Storengy exits UGS tender, partners seek new operator

France’s Storengy appears to have stepped back from an upcoming tender for the privatization of an underground natural gas storage facility (UGS) at an almost depleted South Kavala offshore natural gas field in the country’s north, energypress understands.

Storengy, a subsidiary of the Engie group, had formed a three-member consortium with Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna for this tender.

Storengy’s apparent decision to withdraw from the South Kavala tender may be linked to a decision reached two years earlier by Engie for a revision of its international interests and investment plans.

Energean Oil & Gas and GEK-Terna, Storengy’s two partners for the South Kavala tender, remain interested in expressing first-round interest by a September 30 deadline, but to do so, they must find a new partner, a certified gas grid operator, as required by the tender’s regulations.

The two players have subsequently moved closer to gas grid operator DESFA, already eyeing this tender. According to sources, talks between the two sides have commenced. DESFA will need to hold a stake of at least 20 percent in any partnership formed.

Both sides are also believed to be considering other partnership options. Storengy’s withdrawal could also bring in unanticipated European operators.

Investments of approximately 300 to 400 million euros will be needed to develop the South Kavala UGS.

Two, possibly three, bidders for South Kavala UGS license

An upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north is expected to attract the interest of two, or possibly three, bidding teams.

Interested parties have been given an extension to express non-binding first-round interest. Prospective participants are busy preparing.

The participation of Storengy – a three-member consortium formed by France’s Engie, Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna – is considered a certainty as this consortium was established in anticipation of this tender.

Greek gas grid operator DESFA, increasingly active, since its privatization, in various projects, including some beyond its more customary operator-related bounds, is seen as another certain bidder for the South Kavala UGS license.

Senfluga, the consortium of companies that acquired a 66 percent stake of DESFA, appears very interested in the South Kavala UGS tender. This consortium’s current line-up is comprised of: Snam (54%), Enagas (18%), Fluxys (18%) and Copelouzos group member Damco (10%).

Though Senfluga’s three foreign partners – Snam, Enagas and Fluxys – are examining the prospect of joining DESFA to express joint interest, separate bids from the two sides are considered likeliest. The main reason for this has to do with certain tender rules that restrict the ability of consortiums participating in the first round to then reshuffle, if needed.

Pricing policy regulations expected from RAE, the Regulatory Authority for Energy, ahead of binding offers, will be crucial to how the tender plays out as these rules will determine the project’s earnings potential and level of bids.

DEPA Infrastructure sale luring bidders, deadline Friday

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

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

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

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

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

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

RAE given 5 months to set Kavala underground gas storage charges

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Kavala underground gas storage tender in first half of 2020, TAIPED announces

A tender for the conversion of a depleted natural gas field in the offshore South Kavala region into an underground gas storage facility will be announced in the first half of 2020, according to privatization fund TAIPED.

The project, estimated to cost between 300 and 400 million euros, is needed for storage of strategic gas reserves.

Steps that will need to be taken in the lead-up to the tender have just been presented by the privatization fund’s administration, confirming that previous legal complexities have now been resolved.

Two steps are needed. A joint ministerial decision must be issued. Also, RAE, the Regulatory Authority for Energy, needs to prepare a regulatory framework offering prospective investors a reliable estimate on earnings they should anticipate, necessary before any binding bids can be submitted.

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

Ministry amendment to unblock Kavala storage legal complexity

The energy ministry has prepared a legislative amendment needed to overcome a legal complexity that has emerged concerning the development of an underground gas storage facility in the offshore South Kavala region through the utilization of a depleted natural gas field.

The amendment, which could be submitted to parliament today, will not lead to any fundamental changes concerning the project but purely focuses on resolving the legal obstacles obstructing its development, sources informed.

Once ratified, this amendment will pave the way for the publication of a related joint ministerial decision in the government gazette ahead of the asset’s eventual privatization.

Meanwhile, RAE, the Regulatory Authority for Energy, needs to prepare general guidelines determining the project’s pricing policy, regulated earnings, WACC level, as well as a minimum capacity level that will need to be kept vacant by the project’s investor for national energy security reasons.

RAE will have three months to prepare the guidelines once the joint ministerial decision has been published in the government gazette.

TAIPED, the privatization fund, has received an amount worth 1.6 million euros from the European Commission’s Connecting Europe Facility (CEF) to finance engineering studies required for the underground gas storage facility ahead of the privatization tender. This financial development was included in a updated Asset Development Plan (ADP) presented by TAIPED a fortnight ago. The investment’s cost is estimated between 300 and 400 million euros.

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

Legal details delay ministerial decision for gas storage facility

A joint ministerial decision concerning the operating regulatory framework for a prospective underground gas storage facility in the offshore South Kavala region has been held back by a latest administrative obstacle.

The decision, prepared by the energy ministry, has been put on hold until legal details are resolved, sources noted.

Despite the emergence of this latest hurdle, the ministry will soon be in a position to clear it, energy minister Costis Hatzidakis announced yesterday.

Meanwhile, RAE, the Regulatory Authority for Energy, has begun preparing general guidelines to determine pricing policy, adjustable earnings, minimum WACC levels, as well as compulsory vacancy levels that will need to be maintained by the project’s developer as support for national energy security.

Once the joint ministerial decision has been published, RAE will have three months to complete the  framework so that bidders will have its details when the time comes to submit binding offers.

TAIPED, the privatization fund, plans to stage a tender offering the underground gas storage facility within the first six months of 2020.

To be developed at a depleted natural gas field, the underground gas storage facility will offer a storage capacity of at least 360 million cubic meters.

The investment’s cost is estimated between 300 and 400 million euros. France’s Engie, Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender.

DESFA, the gas grid operator, is also expected to participate in the tender.

A total of 642 underground gas storage facilities offering an overall capacity of 333 bcm, approximately 11 percent of global gas consumption, operate around the world. In the EU, 126 such facilities offer a total gas storage capacity of about 80 bcm.

Slight delay, to early 2020, likely for Kavala gas storage tender

A tender for the utilization of a depleted natural gas field in the offshore South Kavala region as an underground gas storage facility appears headed for a slight delay and could be launched in early 2020, instead of late 2019, as a result of a deadline extension, from August 28 to September 9, granted to participants of a preceding tender looking to appoint a technical consultant for the project.

Besides the preliminary tender’s deadline extension, granted by the privatization fund TAIPED, a still-undelivered co-ministerial decision to determine the operating regulations of the storage facility is another matter that has increased the likelihood of a delay in the project’s competitive procedure. Even so, a launch by late 2019 has not been entirely ruled out.

The technical consultant will be tasked with preparing the tender’s details and offering TAIPED advice on the level of appropriateness of the plan to convert the depleted natural gas field into a gas storage facility, its equipment and interconnection needs, and other matters.

France’s Engie, Energean Oil & Gas and GEK-Terna have formed a consortium named Storengy in anticipation of the project’s tender.

 

Kavala underground gas storage tender later this year

A tender concerning the utilization of a depleted natural gas field in the offshore South Kavala region as an underground gas storage facility is expected to be launched by the privatization fund TAIPED towards the end of the year.

The privatization fund has informed the energy ministry on the progress of preparations, energypress sources informed.

A month ago, on July 12, TAIPED launched a tender seeking specialized preliminary services for the project.

The winning bidder of this initial procedure, expiring August 28, will need to prepare the technical details of the project’s eventual tender and offer consultancy to the privatization fund on the prospective underground gas storage facility’s feasibility and demands.

The recently appointed energy minister Costis Hatzidakis has made clear his intent to utilize the depleted natural gas field.

France’s Engie, GEK-Terna and Energean have formed a consortium, named Storengy, in anticipation of the project’s tender.

Greek gas grid operator DESFA is also believed to be eyeing the project, included in the EU’s list of PCI projects.

The project’s budget is estimated at between 300 and 400 million euros, while its storage capacity could end up being anywhere between 360 and 720 million cubic meters, as much as 10 percent of the country’s annual natural gas consumption.

The prospective underground gas storage facility is regarded as infrastructure that will complement – rather than compete against – the country’s existing LNG terminal on Revythoussa, an islet just off Athens, as well as a prospective FSRU in Alexandroupoli, northeastern Greece, helping establish Greece as an energy hub.

PCI hopes for underground gas storage boosted by late effort

NEWS UPDATE: 

Greek energy ministry officials have made a successful last-ditch effort ahead of this Sunday’s elections that boosts the country’s chances of keeping on the EU’s PCI list an underground gas storage facility in the offshore South Kavala region, planned through the development of a depleted natural gas field, energypress sources have informed.

An FSRU in Alexandroupoli, northeastern Greece, will also be on the PCI list, enabling favorable funding terms, the sources added.

Prior to this latest development, energy ministry officials assured that problems concerning the South Kavala project’s place on the PCI list would be overcome, while admitting the project had been negatively appraised by Brussels.

Earlier today, energypress reported: 

A project entailing the development of a depleted natural gas field in northern Greece’s offshore South Kavala region as an underground gas storage facility appears likely to be removed from the European Union’s PCI list, a status enabling favorable funding.

Delays and the country’s early elections appear to have taken their toll and are believed to be key reasons behind the project’s likely removal from the PCI list.

The underground gas storage facility has been negatively reviewed by EU authorities amid procedures leading to the determination of a new and revised PCI catalogue for 2020-2021, energypress sources have informed.

Not all hope has been lost. Final decisions by EU authorities will be reached in October, which gives Greek officials some time to present their case in favor of the project’s PCI-list inclusion.

The asset’s ownership, along with the responsibility for its utilization, have been transferred to the privatization fund TAIPED, which has significantly delayed related initiatives as it obviously does not consider the project to be a top-priority issue.

The project’s budget is estimated at between 300 and 400 million euros, while its storage capacity could end up being anywhere between 360 and 720 million cubic meters, as much as 10 percent of the country’s annual natural gas consumption.

France’s Engie, as well as Terna and Energean, have formed a consortium to bid for the project whenever a tender is staged.

Engie, Terna, Energean join for underground gas storage facility

Three major firms, each specializing in its own respective field, have formed a consortium to seek a contract to develop and operate a depleted natural gas field in northern’s Greece’s offshore South Kavala region as an underground gas storage facility, energypress sources have informed.

Storengy, belonging to France’s Engie group, Energean Oil & Gas, holder of a license for the South Kavala field, and technical firm Gek Terna are the three players joining forces for this contract, to be offered through a tender being prepared by the privatization fund TAIPED.

Greece remains the only country European country without an underground gas storage facility. All others maintain storage facilities covering over 20 percent of their annual natural gas consumption needs. At present, many countries in Europe are planning to develop additional such projects over the next five years.

Underground gas storage facilities play a key role in subduing carbon emissions as a result of the flexibility they offer to renewable energy sources.

Consortium member Storengy is Europe’s biggest developer and operator of underground gas storage facilities. It currently operates 21 such facilities of all types on the continent.

Offering a capacity of between 360 and 720 million cubic meters, or 10 percent of annual natural gas consumption in Greece, the South Kavala underground gas storage facility will require an investment of between 300 and 400 million euros to develop. The project has been granted PCI status by the European Commission, enabling EU funding support.

 

Engie imports gas from north for Heron, Gazprom not involved

France’s Engie has emerged as a new supplier of natural gas to the Greek market through the country’s northern gateway following a gas auction co-staged yesterday by DESFA, Greece’s natural gas grid operator, and its Romanian and Greek counterparts, to offer capacities available at the Romanian-Bulgarian and Bulgarian-Greek gas grid interconnections.

Engie secured a pipeline capacity at the jointly held auction to import natural gas into Greece for electricity generation by the energy firm Heron. Engie, which holds a 25 percent stake in Heron, has been active in Romania’s energy market, especially natural gas, for a number of years.

Though the amount to be imported by Engie, 1,500 MWh per day over a year, is modest, it represents yet another gas import agreement through Greece’s north that does not involve Russia’s Gazprom.

The agreement is competitively priced, compared to Gazprom’s offers, energypress sources informed.

Besides an import agreement involving DEPA, the Greek gas utility, and Gazprom, Russian gas is also imported into Greece through the northern gateway by Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export. Prometheus Gas has captured a 20 percent share of the Greek market. The Mytilineos group also imports, buying directly from Gazprom.

The gas amount to be brought into the Greek market by Engie covers the pipeline capacity that was available at the Romanian-Bulgarian interconnection. The capacity at the Bulgarian-Greek interconnection was considerably bigger, amounting to 7,500 MWh per day over a year.

The pipeline capacity offered by the Greek, Bulgarian and Romanian gas grid operators at yesterday’s auction represented an amount that needed to be offered to third parties, according to EU regulations. The auction represented the first ever act of collective trans-boundary trade involving the three countries.

The EU has applied pressure on member states to utilize interconnections and diversify their sources of supply.

 

 

Tender seen for subterranean gas storage unit in the north

The energy ministry and TAIPED, the state privatization fund, are making preliminary  moves leading to an international tender for the development of a subterranean natural gas storage facility in the south Kavala offshore area through utilization of a virtually depleted gas deposit.

The ministry is preparing a ministerial decision that will officially brand the project as an independent natural gas system (ASFA), or private storage facility, a necessary step ahead of the tender. TAIPED is preparing official texts for the tender, which, according to energypress sources, will be announced in the second half of this year and most definitely within the year.

An exploitation license held by Energean Oil – following a series of mandatory extensions provided to keep the facility operational – is due to expire in November.

The project is not only seen as useful but necessary for bolstering the country’s supply security and chances of becoming a regional energy hub.

Details concerning the project’s development and exact role remain undetermined.

Besides moving to declare the depleted deposit as an independent natural gas system, which would lead to the staging of an international tender, authorities have also considered two other options. One entails offering the development rights to Energean Oil, holder of the deposit’s existing operational license. Passing on the subterranean storage facility’s  investment and utilization rights to DESFA, the natural gas grid operator, has also been considered.

The south Kavala gas deposit is still producing small amounts being exploited by Energean Oil. The company had proposed converting the virtually depleted deposit into a natural gas storage facility back in 2010. A related application was submitted by the firm the following year, shortly before control of the facility was passed on to TAIPED for appraisal. A period of indeciveness by the Greek State followed, which led to the project’s removal from the EU’s Projects of Common Interest list. The facility regained its PCI status this year as it is regarded pivotal for energy security in Greece and the western Balkans, while also having potential to support the TAP gas pipeline, now being developed and planned to cross northern Greece.

The south Kavala project’s cost is estimated between 250 and 300 million euros.

French energy group Engie, a successor of GDF Suez, Europe’s oldest energy firm, has expressed an interest in the south Kavala project. Company officials who were part of French president Emmanuel Macron’s delegation for an official visit to Athens last September singled out the south Kavala project. Engie is already present in the Greek market with a 25 percent stake in electricity supplier Heron.

 

 

France’s Engie interested in Kavala gas storage project

French energy group Engie, a successor of Europe’s oldest energy company GdF Suez, has expressed an interest in the depleted south Kavala gas deposit in Greece’s north, expected to be developed as an underground natural gas storage facility.

Company officials were part of a delegation accompanying president Emmanuel Macron on his official visit in September.

Engie officials have already gained an understanding of the Greek energy market as the company maintains interests in independent energy firm Heron, active in electricity generation and supply as well as trade in the natural gas market.

The Engie team apparently singled out the prospective underground natural gas storage facility, sought additional information and, more recently, reiterated their interest.

The Greek government, especially its energy ministry, appears determined to utilize the depleted south Kavala gas deposit in the country’s north as an underground natural gas storage facility.

Its feasibility is strengthened by the prospective Greek-Bulgarian IGB gas system interconnector and extensions to Serbia and Romania.

Engie, a leading player in Europe’s natural gas market, is obviously interested in increasing its role in southeast Europe’s gas market. The French firm controls Europe’s biggest natural gas distribution network, is the continent’s biggest importer, owns Europe’s biggest storage facilities, and supplies 105 billion cubic meters of natural gas per year.

The south Kavala project is seen as essential in Greece’s overall effort to reinforce energy supply security. It would also take further an ambitious plan to establish the country as a regional energy hub.

At present, the government is examining three options. The first is to grant the underground natural gas storage facility’s development to Energean Oil & Gas, holder of the deposit’s exploitation rights, renewed just days ago.

The second option being looked at is to incorporate the underground facility into the national natural gas system with DESFA, the natural gas grid operator, as operator of the investment and its utilization.

The third alternative being considered is to classify the prospective natural gas storage facility as an independent unit and stage an international tender offering its development and exploitation rights.

TAIPED, the state privatization fund, now in control of this specific asset, the energy ministry and RAE, the Regulatory Authority for Energy, are expected to reach a decision within the next few weeks, according to the energy ministry’s secretary general Mihalis Veriopoulos.

The project has been reincluded on the EU’s Projects of Common Interest (PCI) list after being removed two years ago, indicating a wider European interest in the project.