EU energy-crisis concerns over Ukraine corridor ‘manageable’

European fears of further energy-crisis woes that could result from the nearing end of a five-year pipeline gas transit agreement between Kyiv and Moscow for Russian gas supply to Europe via Ukraine, appear to be manageable, as long as a series of specific measures are implemented, most EU ministers responsible for energy agreed at an Energy Council in Brussels yesterday.

The bilateral agreement between Ukraine and Russia expires at the beginning of 2025. Ukraine has declared it does not intend to renew this agreement.

Further energy-crisis concerns as a consequence of this agreement’s conclusion, expected to reduce the EU’s total gas imports by 5 percent, can be prevented if EU member states speed up their development of roughly 20 LNG facilities planned from Europe’s north to south; renewable energy investments gain further momentum; energy-savings measures are continued; natural gas consumption reductions continue at the current rate; and LNG imports are increased to make up for reduced Russian gas imports, energy ministers of most EU member states agreed at the Brussels meeting.

Last year, approximately 14 bcm of Russian gas was transported through the Ukrainian corridor to countries such as Austria, Hungary and Slovakia.

Numerous EU member states achieved renewable energy production all-time highs last year. In Portugal, renewables covered 61 percent of the country’s energy needs in 2023. RES coverage of Greece’s energy needs reached 57 percent. In Germany, RES units met 52 percent of the country’s energy needs, while in Belgium the figure reached over 30 percent.

PPC’s energy-sufficiency plan for Crete forwarded to Brussels

An energy-sufficiency plan to cover Crete’s energy needs until an electrical grid-link with Athens is completed for commercial launch, expected within 2025, is now close to being finalized and has been forwarded to the European Commission for approval, energypress sources have informed.

A remuneration formula chosen for the island’s energy-sufficiency plan involves state aid and, as a result, requires Brussels’ approval.

The energy ministry has awarded Crete’s energy-sufficiency project to power utility PPC after alternative solutions involving Heron and Motor Oil failed to make progress.

For its Cretan plan, PPC has reached an agreement with Greek construction and energy group GEK-TERNA to initially lease – for two years, until 2025, and then purchase – the latter’s Heron I, a 147-MW gas-fired power plant, currently stationed in the Viotia area, northwest of Athens.

PPC plans to have the Heron I power plant transferred and reinstalled on Crete in time for this coming summer, when energy demand typically peaks.

A decision was reached, at a recent energy ministry meeting, to cover 75 percent of the power plant’s investment cost, until 2025, through the public service compensation (YKO) account, accumulating related surcharges added to all electricity bills.

The other 25 percent of the investment cost is planned to be covered, between 2025 and 2028, through a remuneration mechanism for emergency reserve units.

The energy ministry is soon expected to bring to Parliament a legislative revision covering the energy-sufficiency plan for Crete.

 

Doubled TAP capacity by 2030, not 2027 as initially planned

A Trans Adriatic Pipeline (TAP) plan to double the pipeline’s capacity to 20 billion cubic meters by 2027 now appears likely to be delayed until 2030, Stefano Venier, CEO of Italian energy infrastructure company Snam, one of the TAP consortium shareholders, has indicated.

The ability to double the pipeline’s capacity depends more on the availability of gas in Azerbaijan than on demand, the Snam chief executive noted during a presentation of the company’s business plan until 2027.

The aim is to increase capacity gradually so that the pipeline can operate at full capacity sometime between 2027 and 2030, the latter being most probable, the official noted.

In previous announcements, the TAP consortium, in which Snam holds a 20 percent stake, had said the pipeline’s capacity would be doubled by 2027.

Participants in a market test being staged to measure whether demand is sufficient face a January 31 deadline to submit binding bids.

TAP, an 878-kilometer link crossing Greece, Albania and the Adriatic Sea to Italy, is developing from a pipeline of strong Italian and Greek interests to one with a crucial pan-European role as a result of the energy crisis of the last two years, a condition that has further highlighted the importance of energy security and gas supply, Snam noted.

 

PPC’s Crete energy sufficiency plans include GEK-TERNA unit

Measures planned by power utility PPC to help cover the energy needs of Crete, Greece’s biggest island, before and after the completion of a grid interconnection project to link Crete and Athens, include Heron I, a 147-MW gas-fired power plant currently owned by Greek construction and energy company GEK-TERNA.

PPC, which has undertaken the task of ensuring energy sufficiency on Crete, has reached advanced negotiations with GEK-TERNA to purchase the Heron I power plant and transfer it from its current Viotia location, northwest of Athens, to Crete.

The power plant’s installation on Crete could be completed in time for 2025’s summer season, a period when energy demand typically soars on the Greek islands as a result of tourism.

Heron I’s launch on Crete in the summer of 2025 would help safeguard the island from any energy insufficiencies should the commercial launch of the Crete-Athens grid interconnection, scheduled for the same summer, be delayed by a few months. Such a delay would leave Crete short of 220 MW, energypress sources informed. Heron I is also equipped to run on diesel.

In the meantime, PPC needs to take swift action to ensure Crete’s energy sufficiency for this coming summer, when the island’s energy deficit is projected to reach 190 MW.

Egypt’s LNG exports to Europe in danger of being zeroed out

The widened Middle East conflict has greatly impacted Egypt’s LNG export ability, intensifying European fears of shortages on the continent this coming winter.

Production at Israel’s Tamar gas field, yielding 10 bcm per year, has been disrupted. This comes as a setback for Europe as a proportion of Israel’s production at the Tamar field is distributed to Egypt, which, in turn, exports to the continent in the form of LNG. Egyptian LNG exports were already down prior to this development.

As a result of these two factors, Egypt must now focus on covering its own energy needs, which relegates its LNG export interests to secondary status, analysts noted, warning that supply from Egypt could even be zeroed out.

LNG supply from Egypt is not negligible. Last year, Egypt exported 4.6 bcm, covering 5 percent of Europe’s needs.

Egyptian LNG exports have been severely restricted since October 7, when the current conflict was instigated by a Hamas attack on Israel, forcing the country to halt production at Tamar as a precautionary measure.

For the first time in years, Egypt’s LNG flow could reverse, transforming the country into an LNG importer rather than an LNG exporter.

Gas supply to Egypt has dropped by 70 to 80 percent since the closure of Tamar, a gas field that was producing at a rate of 23 million cubic meters a day during the year’s first eight months, an International Energy Agency analyst highlighted.

 

 

DESFA slot auction for 2024 successful, premia levels drop

Gas grid operator DESFA auctions staged last week for LNG cargo slots in 2024 proved successful, as had been anticipated. Just five of a total of 45 slots were available as 40 slots had already been reserved by bidders during a previous round.

This year, DESFA is, for the first time, staging LNG slot reservation auctions offering capacities for the next 15 years, from 2024 to 2038, triple the five-year extent offered up until last year.

Slot commitment by bidders beyond five years constitutes a significant qualitative leap for both the natural gas market and gas infrastructure as, on the one hand, long-term capacity agreements are bolstered, and on the other, infrastructure development visibility is improved through the expression of definite interest, market officials noted.

Latest auction premia have fallen to much lower levels, compared to last year, a development attributed to two key factors, reduced gas demand and the forthcoming launch of the Alexandroupoli LNG facility in Greece’s northeast, DESFA sources noted.

Reduced gas demand and the imminent launch of the new Alexandroupoli LNG facility, along with other gas-sector infrastructure, has led to a better supply-demand balance in terms of capacity commitment at the Revythoussa terminal – Greece’s only LNG unit at present – and  prevented conditions for high premiums, as was the case last year.

Heightened gas demand last year pushed slot prices well above auction starting prices. As a result, premia, or windfall earnings, generated at the Revythoussa slot auctions and the Greek gas grid’s other entry and exit points reached 65 million euros.

DESFA’s windfall earnings, according to domestic gas market regulations, need to be utilized to benefit grid users. The 65 million-euro amount accumulated last year will go towards supporting the country’s latest supply security effort, as part of a 160 million-euro preventive action plan.

This initiative will lessen, by 65 million euros, the supply security effort’s collection target through various surcharges on consumer bills.

Preventive action plan given green light following revisions

RAAEY, the Regulatory Authority for Waste, Energy and Water, has approved an energy-crisis  preventive action plan following revisions made through consultation.

The authority clarified that an operating-life extension granted to lignite-fired power stations is part of the Greek State’s new plan addressing energy security issues, especially following European Commission guidelines promoting a reduction of natural gas usage and an end to the continent’s reliance on Russian gas.

The plan’s original section on lignite-fired energy needed to be corrected as its text created a misconception indicating that any lignite-unit participation in the country’s generation mix is governed by a special reserve mechanism. Such a mechanism does not exist.

Power utility PPC, in consultation that preceded the preventive action plan’s approval, clarified that lignite-fired power stations, until they are withdrawn, remain registered with power grid operator IPTO and, therefore, participate in markets while also taking into account other operating obligations such as provision of regional telethermal heating.

Terms regarding the usage limits of the Revythoussa LNG terminal’s storage facilities in the event of a heightened Level 2 or 3 natural gas crisis were also modified. The initial text proposed that the maximum usage time, in the event of a crisis, be reduced to six days, but, in the finalized plan, this limit reduction was reworded to “at least six days”.

EU adequately prepared for winter ahead, ACER notes

 

The EU is adequately prepared to cover its energy needs this coming winter, despite the effects of prolonged efforts that were needed last winter to overcome unprecedented challenges, data provided by ACER, Europe’s Agency for the Cooperation of Energy Regulators, has indicated.

The EU’s gas storage facilities are already 90 percent full, two months ahead of a November deadline.

Also, in the first two quarters of 2023, a target set for a 15 percent reduction in gas demand was achieved, while LNG import capacity has expanded by 20 percent, with the global market remaining well supplied, courtesy, in part, to limited demand growth from China.

Increased LNG imports and reduced demand have been key parts of the EU’s energy-crisis strategy.

LNG imports into the EU-27, as a percentage of overall natural gas imports,  doubled from 20 percent in 2018-2019 to 40 percent between August, 2022 and July, 2023. This percentage rise has been greatly attributed to LNG imports from the USA, up six-fold to 600 TWh.

Furthermore, solar, wind and pumped-storage energy solutions are being developed at a faster pace and contributing, slowly but steadily, to Europe’s reduced reliance on natural gas.

Despite the overall progress, Europe cannot afford to become complacent. According to Brussels-based economic think tank Bruegel, energy shortage fears have subsided but prices remain high.

Also, ongoing global instability could impact the industrial sector and the EU economy, the think tank warned.

The global LNG market, and, by extension, the natural gas market, will remain tight until more liquefaction plants come into play, Bruegel noted.

Encouragingly, new US LNG facilities to offer an annual capacity of 336 TWh, equivalent to half the EU’s LNG imports from Russia, are planned to begin operating in 2024.

Revythoussa LNG terminal still vital despite lessened activity

Capacity increases at the TAP pipeline, facilitating the delivery of Caspian gas to destinations in Europe, and the IGB gas pipeline linking Greece and Bulgaria, plus the scheduled launch, early in 2024, of the Alexandroupoli FSRU at the country’s northeastern port, will lessen the number of LNG tankers delivering quantities to the Revythoussa LNG terminal, just off Athens, for eventual distribution to the Bulgarian market, but the terminal remains vital for Greece’s energy security and supply.

In addition, an agreement signed last January by Turkey and Bulgaria’s respective state-owned energy companies, Botas and Bulgargaz, for Turkish supply to Bulgaria of 1.5 bcm of natural gas, annually, over a 13-year period, also promises to further decongest activity at the Revythoussa LNG terminal.

The Bulgarian-Turkish agreement had prompted a number of questions in the domestic and European markets regarding its terms and conditions, as well as its impact on Greece’s gas infrastructure.

However, as was recently highlighted by Sotiris Bravos, Senior Commercial Services Manager at DESFA, Greece’s gas grid operator, the Revythoussa LNG terminal’s commercial role will only be limited in trade concerning the Bulgarian market.

In 2022, the Revythoussa LNG terminal covered two-thirds of Bulgaria’s natural gas needs, a performance not expected to be repeated this year given the increased number of facilities – TAP, IGB, and, slightly later on, the Alexandroupoli FSRU – serving the Bulgarian market.

Even so, the Revythoussa LNG terminal remains a crucial part of the country’s gas grid, especially regarding supply security and the grid’s balance, Bravos, the DESFA official, noted.

At present, the Revythoussa LNG terminal is Greece’s only LNG entry point and one of the country’s four natural gas entry points.

DESFA’s administration believes new gas infrastructure will not compete against the Revythoussa LNG terminal as it remains a facility of major importance for the Greek gas grid and the significantly increased needs of central Europe.

Hamas attack on Israel raises energy security questions

The weekend’s shock attack by Hamas on Israel, which has cast doubts over the capabilities of Israel’s secret services while also proving the country’s Iron Dome air defense system inadequate as it failed to respond to thousands of rockets launched from Gaza, has, inevitably, also spilled over into the energy sector, raising security fears about Israel’s Exclusive Economic Zone.

Israel’s defense shortcomings, combined with the likelihood of an escalation of the current situation involving other Arab organizations, raise concerns about the country’s ability to protect critical infrastructure such as platforms and gas pipelines.

Upstream companies operating within Israel’s EEZ need to feel secure about the safety of their personnel and investments in the region.

For the time being, production at facilities operated by Greece’s Energean have not been disrupted.

The developments also extend into the political sphere. Earlier this year, Israel and Lebanon reached an EEZ delimitation agreement that enabled Lebanon to begin hydrocarbon exploration on its side. Total, Eni and QatarEnergy took on the project and are expecting initial results a few weeks from now.

The agreement between Israel and Lebanon, a politically sensitive one, gives Israel a 17 percent share of revenue from the Qana gas field.

Israel has also been considering the prospect of conducting drilling efforts off Gaza in collaboration with the Palestinian Authority and Egypt.

As for Europe, which saw in the Middle East an opportunity to escape from the dangers associated with Russian natural gas, this latest escalation comes as a reminder that energy security remains a difficult equation.

 

 

Milder, lower-cost gas storage measures planned for winter

This winter season’s Preventive Action Plan for natural gas supply security in Greece is expected to be significantly lower in cost as it will be limited to a basic set of milder precautionary measures, energypress sources have informed.

The Preventive Action Plan will be determined by the outcome of a risk study currently being conducted for the upcoming winter, deputy energy minister Alexandra Sdoukou recently informed.

Though the study’s results are not yet out, it has already become apparent that drastic energy security measures such as those taken for last winter – among them the rental of an additional FSU at the Revythoussa LNG terminal just off Athens – will not be necessary, well-informed sources have contended.

This winter, gas grid operator DESFA, running the Revythoussa LNG terminal, does not intend to hire an additional FSU, which, along with gas-storage facility rentals abroad last winter season by electricity producers operating gas-fueled power stations in Greece, ended up costing 160 million euros.

In the lead-up to last winter, Greece’s gas-fueled electricity producers were required to store natural gas at underground storage units of other EU member states, as domestic gas storage facilities did not suffice to cover precautionary-measure needs.

The country’s electricity producers have, this autumn, remained far more subdued on gas-storage action at facilities in fellow EU member states. Some of Greece’s major electricity producers have reached agreements to use gas storage facilities, primarily in Italy, if needed, sources informed.

Gas amounts involved in these agreements are believed to be well below levels foreseen by EU regulations and RAAEY, the the Regulatory Authority for Waste, Energy and Water.

Last winter, RAAEY, aligning itself with EU Regulations, which require all member states to store gas amounts equivalent to 15 percent of national annual consumption, set a 7.5 TWh storage requirement.

Market officials have expressed concerns as to whether this requirement still needs to be maintained, noting the Revythoussa LNG terminal could cover extraordinary needs through additional LNG shipments.

Two alternatives for DEPA Commercial bourse listing

Two primary alternatives being considered for the privatization of DEPA Commercial, a process that seems to have regained momentum, seem to be the most probable courses of action, sources have indicated.

Both options being considered would result in DEPA Commercial’s listing on the Athens stock exchange.

Through one of the two possible alternatives, DEPA Commercial’s two shareholders, privatization fund TAIPED, holding a 65 percent stake in the gas company, and Helleniq Energy, formerly named Hellenic Petroleum, would each contribute portions of their equity in DEPA Commercial for its entry into the Athens bourse.

The other alternative being examined would entail the sale of Hellenic Petroleum’s 35 percent stake in DEPA Commercial to the Greek State, which, in turn, would make this equity available on the bourse.

DEPA Commercial’s privatization plan had been put on hold as a result of the energy crisis and an ongoing legal battle between the gas company and fertilizer industry ELFE.

The Greek State has intervened in the gas market, through DEPA Commercial, to implement measures designed to control gas prices and secure energy sufficiency.

Demand to reach 10 GW today, officials confident on grid

Domestic electricity demand could reach 10 GW today, a record level for 2023, amid heatwave temperatures, but sector authorities are confident the grid is well prepared and equipped to handle the challenge.

Overall, the grid is in sound state, while any issues that may have emerged at some locations, especially areas affected by fires that have broken out in recent days, have been swiftly resolved to prevent a spread of grid problems in wider areas, sources at power grid operator IPTO have informed.

However, given the extensive fire fronts and high risk of new outbreaks in coming days, combined with elevated, heatwave-related electricity demand, IPTO officials are remaining vigilant, monitoring events for swift action if necessary.

According to an IPTO schedule for today, electricity demand is projected to peak at 1 pm, reaching 9,956 MW, over the highest level reached so far this year, 9,950 MW, recorded on July 14.

Solar panels are expected to cover over 40 percent of demand, delivering 4,300 MW, during today’s midday hours, when electricity demand will be highest.

Higher electricity demand will push prices higher on the energy exchange today, the average wholesale electricity price expected to rise by 6.62 percent to 135.58 euros per MWh, up from yesterday’s level of 127.17 euros per MWh.

 

Italy gas storage injections of no use, DESFA auctions show

Gas grid users have fully reserved the capacity offered at the country’s Nea Mesimvria entry point in the north after expressing great interest in gas grid operator DESFA’s annual auctions, staged on July 2 and requiring over 24 hours to be completed as a result of the big turnout.

The capacity reservation level at the gas grid’s Nea Mesimvria entry and exit point is crucial for gauging, with clarity, natural gas amounts Greece should store away at Italian storage facilities ahead of next winter as, in the event of disruptions to Greece’s gas import schedule, the stored quantities could only be used if free capacity exists at the aforementioned entry point.

Last year, Greece had resorted to an uncommitted capacity at the Nea Mesimvria entry point in its negotiations with the European Commission for a gas-storage rule exception. It enables EU member states with a shortage of gas storage facilities, such as Greece, to keep storage requirements at 15 percent of the average consumption level over the past five years.

Uncommitted capacity at the Nea Mesimvria entry point last year worked out to 7,522 MWh per day, which resulted in a viable gas storage total in Italy of 1.14 TWh, from the start of November until the end of March.

This year, given the country’s fully reserved capacity at Nea Mesimvria, the prospect of storing gas in Italy would offer Greece no help in meeting domestic needs in the event of disruptions to the country’s gas supply.

DESFA gas auctions pivotal for winter’s storage requirements

Gas grid operator DESFA’s annual gas auctions, taking place today to offer capacities at the grid’s entry and exit points, will play a pivotal role in clarifying and determining to what extent Greece could reduce gas quantities that will need to be stored away at Italian and Bulgarian facilities between November and March for energy security next winter.

The outcome of the auctions will shape Greece’s negotiating position in talks with the European Commission for the country’s gas storage needs.

If the vacant grid capacity left over from today’s auction process is small, then Greece will seek a smaller gas-storage requirement from Brussels authorities.

Greece’s gas storage requirement last winter was limited to 1.14 TWh, based on the country’s vacant capacity at the Nea Mesimvria grid entry point, in the north.

An exception offered by the European Commission to EU member states with a shortage of gas storage facilities, such as Greece, enables storage requirements to be kept at 15 percent of the average consumption level over the past five years.

 

Security fee cut sought for competitive gas-fueled units

RAAEY, the Regulatory Authority for Waste, Energy and Water, and electricity producers are seeking a solution that would lower an elevated Supply Security Fee imposed on natural gas quantities consumed at natural gas-fueled power stations.

The fee’s reduction is being sought by both sides so that high operating costs faced by the country’s gas-fueled power stations can be subdued. These costs are significantly restricting the operating hours of domestic power stations, a situation favoring electricity imports.

A Supply Security Fee of 2.49 euros per MWh has been set for 2023 on all gas-fueled electricity producers, except those participating in a demand-response mechanism, in an effort to help cover the cost of energy-crisis measures adopted last winter to ensure energy sufficiency.

However, a reduction in natural gas prices over recent months has meant the Supply Security Fee currently represents an increase of roughly 8 percent on the cost of natural gas used by natural gas-fueled power stations.

The solution being sought entails limiting this fee but lengthening the period over which it will continue to be paid. This approach would result in the same amount of revenue collected to cover the cost of precautionary energy-safety measures, but it would be accumulated over a longer period of time.

 

Caretaker energy minister confident all is in place

The caretaker government’s energy minister Pantelis Kapros has assumed his post feeling confident that all has already been put into place by previous officials to ensure energy sufficiency as summer approaches.

His predecessor, Kostas Skrekas, the country’s market operators and power utility PPC have taken all necessary initiatives to ensure energy sufficiency, even under high temperatures.

Kapros, professor of energy economics and operational research at the School of Electrical and Computer Engineering of the National Technical University of Athens (NTUA), has made this confidence clear during a first round of talks with market operators and regulators.

He will remain in charge of Greece’s energy portfolio until a new government is sworn in following a second round of voting, possibly late next month.

Reservoir water levels at PPC’s dams have been maintained at levels comparable to last year, lignite reserves are high, while the number of new RES units connected to the grid this year has reached unprecedented heights.

The country’s hydropower facilities currently offer a capacity of 2,800 to 2,900 MW, lignite stocks measure 3 million tons, and more than 1 GW in new RES unit connections have been made.

Furthermore, two new power stations, a Mytilineos group facility and PPC’s Ptolemaida V, promising an overall capacity of 1,500 MW, are now close to being launched.

Europe favorably placed ahead of next winter’s gas storage refill

Favorable conditions last winter have placed Europe in an advantageous position of being able to fill, to full capacity, its natural gas storage facilities even if Russian supply is completely cut off.

Europe needs to store away approximately 35 billion cubic meters of natural gas between now and the end of October, well below the average figure of roughly 55 bcm over the past decade, in order to fill its energy storage facilities at 90 percent of capacity, the European goal set for next winter.

A year ago, Europe needed to purchase approximately 70 bcm of natural gas to fill its storage facilities. This was one of the factors that pushed prices up to all-time highs.

Fortune went Europe’s way last winter as temperatures remained mostly mild, significantly subduing energy usage, while China’s zero-Covid policy enabled the continent to import substantial LNG quantities which, otherwise, would not have been available.

As a result of these factors, Europe’s gas storage facilities were left 55 percent full by the end of last winter, well above the previous decade’s average of 33 percent.

Despite the favorable news for Europe, the market remains susceptible to dangers as a result of increased natural gas usage in the industrial sector and revitalized demand in Asia, factors that have led analysts to forecast a wholesale gas price rebound that could exceed 100 euros per MWh.

Also, the milder weather conditions could have negative impact in the long run. Low rainfall and snowfall in many parts of Europe could lead to a hot and dry summer, increasing energy demand for cooling purposes, and prices. This could make Europe’s energy-storage refilling effort slightly more challenging.

PPC supply security plan for islands in summer approved

RAE, the Regulatory Authority for Energy, has approved a power-generator rental plan prepared by power utility PPC to meet sharply higher summer-season electricity demand on Samos, Chios, Santorini, Rhodes, Lesvos and Kastelorizo.

“Supply security at non-interconnected islands is a national priority and it is therefore necessary to take appropriate measures to avoid risks related to their electricity supply,” RAE announced.

The cost of such emergency measures is funded through public service compensation (YKO) surcharges included in electricity bills.

PPC’s emergency rental plan, to run from July 1 to August 31, includes a 12-MW power generator for Samos, a 25-MW unit for Chios, a 20-MW facility for Santorini, an 18-MW unit for Rhodes, a 14-MW facility for Lesvos and a 0.15-MW power generator for Kastelorizo.

IEA report, positive, calls for faster RES licensing procedures

A latest International Energy Agency report on Greece, published today, calls for swifter licensing procedures concerning new RES projects, while also noting that any new investments in gas infrastructure will need to focus on fully meeting supply security requirements.

The report, examining Greece’s energy transition progress from 2017 to the present, commends the country’s green-energy performance but notes more work is needed.

Greece has made positive progress in reducing carbon use and reforming energy markets, but needs to do more to develop renewables and promote energy efficiency, IEA noted in an announcement concerning the report.

The IEA report praises Greece’s ambitious targets for a greener energy mix through installations of RES technologies, also planned to include offshore wind farms, and also commends initiatives taken to develop new power grid interconnections with neighboring countries.

These grid interconnections will, on the one hand, enable any excess green energy generation to be exported, while, on the other hand, diversify the country’s supply sources, it notes.

The report also makes extensive reference to initiatives taken by Greece to modernize its electricity and gas markets.

DESFA opts to not extend expiring FSU deal for LNG terminal

Gas grid operator DESFA will not make use of an option to extend its expiring one-year lease agreement for an additional floating storage unit installed at the operator’s LNG terminal on the islet Revythoussa last summer as an energy security measure, the operator’s head official has informed.

“We have already agreed with RAE, the Regulatory Authority for Energy, that it [agreement] will not be renewed and the tanker will be released as it was a temporary solution that served the need to maintain strategic LNG stocks for power generators during the winter period,” Maria Rita Galli, CEO at DESFA, told Greek daily business newspaper Nafteboriki.

The current one-year FSU agreement, worth 20 million euros, expires in June. It ended up being a high-cost solution for DESFA as a result of the mild winter conditions as well as LNG quantity loss resulting from evaporation issues at the upper level of the FSU, a situation that could have been greatly restricted had a decision been reached to connect this unit to the Revythoussa terminal for direct transmission into the grid.

DESFA is believed to be examining the prospect of renting a new tanker for a shorter duration of five months, which would entail far lower cost, energypress sources have informed. If so, DESFA is expected to stage a tender within the upcoming summer for a new LNG tanker lease agreement.

Market officials anticipate the installation of a replacement LNG tanker will probably be needed to cover natural gas storage needs ahead of next winter.

The additional FSU currently in use increased the Revythoussa LNG terminal’s capacity by 70 percent, to approximately 370,000 cubic meters.

Gas firms requested to store away 7.5 TWh total this year

RAE, the Regulatory Authority for Energy, has requested natural gas suppliers to start storing away gas quantities ahead of next winter, based on EU energy-security provisions, energypress sources have informed.

The authority aims to encourage companies to make the most of current favorable terms in international gas markets. Gas price levels are currently far lower than they have been during the energy crisis, so quantities required for storage can be secured at competitive prices.

RAE is believed to have informed gas companies that a total of 7.5 TWh will need to be stored away in 2023. The country’s gas importers, DEPA Commercial, Mytilineos, Elpedison, Heron, power utility PPC and Prometheus Gas will need to take on the responsibility of securing this 7.5 TWh quantity.

An EU regulation set last year requires member states without – or without sufficient – domestic gas storage facilities to store away gas quantities representing 15 percent of the previous five-year average of annual gas usage by November 1 at existing storage facilities maintained by fellow member states.

Bulgaria’s underground Chiren gas storage facility appears to be short of space to accommodate Greek gas orders, meaning Greek importers will need to turn to costlier Italian and French alternatives, along with the FSU on the islet Revythoussa, just off Athens.

Annual gas usage in Greece averaged 61.1 TWh between 2018 and 2022, meaning that a 15 percent proportion works out to 9.2 TWh. RAE deducted 1.7 TWh for alternate purposes, resulting in its 7.5-TWh figure set for this year.

Contrary to last year, companies are not expected to be compensated for any leftover gas quantities. Also, gas companies will need to assume all gas transportation and storage costs, to ultimately be passed on to consumers.

Gas companies have already expressed complaints, calling the storage requirement and its related obligations an unfeasible, high-cost plan. They are seeking revisions.

 

Energy transition fund to cover DEPA Commercial for LNG cancellations

DEPA Commercial will be compensated through the energy transition fund for its cancellation of two LNG orders made with TotalEnergies a few months ago as part of the country’s overall effort to bolster energy security ahead of this winter period.

A multi-bill submitted to Parliament yesterday by the energy ministry includes a special revision facilitating this compensation payment to DEPA Commercial, which cancelled two LNG orders submitted to TotalEnergies as a result of a sharp reduction in domestic natural gas consumption.

The legislative revision specifies the compensation payment to DEPA Commercial will be made within a two-month period once all supporting documents have been forwarded by the gas company to DAPEEP, the RES market operator.

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

Analysts expect new round of gas price increases this year

Analysts are projecting an eventual rise in gas prices over the next few months as a result of the combined effect of several factors, the main one being Europe’s almost entire dependence, these days, on imported LNG.

This LNG dependence, following Europe’s drift away from Russia, along with Europe’s limited LNG gasification infrastructure, until at least 2025, will inevitably lead to price increases at some point in 2023, analysts have noted.

Natural gas prices have been falling in recent times and are expected to, once again, drop below the price level of coal. This price descent, analysts believe, will reignite industrial activity in Europe, boosting gas demand.

Also, Chinese production, currently operating at below full capacity as a result of the country’s strict adherence, until recently, to a zero-Covid policy, is also expected to get back into top gear within 2023.

In addition, if Europe avoids recession, then global gas orders will skyrocket.

Taking these factors into account, Europe needs to maintain links with pipeline gas supply if energy security is to be ensured on the continent, analysts have noted.

This highlights the significance of projects such as the East Med gas pipeline plan, now seeming to be back in favor. It promises to connect Israel, Cyprus and Greece, over a total distance of 2,000 kilometers, before crossing to Italy via the Poseidon pipeline, a 210-kilometer stretch.

RAE prepares list of crucial industries for gas rationing exemption

RAE, the Regulatory Authority for Energy, has prioritized industrial enterprises for a ranking system exempting the most crucial players from natural gas rationing in 2023, should such an emergency measure be necessary.

This list of prioritized industries is needed so that a revised emergency plan for 2023, prepared by gas grid operator DESFA and approved by RAE, can be implemented, if needed.

The European Commission requires all EU member states to deliver lists prioritizing industries for the year as part of an EU’s emergency plan designed to weather extreme energy market conditions.

In Greece, a total of 104 industries have been divided and prioritized in eight groups. Industries belonging to the highest-ranked group would be the first to be subject to rationing, while industries in the lowest-ranked group are least likely to be subject to gas rationing.

Industries in the highest-ranked group could convert to alternative fuels and second-tier industries could reduce gas consumption without any major impact on their operations.

Energy sufficiency fears rising, extra FSU may be required

The probability of a complete disruption of Russian gas supply to Europe, including the Turk Stream pipeline supplying Greece and other Balkan countries, is becoming increasingly likely, members of the country’s crisis management team have told energypress.

Over the past few weeks, energy operators have been staging more frequent simulated tests for the country’s electricity and natural gas systems in an effort to measure the extent of energy shortages that would result from a Russian decision to cut off all Gazprom supply routes to Europe.

The tests, according to sources, include rapid moves securing additional LNG cargo orders as replacements for Russian gas quantities.

An extra FSU at the LNG terminal on Revythoussa, the islet just off Athens, in addition to one just installed at the facility, cannot be ruled out at this stage, Athanasios Dagoumas, president of RAE, the Regulatory Authority for Energy, noted yesterday during a speech at the OT (Oikonomikos Tahydromos) Forum.

 

Lignite boost target dependent on futures of sidelined mines

Power utility PPC’s target of boosting its monthly lignite extraction from one million tons to 1.5 million tons, an increase that would enable lignite-fired power station grounds to be fully stocked with lignite reserves ahead of winter, can only be achieved if the futures of two lignite mines, Ahlada and Vevi, both in northern Greece’s Florina region, are cleared up.

Lignitoryhia Ahladas SA, the company to which two lignite mines, Ahlada 1 and Ahlada 2, were leased by the Greek State, was declared defunct by the energy ministry in July as a result of its failure to meet agreement terms, primarily lease payments.

This company, alone, could have provided PPC’s Meliti lignite-fired power station with up to 2.5 million tons of lignite, annually, meaning 1.5 TWh in electricity generation, nearly double this unit’s current limit of 0.8 TWh.

PPC is believed to be close to reaching a new mining agreement with a major private-sector energy firm for the Ahlada lignite deposits.

Greece needs to bolster its lignite reserves as an energy security measure should Russia, in a worst-case scenario, disrupt gas supplies to Europe. Approximately 40 percent of Greece’s electricity generation is gas-fueled.

PPC’s Meliti power station is currently fed by two other lignite sources, one privately owned by METE and, the other, a PPC mine at Mavropigi, in northern Greece’s Kozani region.

There have been no developments concerning Vevi, the Florina region’s other lignite mine, which is owned by the Greek State and has been sidelined since 2001. Reopening the mine after so many years of inactivity would inevitably develop into a lengthy procedure, sector experts have warned.

 

European gas storage units 80% full, sufficiency still not assured

Europe’s natural gas storage facilities have been filled to 80 percent of their capacity, on average, well ahead of an early-October target that had been set by EU authorities as an energy crisis emergency plan.

Given the intense competition anticipated for LNG cargoes in the international market, as well as Asia’s strengthened markets, securing sufficient reserves is important but not a guarantee that Europe will make it through the winter unscathed.

German estimates project that European gas reserves at 80 percent of storage capacity, as an EU average, would last for approximately two months if Russia were to fully disrupt its supply to Europe. The winter’s level of harshness will greatly shape consumption levels and, by extension, consequences.

European gas reserves are likely to reach 90 percent of storage capacity over the next month.

At this stage, the challenge for the EU is to continue securing gas loads. This would minimize the use of gas kept in storage and maintain high storage levels all the way through winter for a bolstered position looking further ahead.

 

Revythoussa new FSU ready to receive LNG, slots in October

A newly installed floating storage unit at the Revythoussa LNG terminal on the islet just off Athens, which has boosted the facility’s capacity by 70 percent, is now ready to receive additional LNG shipments.

The LNG terminal’s capacity boost comes ahead of an October auction, to be held by gas grid operator DESFA, for slots at the facility.

All technically related preparations concerning the new FSU have been completed. The capacity boost enables two LNG tankers to unload at the same time, meaning scheduled tanker arrivals can  be facilitated along with short-notice import orders placed by suppliers or traders.

Such a need does not seem necessary at present, market sources have informed, but the usefulness of the terminal’s capacity boost will start becoming apparent once autumn sets in.

Suppliers and traders will be able to plan their LNG imports for 2023 in accordance with the terminal’s increased capacity as DESFA will auction off slots in October.

The FSU, leased by DESFA in June for a 12-month period through a tender, boosts the terminal’s capacity by 70 percent, from 225,000 cubic meters to 380,000 cubic meters.

 

 

RAE approves energy crisis plans for winter sufficiency

The board at RAE, the Regulatory Authority for Energy, has approved preventive action and risk preparedness plans for the country’s electricity sector, two tools shaped in response to soaring gas and electricity prices, breaking records, in the energy crisis.

Though it is generally hoped they will be needless, the two tools could prove useful during what is expected to be a challenging winter throughout Europe, including Greece.

The preventive action plan was approved by RAE following certain revisions to the initial plan, concerning gas reserve requirements.

According to the plan, a new floating storage unit installed in June at the LNG terminal on the islet Revythoussa, just off Athens, will maintain 0.57 TWH in strategic reserves for electricity production, while 1.14 TWh in gas supplier reserves will be stored at an Italian storage facility.

However, the plan is non-binding as these gas reserves may also be stored at other facilities if preferred by players, who are required to maintain strategic gas reserves.