its reliance on Russian gas as soon as possible. A number of EU member states are now beginning to refocus on domestic hydrocarbon potential.

Renewable energy remains the top priority in Greece’s energy policy as the country aims to transition to a climate-neutral economy.

However, natural gas is planned to serve as a bridge to facilitate the transition towards greater RES market penetration.

ELPE (Hellenic Petroleum) conducted seismic surveys in January at the Gulf of Kyparissia, west of the Peloponnese, at its Block 10 license, commissioning Norwegian company Sharewater and survey vessel SW Cook.

The same vessel then conducted conduct surveys at ELPE’s ‘Ionio’ license, an Ionian Sea block measuring 6,671.13 square kilometers, southwest of Corfu, opposite the Paxi islands.

EDEY, in an announcement, noted that Greece’s potential gas deposits could generate turnover in excess of 250 billion euros, which would support the energy transition.

ELPE acquires 303-MW PV project, 16 MW of units in operation

Hellenic Petroleum (ELPE) has acquired a new solar energy facility with a 303-MW capacity, currently at the licensing stage, and also added to the company portfolio 16 additional MW of RES units now in operation, both dynamic moves made as part of the energy group’s strategy for further RES growth.

More specifically, ELPE has just signed an agreement with RES development company FEN SOL for the 303-MW solar facility, consisting of two solar energy farms at Meliti, in northern Greece’s Florina area.

In its other big move, ELPE has acquired solar parks offering a total of 16 MW in the Viotia area, northwest of Athens, from Trina Solar. These projects, already functioning, have secured tariff levels at very satisfactory price levels.

In addition, ELPE is also moving ahead with licensing procedures for a further 20 MW and has completed its development of a major-scale solar energy park with a 204-MW capacity in Kozani, northern Greece. The company now expects power grid operator IPTO to soon connect this project to the grid.

The Kozani project’s addition to the grid will increase ELPE’s capacity of operating RES units to a total of nearly 300 MW, chief executive Andreas Siamisiis noted during a presentation of the group’s annual financial results.

ELPE preparing to survey ‘Ionio’ block after sector standstill

Hellenic Petroleum (ELPE) is preparing to conduct seismic surveys at a license in the Ionian Sea, a development that comes as a surprise given the overall stagnancy in Greece’s upstream sector and fears of an end to all exploration aspirations.

ELPE plans to conduct surveys at ‘Ionio’, its Ionian Sea block measuring 6,671.13 square kilometers, southwest of Corfu, opposite the Paxi islands, for a clearer picture on possible natural gas deposits, energypress sources have informed.

ELPE has stepped back from a number of upstream projects but, given this latest development, appears keen to carry on exploring in areas where it has maintained interests.

Last Friday, EDEY, the Greek Hydrocarbon Management Company, announced that ELPE has completed seismic surveys at Block 10, west of the Peloponnese.

ELPE is going into the ‘Ionio’ project alone following the withdrawal of Spanish partner Repsol.

Norwegian company Sharewater has been commissioned the seismic survey for ELPE’s ‘Ionio’ block. Sharewater’s research and survey vessel SW Cook has arrived at the port of Patras in preparation for the task.

However, the vessel is reported to have suffered minor damage following a collision during the mooring process at the port and it remains unclear when it will be ready to proceed with the ‘Ionio’ block survey.

 

New Supreme Court hearing delay for Crete offshore licenses

A court hearing concerning a legal case filed by environmental groups challenging an environmental impact assessment for prospective hydrocarbon exploration at two offshore licenses, west and southwest of Crete, by a consortium consisting of Total, ExxonMobil and Hellenic Petroleum (ELPE), has been suspended for a fourth time since 2019 by the Council of State, Greece’s Supreme Administrative Court, which has set a new date, October 5, 2022, according to sources.

The latest delay comes as a setback for the three-member consortium, which faces a first-stage exploration deadline preceding the new trial date.

Total, ExxonMobil and ELPE have planned seismic surveys at the two licenses, believed to offer natural gas production potential, but the trio cannot proceed with any exploration activity unless it overcomes this legal challenge.

Authorities tasked with assisting the government in legal action taken by environmental groups are seeking to move forward the new trial date, for a swifter conclusion.

The latest court delay highlights fears previously raised by upstream officials believing the country’s official policy on hydrocarbon deposit utilization remains ambiguous.

It remains to be seen how Total, ExxonMobil and ELPE will react to the hearing’s latest delay.

DEPA Commercial privatization decision expected in January

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

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

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

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

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

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

No sign of energy price de-escalation, ELPE chief executive points out

There is no sign of energy prices deescalating any time soon, Hellenic Petroleum (ELPE) group CEO Andreas Siamisiis has noted during a conference call staged for a presentation of the group’s 3Q results.

The ELPE chief executive expressed concern over the sharp rise in energy costs, which have impacted the recovery of the group’s results, despite nearly doubled operating profit in the third quarter.

Higher energy costs are subduing, to some extent, ELPE’s positive results, the chief executive noted, adding that figures in 4Q are expected to be just as good, if not better.

The group’s restructuring plan is progressing at a rapid pace for completion by the end of this year, in accordance with the initial schedule, Siamisiis pointed out.

ELPE, whose revised business plan incorporates major green-energy investments, is expected to be rebranded in early 2022.

ELPE, Energean withdraw from Gulf of Patras license

Hellenic Petroleum (ELPE) and Energean have decided to withdraw from their Gulf of Patras license in western Greece, the two companies have informed EDEY, the Greek Hydrocarbon Management Company.

The Gulf of Patras area’s hydrocarbon quantity, believed to measure at least 100 million barrels, will now remain unconfirmed, following this latest development.

In January, 2020, the consortium had applied for an 18-month extension to complete second-phase work at the Gulf of Patras license. At the time, the consortium had cited insufficient port facilities for entry of the project’s drilling facility and other equipment.

The consortium would have had to conduct a first round of drilling this winter or abandon the project. It opted for the latter.

The Gulf of Patras license was originally granted to ELPE through an open-door tender launched in 2012 and completed in 2014.

Italy’s Edison was also a partner but it withdrew and was replaced by Energean.

The project area covers 1,900 square kilometers. Its estimated hydrocarbon reserves, estimated at between 100 and 140 million barrels, had the potential to offer annual turnover of roughly 200 million euros.

 

ELPE profitability recovers to pre-crisis levels

HELLENIC PETROLEUM (ELPE) announced its 3Q21 consolidated financial results, with Adjusted EBITDA coming in at €125m, up by 90% vs 3Q20 and 58% compared to 2Q21, with corresponding Net Income at €39m. Likewise, 9M21 Reported Net Income came in at €258m, improved by over €600m compared to last year.

Results were mainly driven by oil demand recovery in all key markets, as well as improved benchmark refining margins, following several quarters at historical lows. The strong operational performance in refining and marketing, both in Greece and internationally, as well as the first results from the strategic transformation programs, also had a positive impact. A significant part of the operational improvement was offset by the surge in energy costs and CO2 emissions allowance pricing, which has become one of the most important challenges for industries in Greece and internationally.

Refining, Supply & Trading increased its contribution to the highest levels of the last 5 quarters, led by the higher refining availability and the improvement in the international environment. Furthermore, fuel demand in Greece continued to increase, with domestic sales accounting for 50% of total sales, the highest since 2019. The above positive results were partially offset by the significant increase of variable operating costs, due to the sharp rise in international natgas prices to multi-year highs, which affected the pricing of electricity, as well as of CO2 emissions allowances.

Petrochemicals’ results continued to improve, as product demand exceeds current supply. In Domestic and International Marketing, where an expansion and upgrade plan at the retail network is being implemented, sales and profitability were higher.

The associated companies in the Power and Gas sector reported another quarter of improved performance, mainly due to the higher electricity demand.

IFRS Reported financial results were further improved, due to the continuous increase in crude oil and product prices, with 9M21 Reported EBITDA at €531m and Net Income at €258m. 

Strategy and main developments

The Group’s corporate restructuring process continues, with the Company’s BoD approving, on 30 September 2021, the draft demerger deed for the hive down of the Refining, Supply & Trading and Petrochemical business to the new company. The deed is expected to be submitted for approval by the Shareholders’ General Meeting in early December and its implementation is expected to be completed in the beginning of 2022. The new corporate structure will have multiple benefits in terms of flexibility in developing and financing of new activities, risk management, as well as improving value transparency across the Group’s activities’ portfolio.

Engineering works at the 204 MW PV park in Kozani are at the final stage, with 14 of the 18 parks -corresponding to 166 MW- already mechanically completed, while connection to the HV network and commercial operation are expected in 1Q22.

With reference to the sale process of DEPA Infrastructure (65% HRADF – 35% HELPE), in which the Group participated as a joint seller with the HRADF, Italgas was declared as preferred investor, with an offer of €733m, corresponding to €256m for HELLENIC PETROLEUM’s participation. The share purchase agreement is expected to be signed soon, following the Court of Audit approval, while it is anticipated that the transaction will be completed in 1H22, subject to customary regulatory approvals.

Finally, during 3Q21, the on-shore exploration concessions “Arta-Preveza” and “NW Peloponnese” were returned to the Greek State, while in October the Hellenic Hydrocarbons Resources Management Agency was notified about the intention to also return the West Patraikos concession.

Andreas Shiamishis, Group CEO, commented on results:

“Economic recovery accelerated during 3Q21, mainly due to stronger tourism and increased economic activity, with a direct impact on our sector. The Group results are improved in almost all respects vs last year as a result of better environment and, more importantly, the continuous and steady improvements in controllable areas, such as refining availability, commercial performance in Greece and our international subsidiaries, as well as cost control.

However, aside those positive developments, the ongoing global energy crisis, with a sharp increase in international NatGas prices and a corresponding rise in -natgas linked- electricity and CO2 pricing, affects the industry and the energy transition process.

The above highlight further the importance and necessity of the Group’s strategic transformation process and the implementation of “VISION 2025” strategy, with the new corporate structure, a corporate governance upgrade, as well as the significant resources and capital reallocation, in order to grow in new energy market and proceed with the equally important decarbonization of our core activities”. 

Benchmark refining margins improvement

Since the end of July, OPEC ++ has agreed to a gradual increase in crude oil exports, by 400 kbpd, with a significant impact on global crude supply. However, as demand continued to recover from COVID-crisis lows at a faster pace, a further increase in international prices was recorded, with Brent crude averaging $73/bbl, up from $43/bbl last year and $69/bbl in 2Q20.

As a result of higher demand, the main product cracks recovered from their recent historical lows. In addition, the increase in the crude oil supply, particularly for high-sulfur, put pressure on the relative pricing of those grades vs Brent, with the Brent-Urals differential at the highest levels of the last decade. Those led to a recovery in benchmark refining margins, with the FCC averaging at $5.2/bbl and Hydrocracking at $2.9/bbl. Finally, energy costs increased significantly, with gas and power prices reaching historical high.

The US dollar slightly strengthened vs the Euro in the 3Q21, with €/$ exchange rate averaging at 1.18, corresponding to last year’s levels.

Domestic fuel market demand continuous improving

The lifting of mobility and travel restrictions as well as the restart of the economy and tourism during the quarter, resulted in ground fuels demand increasing by 8% vs LY, reaching 2019 levels. Total domestic fuels market demand amounted to 1.6m MT, -1% compared to 3Q19. The Aviation and Bunkering market also recorded a significant recovery compared to last year, with the consumption of shipping fuels up by 28% to 712k MT and aviation fuel more than doubling to 476k MT, but falling short of 2019 by 20%.

Reduced financing cost; €201m Eurobond repayment

On 14 October 2021, the Group repaid the remaining €201m bonds through available cash, while it will review its capital structure and opportunities in international markets, following the completion of HELLENIC PETROLEUM’s demerger process. The repayment of 4.875% interest rate bonds will have a positive impact on the Group’s financing cost, which in 3Q21 amounted to €24m, reduced by 4% compared to last year.

In addition, a consent solicitation process is underway to the holders of October ’24 notes, to amend the existing conditions, so that the demerger of HELLENIC PETROLEUM takes place in a credit neutral way. Net Debt amounted to €1.8bn, significantly reduced vs LY and at similar levels vs 2Q21.

Key highlights and contribution for each of the main business units in 3Q21 were:

REFINING, SUPPLY & TRADING

­           Refining, Supply & Trading 3Q21 Adjusted EBITDA at €57m.

­          Production amounted to 3.6m MT (+9%), due to the Aspropyrgos increased availability. Sales amounted to 3.8m MT (+5%), with domestic market up 13%, at 1.1m MT.

  • HELPE realized margin at $8.7/bbl, the highest in two years, driven by stronger benchmark refining margins, as well as by the Supply and Marketing performance.

PETROCHEMICALS

  • PP benchmark margins, even lower compared to 2Q21, remained at high levels, leading Adjusted EBITDA to €21m (+40%) in 3Q21 and €102m in 9M21, double vs 9M20. 

MARKETING

  • In Domestic Marketing, the recovery in fuel demand in all sub-markets resulted in increased sales volumes and profitability to significantly higher levels, offsetting the notable rise in transportation and electricity costs, with 3Q21 Adjusted EBITDA at €29m (+68%).
  • In International Marketing, the sales’ increase in the retail networks and the good operational performance led the 3Q21 Adjusted EBITDA to €20m (+15%).

ASSOCIATED COMPANIES

  • DEPA Group contribution to 3Q21 consolidated Net Income amounted to €3m.
  • Elpedison’s EBITDA for the 3Q21 came in at €20m (+31%), with 9M21 at €64m (+50%), due to increased demand for power as well as the contribution of NatGas plants in the system mix, offsetting the decline in profitability in the retail sector.

HELLENIC PETROLEUM GROUP

Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q/9M21 are shown below:

€ million 3Q20 3Q21 % Δ 9M20 9M21 % Δ
P&L figures  
Refining Sales Volumes (‘000 ΜΤ) 3,667 3,842 5% 11,173 11.309 1%
Sales 1,474 2,442 66% 4,460 6.399 43%
EBITDA 19 140 -321 531
Adjusted EBITDA 1 66 125 90% 256 264 3%
EBIT -42 76 -509 341
Adjusted EBIT 1 9 70 93 115 24%
Net Income -43 51 -379 258
Adjusted Net Income 1 8 39 13 51
Balance Sheet Items
Capital Employed 3,989 3,937 -1%
Net Debt 2,125 1,866 -12%
Debt Gearing (ND/ND+E) 53% 47% -11%

 

ELPE begins group restructuring plan to feature new subsidiaries

Hellenic Petroleum ELPE has begun preparations for the establishment of a new subsidiary as part of the group’s wider restructuring plan, dubbed Vision 2025. The subsidiary will be attached to a holding company to serve as an umbrella for subsidiaries representing the group’s activities.

As a first step, ELPE’s administration has decided to establish a new division for its refining, supply and petroleum and petrochemicals sales.  ELPE plans to offer 130.1 million new shares for 10 euros each, which results in a total value of 1.3 billion euros for this new subsidiary.

The restructuring plan is expected to be completed by the end of the year with the establishment of all other subsidiaries, representing Commerce (EKO, BP), ELPE Upstream, ELPE Renewables, as well as a subsidiary hosting the group’s electricity and natural gas interests.

The Vision 2025 plan includes investments worth 4 billion euros to facilitate the group’s entry into the renewable energy sector and support new technologies for cleaner energy production.

Industrial players paying price for energy supply agreement delays

Industrial producers who have prolonged their energy-supply negotiations and delayed signing new agreements now face drastically deteriorated conditions prompted by an alarming price surge.

Highlighting the unfavorable turn in market conditions, one small-scale industrial consumer is believed to have just signed a new high-voltage supply agreement at a price level of approximately 120 euros per MWh, about 30 percent higher than levels of just a few months ago and considerably higher than supply agreements reached early in the summer.

Power utility PPC managed to move fast enough to incorporate hedging agreements to these deals as protection against price rises, a crucial decision given the current conditions.

A number of large-scale industrial players have yet to reach electricity supply agreements, finding themselves fully exposed to the sharp price rises, caused by a combination of unfavorable factors in international markets.

Mid-voltage industrial producers find themselves in even more discomforting positions as electricity price rises for this category have been even steeper, reaching levels of 125 euros per MWh in July and 150 euros per MWh in August.

The adverse market conditions help explain Hellenic Petroleum ELPE’s recent decision to not sign a new supply agreement with PPC, turning instead to group member Elpedison for its electricity needs.

Increased electricity and natural gas costs are severely impacting the competitiveness of industrial producers, expected to pass on these increased costs to their product prices.

 

PPC retail market share remains high, 64.37% in August

Power utility PPC’s retail electricity market share remains high, capturing 64.37 percent in August, down slightly from the previous month’s 65.25 percent, a latest report issued by the Greek energy exchange has shown.

The slight contraction does not represent a wider change in the overall market, but, instead, has been attributed to a market share gain by one supplier, Elpedison, a joint venture involving petroleum group ELPE (Hellenic Petroleum) and Italy’s Edison, following ELPE’s decision to stop receiving high-voltage electricity from PPC for supply from Elpedison. As a result, Elpedison’s retail electricity market share increased to 5.69 percent from 4.44 percent, placing the company in third place among the independent electricity suppliers.

PPC has essentially maintained recent market share gains in the retail market’s low and medium-voltage categories following power bill hikes made by independent suppliers as a result of their decisions to trigger wholesale cost-related clauses included in their electricity bills.

The entire field of independent electricity suppliers increased their overall share to 35.63 percent in August from 34.75 percent in July.

Protergia, a member of the Mytilineos group, led the pack of independent suppliers with a 7.67 percent market share in August, marginally below July’s 7.85 percent. Heron followed in second place with 6.4 percent in August from 6.77 percent in July and Elpedison was ranked third with aforementioned figures. NRG ranked fourth with 4.42 percent from 4.26 percent, while Watt and Volt was ranked fifth with an unchanged market share of 2.67 percent. Volterra was sixth with 2.05 percent from 2.07 percent, Fysiko Aerio Attikis seventh with 1.87 percent from 1.94 percent, Zenith eighth with 1.56 percent from 1.55 percent, Volton ninth with 1.46 percent from 1.43 percent and KEN tenth with 0.75 percent, unchanged from July to August.

ELPE posts 76% EBITDA increase, year-to-year, 2Q net profit at €54m

Hellenic Petroleum (ELPE) has posted a 26 percent comparable EBITDA profit increase to 79 million euros for the second quarter.

ELPE’s net profit reached 54 million euros in the second quarter and 206 million euros in the first quarter, while the EBITDA figure was 133 million euros, a 76 percent year-on-year increase.

The market’s gradual market recovery has led to a slight improvement in international market conditions.

An operating profit increase at ELPE was primarily attributed to a record high in the petrochemical sector, where the reduced global availability of polypropylene led to very high international margins.

A rebound in international oil prices for yet another quarter, positively impacted the company’s stock valuation and published results.

 

Repsol transfer of Ioannina block stake to Energean done, 4 players left

Spain’s Repsol has completed its strategic withdrawal from the Greek hydrocarbon market with the finalization of a transfer of its 60 percent share in the onshore Ioannina block, northwestern Greece, to project partner Energean.

Energy minister Kostas Skrekas’ ministerial decision needed for the transfer’s finalization was published yesterday.

Repsol revealed its intention to withdraw from the Greek market early this year when the Spanish company and its partner for the Etoloakarnania block, Energean, both notified the Greek State and EDEY, the Greek Hydrocarbon Management Company, of their decision to return their Etoloakarnania block rights.

This was followed by the transfer of Repsol’s share in the Ioannina black to Energean in March, while, late in July, the Spanish company announced its decision to withdraw from an Ionian Sea block, its last remaining license in Greece.

Repsol’s new business plan will limit the company’s presence to just 14 of 34 markets in which it has maintained interests. Repsol has also set an objective to reduce its annual investments in the upstream sector from 2.4 billion euros in 2019 to 1.6 billion euros by 2025.

Besides Repsol, Hellenic Petroleum (ELPE) has also withdrawn from two onshore blocks, Arta-Preveza and Northwestern Peloponnese, made official on August 13.

Four investors remain active in Greece’s hydrocarbon exploration and production market, ELPE, Energean, France’s Total and the USA’s ExxonMobil, at a total of 11 licenses.