Gas-fueled power producers take on LNG tanker security measure costs

Natural-gas fueled electricity producers will assume the cost of a RAE (Regulatory Authority for Energy) decision to hire a tanker for additional storage capacity at the Revythoussa islet LNG terminal, just off Athens, as a precautionary gas supply measure for this winter season.

The details concerning the cost coverage of this measure have been included in an energy ministry amendment of a bill drafted for the establishment of energy communities, promising decentralized, locally generated energy solutions.

According to local regulations, licensed natural-gas fueled electricity producers need to maintain agreements with DESFA, the natural gas grid operator, as well as natural gas reserves.

Costs to be covered by natural-gas fueled electricity producers include the tanker’s hiring and operational costs.

A tanker loaded with 120,000 cubic meters of LNG arrived at Revythoussa at the beginning of this year and will remain docked at the facility until the end of February to offer supply security should high-demand conditions emerge, as was the case last winter, when the system was stretched to its limits.

LNG tanker, an energy security measure, on way to terminal

An LNG tanker leased by DEPA, the Public Gas Corporation, planned to dock at the LNG terminal on Revythoussa, an islet just off Athens, as an emergency gas storage facility during the high-demand winter months, is expected to arrive tomorrow or Friday.

The tanker will be used to help maintain a regulation requiring gas-fueled electricity producers to be prepared to operate for five consecutive days if needed by the system. This regulation has not been implemented to date. It was scrapped about seven years ago when the LNG terminal’s storage capacity was deemed inadequate to support the measure.

Certain electricity production units – Elpedison’s two units and a smaller facility run by Heron – have been designed to be able to switch from natural gas to petrol, if necessary.

All other licensed units in operation have agreed to maintain LNG reserves so as to be able to function for five consecutive days.

The five-day reserves requirement will now apply for all electricity production units not equipped to switch from gas to petrol.

The LNG tanker plan, expected to safeguard the country against a repeat of last winter’s energy crisis, is estimated to cost approximately 6 million euros. The measure will be covered through the reimposition of a special supply security surcharge previously included on consumer gas bills.

The surcharge was lifted following the accumulation of a surplus worth between 9 and 10 million euros. Consumers can expect this surcharge to soon reappear on their natural gas bills. It will be maintained until the coffers at DESFA, the natural gas grid operator, are sufficiently filled to cover the cost of the precautionary LNG tanker measure.

Industrial enterprises linked to the demand response mechanism (interruptability) – it enables them to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs – will be exempted from the supply security surcharge.

Meanwhile, market players have reacted strongly against an additional measure that will require suppliers and producers to sign gas supply contracts for extended periods of roughly two and a half months.


Local market still unaffected by Austria gas hub explosion

Greece’s energy market has remained unaffected, without any danger of supply shortages and increased prices, for the time being, following yesterday’s blast at Austria’s Baumgarten gas hub, which killed one person and injured at least 18, according to police reports.

The blast at Baumgarten, one of Europe’s main distribution hubs, prompted a 23 percent increase in wholesale natural gas prices within minutes of the explosion to reach a four-year high, but the effects have not reached as far as Greece.

This may be explained by the fact that Greece’s natural gas market does not feature many buyers and sellers, nor does it serve as a gas hub, but, instead, is supplied directly via a route stretching from Ukraine all the way to the Greek-Bulgarian border.

However, it is still too early to rule out any impact on the small Greek market over the next few days, especially if repair work at the damaged Austrian facility is delayed and European gas demand levels remain high as a result of the winter conditions.

Market officials noted LNG prices may rise if the damage at Baumgarten proves extensive. No further affects are anticipated for the time being, according to authorities.

Besides the lignite-fired power stations currently on hand in Greece – four of five units at the main power utility PPC’s Agios Dimitrios facility, as well as the utility’s Megalopoli III and IV and Amynteo II – the country’s grid is also being supported by gas-fueled facilities in Aliveri, Lavrio, Megalopoli V, a Heron facility, Elpedison’s unit in Thisvi, as well as units operated by Protergia and Korinthos Power.

To date, no gas import shortages, or exports, to cover increased needs in central Europe, have been registered.

Austria’s Baumgarten facility, on the Slovakian border, supplies one tenth of total European demand and is a key distribution center for gas hailing from Russia and Norway.

A Bloomberg report described the incident as a warning that highlights the age-factor of much of Europe’s key energy infrastructure.

Just hours prior to the explosion in Austria, an underwater pipeline connection transfering natural gas from the North Sea to northern Europe needed to be temporaily closed after a minor rupture was detected. Also, gas storage facilities in the UK are frequently forced to shut down as a result of ageing pipelines.

The majority of Europe’s natural gas infrastructure was developed between 1960 and 1980, during a period when the former Soviet Union was exploiting new Siberian deposits for increased gas exports to west Europe.

Ageing gas infrastructure requires increased attention and maintenance over time. Increased demand also accelerates deterioration.

Lower natural gas and oil prices have prevented any talk of replacing some of Europe’s ageing energy installations.

The UK has been impacted most, in terms of prices, by the Baumgarten gas hub explosion, which coincided with increased demand from northern Italy to Scandinavia as a result of the drop in temperatures.




Flexibility mechanism delayed by insufficient market reforms

The delivery of the country’s new flexibility remuneration mechanism plan by local authorities to the European Commission has been postponed until March, meaning its implementation, intended to compensate electricity producers for flexibility-related output, will be delayed accordingly, energypress sources have informed.

This rescheduling, included as a term in the bailout’s just completed third review, has been attributed to the lack of progress in local electricty market reforms.

Market reforms are expected as prior actions by the European Commission’s Directorate-General for Competition and Directorate-General for Energy before any remuneration mechanism may be applied to cover additional needs.

Officials in Brussels have obviously identified delays concerning electricity market reforms and, as a result, opted to delay the new flexibility remuneration mechanism’s introduction.

This delay will place even greater sustainability pressure on the country’s gas-fired electricity producers, left without CAT payments since April, and also pose a threat for the country’s energy supply security, especially amid the forthcoming winter period.

RAE, the Regulatory Authority for Energy, recently staged a public consultation process to shape the new flexibility mechanism’s details. It will be based on an annual auction procedure, as required by European law.

The plan entails offering producers three-hour-notice flexibility compensation for a maximum of 4,263 MW through one auction in 2018, not two as was initially considered.

Also, the starting remuneration price at flexibility mechanism auctions will be set at 30,000 euros per MW of output, slightly higher than the originally planned level of 25,000 euros per MW.

Hydropower and natural gas-fired electricity producers as well as Combined Heat and Power High Performance (CHP) stations will be entitled to take part in flexibility mechanism auctions. CHP units will have the right to seek payment for any output not remunerated through existing RES payment mechanisms.

Also, gas-fired electricity producing units will need to be able to run on alternative fuel (diesel) or possess natural gas reserves to be eligible for the flexibility mechanism’s auctions. This essentially means producers will need to hold additional supply contracts or be able to cover the cost of temporary LNG storage solutions, either directly or indirectly, as was proposed by DEPA, the public gas corporation.

RAE moving to prevent repeat of last winter’s energy crisis

Driven by the energy crisis experienced in Greece for most of last winter, RAE, the Regulatory Authority for Energy, is taking precautionary measures to avoid a repeat of any natural gas supply shortages next winter.

The authority is currently examining options that could ensure direct supply of additional natural gas supply, should extra amounts be needed.

The insufficient storage capacity at the country’s only LNG terminal at present, on the islet Revythoussa, just off Athens, is a key concern. Construction of an additional third storage tank at this facility has been delayed. To counter the issue, authorities appear likely to lease an LNG carrier as a storage facility to be moored at Revythoussa.

The cost of such a solution could be covered by a reserve amount in an account supported by a supply security surcharge. Another option would be to activate a clause against sub-contractors responsible for the construction delays of Revythoussa’s third storage tank and use the resulting penalty amounts to cover the ship’s leasing cost.

RAE is close to completing an updated risk assessment study that is based on data provided by DESFA, the natural gas grid operator, and support from the National Technical University of Athens (NTUA). RAE has also hired a consultant specializing in risk management for the effort.

RAE working on country’s long-term energy plan, due by end of year

RAE, the Regulatory Authority for Energy, backed by environment and energy ministry, is working on delivering a long-term energy plan for Greece by the end of this year.

The plan will include initiatives to help Greece reach climate change targets the country agreed to, for 2030, at the COP21 climate conference in Paris late in 2015, and also detail energy market revisions, including pricing issues.

The European Commission’s recent winter package, announced in November, requires all EU member states to prepare national energy and climate plans, based on 2030 targets, within 2017.

RAE has assumed the task of preparing a plan based on new conditions and needs. It will provide  proposals for revisions to the country’s energy portfolio, detailing necessary investments and infrastructrure, all in line with EU directives.

Besides ensuring a gradual expansion of the renewable energy sector, the RAE plan will also aim to achieve a balanced mix of energy-generating technologies, improve energy efficiency, and further diversify conventional energy sources through the development of new pipelines, refineries, natural gas and oil storage facilities, electicity network interconnection projects, and smart meters capable of handling renewable energy output fluctuations.

The RAE plan will also provide prerequisites needed for the establishment of a modern energy market for electricity and gas. Its framework will include features such as a secondary market.

Lessons learnt from the energy supply crisis last winter will help shape the long-term energy plan.


RAE taking gas-sector action to prevent energy crisis next winter

RAE, the Regulatory Authority for Energy, is preparing measures to prevent a repeat of the energy crisis experienced by the country last winter, in December and February.

The authority is aiming to implement protective measures prior to further gas market reforms through a target model, now a Greek bailout requirement, expected by September.

As the overall effort’s first move, RAE will prepare a risk assessment study concerning natural gas supply security in Greece. RAE will use data to be provided by DESFA, the natural gas grid operator, and the National Technical University of Athens (NTUA), to update a previous risk assessment study.

RAE plans to then swiftly introduce a series of measures. It is anticipated that these will include an existing plan concerning licensing requirements for power generating units. Power stations must guarantee their ability to operate uninterruptedly over five-day periods during emergencies to satisfy this specific licensing term.

With this requirement in mind, certain power units – two operated by Elpedison and a small Heron facility – are equipped to run on alternative fuels, allowing a switch from natural gas to fuel whenever needed. RAE is expected to soon clarify how such units will be compensated for their flexibility.

Power units not equipped to switch to alternative energy sources will need to maintain specified fuel reserves, an older requirement abandoned several years ago but now set to be reintroduced and remain effective until a third tank is added at the LNG terminal on Revythoussa, an islet just off Athens. This project has been severely delayed.

The use of a floating LNG tanker, which would be moored off the Revythoussa facility during periods of high energy demand, is being contemplated as a temporary solution until the terminal’s third storage tank is completed. The cost of such a solution could be covered by cash reserves raised through a supply security surcharge. The amount in this coffer is estimated to now be worth around 8 to 9 million euros.

Authorities are also considering taking action against contractors responsible for the delay of the third Revythoussa tank’s delivery. The amount that could result from penalty payments, if such a course is pursued, could be used to hire a LNG tanker for tempotary use.

Military report highlights region’s complex issues

A report published recently by a high-ranking Greek military academy, believed to echo classified information, notes that the role of the military, among other factors, amid a competitive southeast Mediterranean environment possessing hydrocarbon deposits needs to be defined.

It also makes a note of the ongoing political turmoil in the wider region, including the emergence of fragile states, problems of dysfunctional and failed states, possible de facto border revisions, the role of political Islam, the refugee problem, ambitions of regional countries and competition for energy sources.

The report reminds that the southeast Mediterranean region represents a crucial energy supply corridor for Europe while adding that the EU is heavily dependent on oil and gas imports as 35 percent of these supplies hail from Russia.

This lack of diversification in energy supply also poses a threat for Greece, the military report pointed out.


‘Compliance with EU law required for TAP access’

Development of the TAP (Trans Adriatic Pipeline) project’s Greek segment is on schedule with groundwork for 230 km, from 190 km in January, of the country’s 550 km total stretch completed, Rikard Scoufias, TAP’s Country Manager for Greece, told energypress in an interview.

“We are on schedule and 90 km of pipelines have been installed across the entire Evros region, as well as parts of the Rodopi prefecture and Serrres,” noted Scoufias who took part in an economic forum at Delphi.

Parties interested in having access to European infrastructure must operate in accordance with EU regulations,” Scoufias remarked, noting that the TAP project will offer a greater number of gas supply options for Europe, currently reliant on Russia for natural gas.

To run across northern Greece, Albania and across the Adriatic Sea to Italy, the TAP project is being designed to primarily carry Azeri natural gas to Europe.

Russia remains a key player for European natural gas supply but diversification is a fundamental in the aim to ensure energy security,” Scoufias said.

“The plan is to have completed the pipeline’s construction by the end of 2018 in order to have an entire year for test runs in 2019 before TAP begins fully operating in 2020,” the TAP official noted.

Energy crisis spurring plans for gas infrastructure projects

The establishment of gas storage infrastructure, as part of the local energy market’s strategic planning, has developed into a top-priority issue for the country’s energy ministry.

This direction is largely due to the ongoing supply crisis in the energy market, especially the gas sector, a situation which, amongst other things, has highlighted the need to be able to store natural gas, a fuel considered certain to play a key role in Greece’s future energy mix, even if coal remains a pivotal factor.

Energy ministry officials are currently assessing the respective situations of projects related to the strategy, the aim being to accelerate their progress.

Information is being gathered on projects concerning an upgrade of the LNG terminal on Revythoussa, an islet just off Athens, as well as the addition of a floating LNG facility at this terminal; the development of a gas storage facility at the Gulf of Kavala in northern Greece; as well as the construction of a Floating Storage Regasification Unit (FSRU) in Alexandroupoli, northeastern Greece.

Energy ministry officials consider delays experienced in the development of a third LNG tank at the Revythoussa facility as inexcusable. This project, commissioned by DESFA, the natural gas grid operator, was originally scheduled to be completed by the end of 2016 but major delays are  expected. The addition of a third tank stands to increase the facility’s capacity from 130,000 cubic meters to 225,000 cubic meters. This alone will increase market competition as users will be able to store gas at Revythoussa for as many 28 days, up from the present limit of 18 days.

The energy ministry now holds a far more favorable view of a plan entailing the transformation of a depleted gas deposit in the Gulf of Kavala into an underground gas storage facility. The ministry wants this project to be reclassified as an EU Project of Common Interest (PCI), which would facilitate funding.

The prospective FSRU in Alexandroupoli is a private-sector venture and will entirely depend on the progress of the Greek-Bulgarian IGB pipeline.

An idea to dock a floating LNG tanker with a capacity of around 120,000 cubic meters at the Revythoussa terminal and use it as a storage facility was prompted by the ongoing energy crisis. A low-cost solution estimated at between 10 and 15 million euros, it would not take long to set up and launch.



New Brussels-required energy strategy committee imminent

A special committee to be charged with preparing a new national strategic energy plan required by the European Commission is expected to be established within February through a ministerial council decision.

This committee is needed as a result of the European Commission’s recently presented “winter package”, requiring all EU member states to prepare national energy and climate strategies within 2017. Targets looking ahead to 2030 are expected.

According to energypress, the procedure for the establishment of the Greek committee has been prepared.

The committee’s national energy and climate strategy will need to take into account new conditions and needs, offer solutions to the country’s energy portfolio and determine investment and infrastructure development needs, all within an EU context.

The strategy will also need to provide guidelines for further renewable energy sector growth; a balanced energy production technology mix; energy efficiency improvement; increased conventional energy source diversification through development of natural gas pipelines as well as natural gas and oil storage facilities; and development of interconnections and digital networks.

New market systems, including secondary markets, for both the natural gas and oil sectors will also be included in the national strategy.

National energy plan in the making, lignite gains ground

The Environment and Energy Ministry is expected to soon launch procedures for a National Strategic Plan concerning energy sector objectives in 2030. The European Commission’s recent winter package obligates all EU member states to present a national energy and climate plan within 2017.

Greece’s lignite sources, a fundamental energy source for the country, are expected to figure as a pivotal aspect of the national plan. The current energy crisis in Europe and its wider impact stands as a key reason behind the insistence on coal as a vital domestic energy source.

According to energypress, Greece’s energy ministry will soon assemble a working group that will be charged with preparing a proposal based on new conditions and needs. It will provide answers to fundamental questions concerning the country’s energy mix, required investments and needed infrastructure, based on EU directives and obligations.

Besides the gradual expansion of the role to be played by the renewable energy (RES) sector, the presentation’s other key obectives will be to achieve a balanced mix of technologies used for energy production; improve energy efficiency; and further diversify conventional energy sources through the development of oil and gas transmission and storage infrastructure, electricity interconnection projects and digital power meters that will help combat fluctuating energy supply stemming from renewable energy and decentralized sources.

Europe’s recently emerged and ongoing energy supply crisis, prompted by the temporary withdrawal of French nuclear power stations, has already made firm impact and served as a lesson that will be taken into account by Greece when preparing the National Strategic Plan, sources informed.

The same sources noted that lignite, as the fundamental domestic energy source, will need to keep playing a key role in Greece’s energy mix for many years to come. The transition to the post-lignite era will need to be made based on terms that ensure energy security for the country, the sources said.

Highlighting this point, the crisis of the past few days could not have been combated had it not been for the crucial contributions of the country’s lignite and hydropower units, operating at maximum levels, the sources stressed.


High RES output, swifter DEPA gas order combat energy alert

The country’s energy system has been placed on Level 2 Alert, prompting a crisis management team at RAE, the Regulatory Authority for Energy, to convene yesterday for marathon talks that are expected to be followed up today with an additional session involving major-scale energy consumers.

Greece’s energy level alert already appears to be heading towards normalization as a result of two key factors.

DEPA, the Public Gas Corporation, has managed to swiften the delivery date of a major 130,000 cubic-meter LNG order. Its delivery, originally due to arrive at the country’s LNG terminal in Revythoussa, an islet just off Athens, on December 26, has been rescheduled for December 24.

The significant level of Greece’s renewable energy (RES) output has also proved crucial to avert a bigger crisis. The wind energy sector is today expected to contribute a precious 32,000 MWh electricity amount to the energy system. Market sources informed energypress that this amount is literally keeping the energy system standing.

According to the day’s grid plan, natural gas-fueled power stations are scheduled to provide significant electricity amounts, while most of PPC’s lignite-fired power stations, as well as hydropower facilities, are being called into action.

Demand for natural gas, expected to be particularly high today, is forecast to reach 227,000 MWh.

These extraordinary conditions, also expected to apply pressure on the system tomorrow, should be back to normal on Saturday when a major 130,000 cubic-meter LNG load, supplied by Algerian energy firm Sonatrach, is set to arrive.

Officials at today’s follow-up RAE meeting will further evaluate the situation and decide whether additional measures are required.

An energy-level crisis in the French market has significantly contributed to an increase of Greek exports. Local officials have requested that export limits be imposed as a result of the increased pressure being encountered by the Greek system. However, such a solution is viewed as one that contravenes EU principles.

Time is ripe for investments, PM highlights at TAP launch

Development of the TAP (Trans Adriatic Pipeline) project, to carry Azeri natural gas to Europe via a route including Greece’s north, combined with the anticipated completion of the first review of Greece’s third bailout package by international lenders, promises to pave the way towards major investments in the country, Prime Minister Alexis Tsipras noted during his speech at a ceremony held in Thessaloniki today, marking the launch of construction work for TAP’s Greek segment.

“The hope that we are overcoming the [recession’s] most difficult stage and opening up to the prospect of stability removes a sense of uncertainty that has surrounded the Greek economy and also creates a stable environment for attracting investments,” Tsipras remarked at the TAP ceremony.

Tsipras predicted economic growth from the second half of 2016 and onwards, noted that Greece’s unemployment rate is now de-escalating, and added that the next tranche of bailout money would be used to also cover amounts owed by the State to citizens, all of which would gradually put Greece on a path of sustainable growth, according to the Prime Minister.

Tsipras said the TAP project was justifiably regarded as one of the world’s biggest energy projects at present, adding that it could be interconnected with other existing and future pipelines for access to more markets. He cited the prospective Greek-Bulgarian IGB interconnector as an example, noting its development will serve as a bridge to supply natural gas to central and east Europe.

The Prime Minister once again stressed that Greece is developing into a multidimensional energy hub along with the transformation of southeast Europe’s energy map. He cited the IGB, the prospective LNG floating station in Alexandroupoli, northeastern Greece, and the current upgrade of the existing LNG facility in Rethythoussa, an islet close to Athens, as developments that are reshaping the country’s production potential.

Tsipras pointed out that the TAP project’s budget for the local segment is worth over two billion euros and promises to create 8,000 jobs in Greece.

The project’s development comes at a critical time for the region as “Caucasus and central Mediterranean countries are being called upon to bolster stability and cooperation in an area of conflict,” Tsipras said.

He ranked the TAP project as the biggest foreign investment in Greece, highlighting the involvement of Greek firms and resulting lower energy costs for enterprises.

Georgia’s Prime Minister Giorgi Kvirikashvili, who attended the ceremony, said the TAP project will create a total of 30,000 jobs in the countries it will cross.

Azerbaijan’s First Deputy Prime Minister Yaqub Eyyubov made reference to the role to be played by the Southern Corridor as an alternative energy source, noting it will support the European plan for diversified energy sources and increased energy security.

Ian Bradshaw, the TAP project’s managing director, also made note of the pipeline’s role in diversifying the EU’s energy sources and also took the opportunity to thank Greece’s Prime Minister and the Greek State for the support offered.

Maros Sefcovic, the European Commission vice president responsible for Energy Union, who delivered his speech in the Greek language, described the day as historic and the Southern Corridor as the biggest energy project being carried out at present.

The project’s significance was also underlined by Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, who relayed a message from John Kerry, the Secretary of State. “Completion of the Southern Corridor must stand as a priority in order to ensure energy security. The US supports this project which offers new hope for stability in the region,” Hochstein remarked. “The pipeline can make a difference in the region and help areas that face serious issues with monopoly-related problems,” he added.

Turkish energy minister Berat Albayrak stressed that TAP, along with the TANAP project, will supply greater amounts of natural gas to the region. “We are ready to discuss all the economically feasible projects to support energy diversification,” Albayrak said.

Italy’s minister of economic development, Carlo Calenda, said the Italian government has actively supported the TAP project and recently granted permits for the project’s development.

Bulgarian energy minister Temenuzhka Petkova informed that Bulgaria’s government is placing great emphasis on the Greek-Bulgarian IGB interconnector, to be linked to the TAP pipeline. The second round of a market test for the IGB will begin in June, she noted.

Greece interested in ‘European gateway role for Cypriot, Israeli gas’

Greece is interested in serving as a gateway for Cypriot and Israeli natural gas supply to Europe, either through tankers transporting supply from export stations operated by the two neighboring countries, as well as Egypt, or through a direct East Med submarine gas pipeline link, Greece’s energy minister Panos Skourletis noted in a written statement prepared for the 4th edition of the Energy Symposium in Cyprus. The minister’s note was read at the event by an official of the Greek Embassy in Cyprus.

Greek is striving to establish itself as an energy hub in southeast Europe and the east Mediterranean to contribute to the region’s energy security, the minister’s note added, while adding that heightened activity leading to this objective has been observed in the region lately.

Greece is seeking to play a central role as a regional hub, while the development of the IGB Greek-Bulgarian pipeline interconnection; the TAP (Trans Adriatic Pipeline), to supply Azeri natural gas to Europe via Greece; a prospective LNG terminal in Alexandroupoli, northeastern Greece; and Russia’s new gas pipeline proposal for the Southern Corridor, envisioned to run westward through northern Greece and across to Italy, are all  key components of the overall plan, the minister noted.

The minister’s note added that the East Med pipeline, to be comprised of a network of submarine and overland infrastructure offering a direct link for deposits in the southeast Mediterranean area with the European gas network via Greece, is another crucial element in the plan to establish Greece as a new regional energy hub.

Skourletis’s note highlighted that the discovery of natural gas deposits in the sea region between Cyrpus, Israel, and Egypt promises to alter the region’s geopolitical standing and establish a central role for Cyprus on the southeast Mediterranean’s energy map.

Utilization of Greece’s renewable energy potential could greatly contribute to the diversification of the country’s energy mix, and also offer energy security, and environmental protection, the minister’s note added.

The two-day event, whose theme this year was “Energy: Time for Decisions”, concluded yesterday.



Lafazanis: Energy sector will drive Greece out of recession

The country’s energy sector will help drive Greece out of the deep recession, Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis told an energy conference in Athens today.

Commenting on a bilateral agreement that was recently signed by Greece and Russia to make official their interest in developing “Greek Stream”, the local natural gas pipeline segment to be incorporated into the prospective Southern European Pipeline, Lafazanis said the project will be completed by the end of 2018.

The minister noted the pipeline’s construction will create about 20,000 jobs, offer fiscal benefits to the national economy as a result of significant revenues to be collected by the prospective Greek state company that will be established to co-manage the gas pipeline, and, on a wider scale, upgrade the country politically and geopolitically.

The Southern European Pipeline stands as an exemplary model of fair and balanced cooperation between countries, Lafanis noted, while adding its construction will be funded by Russian capital.

Lafazanis also told the conference – titled “Natural Gas Market Penetration in Greece” and organized by the ESCP Europe business school’s Research Center for Energy Managament (RCEM) – that total energy security and low-priced energy sources, which he described as key aspects for peace, stability and economic growth in Europe, stand as the ultimate objectives at his ministry.

The energy minister expressed hope that an international tender for exploration and exploitation of twenty offshore blocks in the Ionian Sea and south of Crete, whose deadline expires next week, on July 14, will produce desirable results. He rejected reports that a new deadline extension will be offered, as a result of the adverse market conditions, following an extension granted earlier this year.

Lafazanis also noted the government intends to further utilize the country’s lignite deposits, which he described as significant for Greece’s energy future.

The hard-line leftist, who heads the radical Left Platform wing within the coalition’s main party, Syriza, reiterated, yet again, that public energy corporations in Greece will not be privatized, while noting private-sector investments in the sector are welcome.

Offering his views on the bankruptcy-threatened country’s current economic turmoil as Prime Minister Alexis Tsipras and his team appear to be pushing for a last-minute bailout deal with creditor representatives, Lafazanis noted that last weekend’s resounding “No” vote in the Greek referendum  – which rejected a previous round of harsh austerity measures proposed by lenders to Greece – would not be transformed into a humiliating “Yes” for a new agreement.

“Having reached this stage, we know that all options are difficult. However, the worst, or most exhausting, humiliating, and unbearable agreement of all would be one of surrender, plunder, and submission of the country and its people,” Lafazanis stressed. “We will never make this choice, not only because it would cause even greater hardship for Greek citizens, but also because it is a choice without any future prospects.”

Playing down the overall panic caused by the ongoing closure of Greek banks, which have now been closed for a week, the energy minister contended the country is not out of control, but instead has many options to choose from. The energy minister described a recent adjustment made by the European Central Bank (ECB) to the emergency liquidity assistance (ELA) mechanism for Greece, which prompted last week’s forced closure of local banks, as a criminal act.

Lafazanis said no nation and its people had been subjected to such degree of suffering and blackmail by “so-called partners” during a time of peace as Greece had over the last five or so years. “Greece can also win this major and unfair battle like so many others it has fought heroically and won in the past,” said Lafazanis.


ELPE prepares emergency fuel plan in event of Greek default

The country will be able to ensure fuel supply for a six-month period, and then manage to find alternative sources coverings its needs for an additional three months, according to an emergency plan prepared recently by ELPE (Hellenic Petroleum), in the event that Greece defaults on its payments and is forced to exit the eurozone.

According to ELPE officials, citizens should not be concerned about any danger of a fuel supply shortage for the nine-month period if the bailout talks ultimately collapse and force the country out of the eurozone.

ELPE’s preparation of an emergency plan highlights the degree of seriousness caused by the failure, so far, of Greece and its lenders to strike a deal.

Fuel supply emergency situations are divided into three levels of increasing urgency. At the first level, Greece would draw from its emergency deposits. These are maintained by all EU member states, based in European law, to cover emergencies, and would meet demand for three months.

The second level, should the situation worsen, would lead ELPE to turn to future petroleum orders, which would suffice for a further three months.

At the third level, ELPE would make additional crude oil orders and avoid monetary payment but, instead, cover the crude oil orders by supplying equivalent amounts of refined petroleum products, such as diesel. This option, practiced regularly in other countries, such as Italy and Spain, to maintain reserve levels, would offer a solution to Greece for a further three months. Some sources noted this practice could be applied infinitely.

ELPE is also keeping a close watch on developments concering the West’s embargo on Iran, which could reportedly be lifted in the near future, as well as a possible gradual restart of exports by Libya and Iraq. An end to the trade embargo imposed on Iran by the West would prompt access to an additional one million barrels of oil per day, leading to lower prices, from 60 dollars a barrel at present, and decrease order costs for ELPE.

The Greek state holds a 35.5 percent stake in ELPE. The Latsis Group controls a 42.6 percent equity share.



Commission support for Kavala LNG station vital, minister says

Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis highlighted Greece’s diversified energy policy and the importance of LNG in the overall effort being made to ensure energy security for Europe at a meeting of EU energy ministers today in Luxembourg.

Lafazanis also noted the importance of a planned floating LNG terminal station in Kavala, northerm Greece, and called on the European Commission to offer adequate financial support.

The country’s energy minister told the session that energy security may be broadly defined as the diversification of sources, suppliers, and routes. Lafazanis reminded his counterparts that Greece is being supplied natural gas by three different sources, while also being the region’s only country with an existing LNG terminal, on Revythoussa, an islet in the Saronic Gulf, close to Athens.

Lafazanis added that a series of projects now being developed promise to significantly bolster diversification and supply security for Europe and the continent’s southeast.

On the Revythoussa facility, Lafazanis noted that the station’s existence proved crucial during 2009, a crisis year, for the transmission of gas to neighboring Bulgaria.

“Greece is currently upgrading the Revythoussa facility for a total storage capacity of 225,000 cubic meters, from 130,000, and a gasification capacity of 1,400 cubic meters per hour, from 1,000 cubic meters,” Lafazanis noted.

On a more negative note, Lafazanis told the meeting’s participants that the European Commission’s support for new projects was, at best, selective, adding that equal treatment of all energy projects is crucial. Selective policies prompted by EU law need to be eliminated, the minister noted.

Elaborating on the country’s LNG propsects, the energy minister said Greece has the potential to bolster its role as a supplier of the fuel to southeast and central Europe. Development of a state-controlled floating LNG terminal station in Kavala would play a key role for such a prospect, he noted, adding the project could serve as an integral part of the Vertical Corridor towards Bulgaria, Romania, and many other countries. He described the European Commission’s support for the project as vitally important, calling for it to sufficiently fund the Kavala LNG station’s development.






Energy a key theme at the recent Economist conference

Energy was a key theme at the Economist’s recent 19th Roundtable with the Government of Greece in Athens, with much discussion of pipelines and the politics surrounding them.

Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis set out a vision of Greece as a “pluralistic energy hub” and a “pioneer in energy interconnections”. Diversity of energy links would make the country truly independent in the energy sphere, he noted.

The euro-zone economy is improving, supported by a trio of favorable factors, quantitative easing (QE) from the European Central Bank (ECB), cheaper oil, and a cheaper euro, former Italian Prime Minister Enrico Letta pointed out at the conference.

However, the uncertainty over Greece is a big cloud on the European horizon, with a palpable risk of the country falling out of the euro zone – a 40% chance, reckons Joan Hoey of the Economist Intelligence Unit (EIU). Greece is back in recession, and growth forecast for 2015 has been taken down to 0.5% by the European Commission and to zero by the EIU.

Precisely because all eyes are on Greece there was very high interest in the Roundtable, with more than 600 people attending the session with Finance Minister Yanis Varoufakis and at the closing dinner with Prime Minister Alexis Tsipras.

Tsipras said his government came with “a new perception of how society and the economy can be organised”, and he gave an assessment of its first 100 days. Among the achievements he listed were first steps to “relieve the humanitarian crisis”, anti-tax-evasion measures, jobs restored to cleaning ladies at the finance ministry, a law to reopen public TV, moves towards raising the minimum wage and bringing the issue of wartime reparations from Germany into the limelight.

As for the crucial matter of the negotiations, the prime minister said he was devoting much of his time to them personally. The partners should not imagine that “our red lines will fade”. Four key points for an agreement were low primary surpluses as targets, especially for the first two years; no obligation for new cuts on pensions and salaries; a restructuring of public debt; and solid packages of public investment. Common ground seems to have been identified, and Tsipras expressed optimism that a deal was very close.

Varoufakis stressed that Greece would not do the sort of deal with its creditors that resulted in only a temporary fix. Emphasising the need to be more realistic about the targets set, he said he would “never sign a deal that is not dynamically consistent”.

Minister of state Nikos Pappas echoed this notion, saying that Greece wants to reach a deal that will lead to “solutions”, not just any kind of deal.

According to Varoufakis, Greek debt has to be “redesigned”, avoiding the term “haircut”, a taboo word. Payments to the ECB should be deferred to the future and Greece integrated into the QE mechanism, he noted, adding there should be no change in VAT before the end of the summer.

Both Letta and Varoufakis stressed that Grexit would be a disaster. Letta called it a “catastrophe”, while Varoufakis said it would be a “recipe for going back to the Neolithic age”, even if he might have preferred that Greece had stuck with the drachma rather than joining the euro in the first place. On the positive side, the finance minister believed that as soon as a deal is struck there would be a “torrent of investment” in Greece. “Greece is going to have a bonanza,” Varoufakis remarked.

For the opposition New Democracy party, former deputy finance minister Christos Staikouras, speaking at the opening dinner, said that in its four months in charge, the Tsipras government had “lost time, confidence and allies”. Considering various measures, such as the primary budget surplus, payment arrears, non-performing loans, the investment climate, privatisation, education reforms, Greece had started to regress rather than make progress, Staikouras remarked.

Offering his views on reforms, based on the experience of other countries, Alvaro Pereira of the OECD’s Economics Department stressed the need not just for passing laws but having the ability to put them into practice. For a new government, front-loading of reforms is vital, and cross-party support helpful, Mexico being a good example, he noted.

The bankers were naturally concerned about the shortage of liquidity, but believed that much of the problem stemmed from the uncertainty over whether Greece would reach a deal with the institutions. As uncertainty comes down, liquidity would come back.

Government ministers did not dispel entirely concerns that tourists to Greek islands would have to pay an 18% tax on hotel and restaurant bills – saying it would not happen this summer, but not ruling out the proposal altogether.

For all the concerns over Greece, a bigger worry is the tension between Russia and the West and the possibility of nuclear war, said Laza Kekic, setting the scene for the session on security challenges for Europe.

Greece’s Defence Minister Panos Kammenos, leader of the Independent Greeks, the coalition’s junior partner, stressed that Greece’s role was to be a “pillar of stability” in a region of instability. He criticised the treatment of Greece by Germany (which wants to “impose its rule throughout Europe”) and expressed his displeasure with the West’s sanctions on Russia. Kammenos revealed that he was going to the US soon and would propose the creation of a new NATO base on an Aegean island.

Minister offers socio-democratic rundown, on energy, at party event

Environment, Energy & Climate Change Minister Yiannis Maniatis, a member of the coalition’s junior partner, PASOK, provided a rundown of key socio-democratic, progressive principles for the energy sector, commenting on their implementation within a Greek context, during a speech delivered this week at an event co-organized by the Institute for Strategic and Development Studies (ISTAME) – a think-tank affiliated with the PASOK party – and an SPD (Social Democratic Party of Germany) institution.

Entitled “Progressive Policy in the Energy Sector – An Opportunity for Social Democracy”, the event included speeches from Ralf Bartels, an energy-sector workers’ union representative – he filled in for SPD general secretary Yasmin Fahimi, who was unable to attend – and Alfred Geissler, CEO of German energy company STEAG.

Maniatis’s list of progressive principles for the energy market included growth sustainability; European solidarity through the creation of crisis mechanisms; benefits for local communities and reduction of regional inequalities; interconnection of islands; low-priced energy for business and households; self-production, and transparency to help combat bureaucracy.

“The question that preoccupies us all is whether progressive policy in the energy sector exists,” Maniatis remarked.

Greece’s Energy Minister also spoke of a global situation in which two crises were concurrently developing. “We are in the middle of two crises, the global financial crisis of capitalism, and the global environmental crisis,” Maniatis said, adding these developments had combined to cause food crises in numerous countries around the world. Progressive political thinking needed to adapt to the new environment and find solutions, Maniatis highlighted.

As for the energy sector amid this troubled context, Maniatis remarked that “adequate and affordable energy, produced in such a way that does not downgrade the environment, and which is sustainable, stands as the objective.”

Besides Maniatis, a host of other PASOK party officials took part at the event.


Energy sector the focus in research center’s new edition

Greece’s energy sector, the utilization of domestic oil deposits, infrastructure projects being developed to expand the country’s electricity and natural gas networks, the power interconnection of the Greek islands, projects to offer energy security and interconnection with the rest of Europe, installation of high-tech “smart” networks and meters, all stand as main priorities at the Ministry of Environment, Energy & Climate Change (YPEKA), and are presented in detail in a special “Energy” edition published by KEPE, the Center for Planning and Economic Research, which operates under the ministry’s supervision.

The development of all these domains stands to offer major employment opportunities as well as significant opportunities for a new model of economic growth that promises to reinvigorate the national economy, Greece’s Environment, Energy & Climate Change Minister, Yannis Maniatis, points out in the edition’s introductory note. The minister underlines that these opportunities “must not be lost”.

The edition, published in the Greek language, includes articles by sector authorities such as Athanasios Dagoumas, a special advisor to the Energy & Climate Change Minister; Miltiadis Aslanoglou, a member of RAE, the Regulatory Authority for Energy; Giorgos Stamtsis, the general manager at HAIPP, the Hellenic Association of Independent Power Producers; Savvas Seimanidis, the recently appointed president of EREF, the European Renewable Energies Federation, who previously was a representative at ESIAPE, the Greek Association for Electricity Producers and Renewable Energy Sources; Sotiris Kapellos, president of SEF, the Association of Photovoltaic Companies; Takis Grigoriou, an Energy and Climate Change official at Greenpeace Greece; and KEPE researcher Vassilis Lyhnaras, the KEPE energy edition’s supervisor.

“The energy sector can play an important role in the country’s development and help to attract new investment and capital from abroad, and create new jobs. At the same time, it stands as the fundamental determining factor for competitiveness and export orientation of producers in the Greek economy,” notes Lyhnaras in the edition’s foreword.

Greece’s role in EU energy efficiency now vital

A European Commission announcement, delivered yesterday, on the adoption of a new and binding target for a 30% improvement in energy efficiency by 2030 clearly demonstrates how significant Greece’s role has now become in the EU energy policy’s formulation. The country has managed to capture a pivotal place on the international energy map in recent years through a series of focused and careful moves.

The European Commission’s adoption of the target figure comes following its proposal by Greece’s Minister of Environment, Energy & Climate Change, Yannis Maniatis, during his tenure as head of the Council of Energy Ministers in the first half of 2014. He was joined by six other ministers from Germany, Denmark, Luxembourg, Portugal, Ireland, and Belgium for the proposal.

Forwarded to the President of the European Commission, Jose Manuel Barroso, the European Commissioner for Energy, Günther Hermann Oettinger, as well as Connie Hedegaard, the European Commissioner for Climate Action, the proposal by the seven ministers also requested that the target be included in an imminent European Commission progress report that is expected to be published within the current month, to address the energy efficiency target for 2020.

“The current situation in Ukraine highlights the importance of reducing dependence on imported petrol and natural gas. Reducing energy consumption through energy efficiency is the most powerful and cost-effective way to increase energy security and reduce greenhouse gas emissions, while there is still significant potential for energy efficiency improvement in most areas,” the proposal by the seven ministers noted.

Last January, the European Commission proposed a binding target to reduce greenhouse gas emissions by 40% by 2030, while also calling for an increase in the share of renewable energy sources in the EU’s energy mix to 27%. A binding target for energy efficiency, however, had not been set at the time.

Yesterday’s target figure of a 30% increase in energy efficiency by the European Commission is particularly ambitious, yet also feasible.