As the energy crisis evolves into the new normal and power & gas markets are seeking new rules, Energypress organizes for a fourth year the annual Power & Gas Forum on March 22-23 in Wyndham Grand Athens Hotel.
The conference will take place with physical presence and can also be viewed online both in Greek and English.
You can see the conference’s agenda and the speakers list here.
https://powergassupplyforum.gr/
The Power & Gas Forum, organized by energypress for a fourth year and taking place March 22 and 23, 2023 at the Wyndham Grand Athens hotel, offers a rich agenda over its two days. The entire range of energy-sector topics will be covered with participation from over 70 prominent speakers. Simultaneous interpretation from Greek to English will be offered.
Watch the conference through this link:
https://www.livemedia.gr/powerandgasforum2023/live/7991
European Commission proposals for electricity market reforms as well as gas supply security measures ahead of next winter will be the focus of attention at a European Council summit of EU leaders later this week, planned for March 23 and 24, as well as at an upcoming EU Energy Council, scheduled for March 28.
According to energypress sources, Greek officials are approaching these sessions with a mostly favorable view of the European Commission’s proposed framework of measures, while pointing out, however, that they do not offer solutions but rather set defense strategies in the event of further crises.
Given this stance, Greek officials, at both upcoming meetings, intend to support the need for short-term measures aimed at curbing the effects of the energy crisis and contend that the European proposals are too timid.
As for the segment of upcoming talks to focus on European electricity market reforms, Greek officials will promote the establishment of a European fund, which they believe is necessary to provide state guarantees for CfDs and other European Commission proposals such as hedging.
The absence of such support would limit the benefits of measures proposed by Brussels to EU member states possessing sufficient fiscal leeway and marginalize all other member states, Greek officials believe.
The possibility of extending, into next winter, a voluntary objective for reducing gas demand will be among the topics to be discussed at next week’s EU Energy Council. The European Commission has proposed extending this voluntary goal to March, 2024. It was originally set to run from August 1, 2022 to March 31, 2023.
Electricity supplier tariffs for April, due, by law, to be announced by midnight, will be at least 2 cents per KWh below levels set for March, while a number of independent suppliers may even offer greater reductions of as much as 5 cents per KWh, sources have informed.
Recently introduced law requires the country’s electricity suppliers to announce their retail tariffs for each forthcoming month by the 20th of every preceding month.
The anticipated tariff reductions for April will not result in lower energy costs for users, but the government, which has been providing subsidies – through the Energy Transition Fund – during the energy crisis to maintain residential tariffs at between 15 and 16 cents per KWh, will be able to decrease its outlay on subsidies while keeping tariffs at the desired level.
Lower wholesale electricity prices and a current de-escalation of natural gas prices in international markets are the key reasons behind the anticipated reduction in electricity tariffs.
Intraday market electricity prices during the first half of March were approximately 20 percent less than a month earlier and nearly 55 percent below prices recorded in December.
Electricity suppliers will no longer be factoring into their tariffs a special surcharge of 10 euros per MWh on natural gas used for generation purposes following a recent revision to this extraordinary measure.
The country’s power retailers are currently working on their tariffs for April, due to be announced on Monday, based on a recent law requiring suppliers to announce price levels for every forthcoming month by the 20th of each preceding month.
Though the aforementioned flat-rate surcharge no longer applies, electricity producers have not been entirely spared of special contributions. An amendment that came into effect this month now requires electricity producers to contribute to the state a monthly surcharge that is equivalent to 5 percent of the TTF natural gas index.
The now-terminated special surcharge of 10 euros per MWh on natural gas used by producers for generation purposes is estimated to have increased retail electricity bills by 18 to 20 euros per MWh.
Though the eventual cost – for consumers – of the new TTF-based surcharge remains unknown, it will definitely be lower than costs resulting from the flat-rate formula. Lower TTF levels will mean lower related costs for electricity producers, which, by extension, will enable suppliers to offer reduced retail prices.
Suppliers are expected to announce reduced tariffs for April on the 20th of this month as wholesale electricity prices and the TTF index have been on downward trajectories.
Independent suppliers are forecast to offer tariffs of around 0.20 euros per kWh, a reduction of 0.02 to 0.03 euros per kWh compared to levels for March. Power utility PPC may lower its prices below 0.20 euros per kWh, according to unconfirmed reports.
These lower prices will essentially not offer reduced prices for consumers, but the government’s subsidy support policy, keeping retail power prices at levels of between 14 to 16 cents per KWh, will cost the administration less.
London, 9 March 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has confirmed that first gas has been safely delivered at North El Amriya and North Idku (“NEA/NI”), offshore Egypt.
Highlights:
The NEA/NI development, located in shallow water, offshore Egypt, contains an estimated 39 mmboe[1] of 2P reserves (88% gas) with net working interest production expected to peak at 15 – 20 kboed (88% gas) in 2024. The development leverages existing infrastructure and involves the subsea tieback of four wells to Energean’s North Abu Qir PIII platform. Energean sanctioned the project in January 2021, representing a development period from final investment decision to first gas of 2 years and 2 months.
Mathios Rigas, Chief Executive Officer of Energean, commented:
“Our successful development of first gas at NEA/NI is a good example of our commitment to Egypt and longstanding partnership with the Egyptian Ministry of Petroleum, EGPC and EGAS, creating value for all stakeholders. We are delighted to bring on new production into our East Mediterranean gas-focused portfolio, as well as meeting the needs of Egypt and Egyptians through underwriting energy security with reliable supply that has a lower carbon footprint than alternative sources of domestic energy.”
US Secretary of State Anthony Blinken has praised Greece’s leading role concerning the region’s energy transition in his opening remarks at the start of the 4th round of the Greece-US Strategic Dialogue, while underlining that the US is grateful for Greece’s unwavering support for Ukraine.
“Greece’s transition is a model for the region,” Blinken stressed, recalling that renewable energy sources such as wind and solar have, in recent times, provided half of Greece’s electricity needs, which he said was equivalent to taking 3 million cars off the roads.
The US Secretary of State also praised Greece’s role in supporting neighboring countries to diversify their energy sources by reducing their dependence on Russia, such as Bulgaria.
However, the US appears unmoved by Israel’s renewed interest for the development of the East Med gas pipeline, which would connect Israel, Cyprus and Greece before crossing to Italy visa the Poseidon pipeline. This project would greatly contribute to Europe’s efforts aiming to end the continent’s reliance on Russia for fossil fuels.
Contrary to expectations, the East Med project has not been included on the agenda of talks for Blinken’s official two-day visit to Athens, today and tomorrow, reliable sources informed.
Roughly a year ago, the US had announced it could not support this pipeline project, attributing this stance to a lack of feasibility. But the country’s willingness to maintain a balance in its regional geopolitical interests, especially between Greece and Turkey, is most likely the underlying reason.
Despite difficulties faced in its ties with Turkey, the US appears unwilling to support a regional gas pipeline project that would sideline this NATO ally.
Energypress is staging the fourth edition of its Power & Gas Forum on March 22 and 23 at the Wyndham Grand Athens Hotel, an event whose agenda has acquired even greater urgency as a result of the ongoing energy crisis that has put under the spotlight gas and electricity markets, now the focus of economic, political and social interest.
Conference speakers and attendees will participate in person. The event’s registration process has begun and will continue until all available places have been filled.
All proceedings will be broadcast live, with free access, in Greek and English.
A market test to be staged by gas grid operator DESFA to gauge the level of investment interest and need for a network capacity increase is imminent and could be launched as early as this week or, if not, by the end of the month at the very latest, energypress sources have informed.
DESFA has determined a gas network upgrade and capacity boost are needed as the continent’s efforts to end reliance on Russian gas supply are changing Europe’s energy map and reversing the flow of gas.
The developments have elevated the role of Greece as an important gas supplier to markets north of the country, meaning the country’s gas infrastructure needs to be upgraded in order to handle the increased gas quantities expected to flow through the country in a northward direction. In previous decades, natural gas, supplied by Russia, flowed from north to south.
When offering its approval of DESFA’s ten-year development plan, RAE, the Regulatory Authority for Energy, requested a market test from the operator for the gas network upgrade plan.
DESFA, sources informed, intends to stage the first round of a market test for the project imminently, the aim being to complete this procedure by summer and follow it up with a second round of binding bids, which the operator wants completed by the end of the year.
DESFA plans to stage an international road show to attract investors and potential buyers, the sources noted.
A sharp reduction in domestic natural gas consumption has prompted gas utility DEPA to cancel two LNG orders submitted to TotalEnergies a few months ago as part of the country’s overall effort to bolster energy security ahead of this winter period, energypress sources have informed.
The cancellation will not come without repercussions as DEPA, based on the agreement’s terms, will be required to pay TotalEnergies compensation of approximately 10 million euros for each cancelled order. This sum may be covered by the Energy Transition Fund, as foreseen by law.
DEPA’s cancellations concern two LNG orders submitted in September, each for 10 TWh quantities. These orders were secured at particularly competitive prices as other indices besides the TTF were also factored into the pricing formula to lower the price level. At the time, the TTF was as much as 90 euros per MWh higher than other platforms also used for such transactions in the European market.
The two DEPA 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 have ended up proving excessive given the prevailing conditions.
Renewable energy was ranked the country’s biggest electricity producer for the first time ever in 2022, capturing a 41.6 percent share of the energy mix for output totaling 19.7 TWh, data provided by power grid operator IPTO has shown.
Natural gas-fueled generation, previously the country’s biggest producer, was ranked second in 2022 with a 38 percent share of Greece’s energy mix and output of 17.9 TWh. It was followed by lignite, once the country’s leading source of electricity production until it was overtaken by natural gas, with an 11.8 percent share and 5.6 TWh. Hydropower ranked fourth in terms of output in 2022, capturing an 8.5 percent share with output totaling 4 TWh.
Combining the energy-mix shares captured by the RES sector and hydropower adds up to 50.1 percent, meaning these two energy source categories edged past fossil fuels as Greece’s main producer of electricity.
Last year, natural gas-fueled generation fell by just over 4 percent compared to 2021, dropping from a leading energy-mix share of 42.8 percent.
All EU member states have set objectives, on a voluntary basis, to reduce natural gas consumption by 15 percent this winter.
In 2021, the RES sector was ranked second in terms of electricity generation in Greece with a 35.3 percent share of the energy mix followed by lignite, whose share hardly changed. Compared to 2022, hydropower output was slightly higher in 2021, when it had captured a share of approximately 11 percent.
An energy ministry meeting scheduled for tomorrow will focus on a European platform introduced to facilitate collective natural gas orders next winter, the session’s objective being to determine gas quantities Greek market players would be prepared to order through this platform, promising collective-bargaining benefits expected to result through deals struck between the EU and international suppliers.
Tomorrow’s meeting, organized by the energy ministry, will involve the participation of the country’s four electricity producers, gas company DEPA Commercial, as well as industrial-sector officials.
A key objective of this new European platform will be to prevent competition between EU member states in international markets for natural gas orders, a consequence of the reduction in Russian gas supply to Europe that has escalated prices.
EU energy ministers approved the European platform for collective gas orders in mid-December.
EU member states equipped with gas storage facilities will be required to place gas orders – though the new collective platform – representing at least 15 percent of their respective gas demand when refilling storage facilities for next winter.
The European Commission has set an objective for EU gas storage facilities to be 90 percent full by next November.
At present, Greece does not possess gas storage facilities. Domestic market players may place orders through the new platform on a voluntary basis.
Heating alternative costs are set for a reshuffle in February. Heating fuel looks like it will become a more expensive heating option, while the cost of natural gas as a heating source is headed down. At this stage, it remains unclear whether electric heating will cost more or less next month as the government is believed to be considering revisions to its electricity subsidies policy, currently offered universally.
Heating source price shifts are expected as a reflection of international market trends. In Greece, heating fuel currently averages 1.3 euros per liter, but rising international oil prices suggests local price hikes are imminent. The price of Brent crude oil rose by 1.5 percent yesterday, reaching 87.47 dollars.
If it weren’t for a rise in the value of the euro against the dollar, heating fuel would have already risen to 1.4 euros per liter in Greece.
Demand in China appears set to grow, which will prompt a further increase in international oil prices. They are expected to reach levels of 90 dollars a barrel over the next few months.
Contrary to oil, natural gas prices are set to drop in Greece next month, once plunging international prices, now below 60 euros per MWh, have been factored in.
A month-ahead system is applied in Greece’s natural gas market, meaning this month’s wholesale gas prices will be passed on to the retail natural gas market in February.
Local retail natural gas, currently priced between 11 and 12 cents per KWh, is expected to fall to levels as low as 6.5 cents per KWh in February, plunging between 40 and 45 percent.
As for electric heating, the prospective cost of this option will depend on the level and structure of February’s electricity subsidies to be offered by the government. Its electricity subsidies package for next month is expected to be announced Monday or Tuesday.
The government is believed to be considering lowering or even zeroing out electricity subsidies for monthly consumption levels of over 500 or 1,000 KWh.
Gastrade, the consortium established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal now being developed in Greece’s northeast, will also install an additional FSRU unit at the location, the group’s chief, Dimitris Copelouzos has asserted in comments to media, noting the facility will be capable of transporting natural gas to Ukraine.
According to sources, the Copelouzos group has already held preliminary talks with officials of the embattled country on the prospect of natural gas supply from Greece’s northeast.
A second Alexandroupoli FSRU is expected to be completed in 2025, as an addition to the first terminal at the location, now nearing completion.
The Copelouzos group chief, asked by journalists on the route to be used for transporting natural gas to Ukraine, responded: “Via the pipeline that is now empty,” a reference to the Trans Balkan Pipeline, which transported Russian gas to Greece through the Sidirokastro entry point in the country’s northeast until early 2020.
This route was replaced by Turk Stream in early 2020 so that Ukraine could be bypassed.
The Trans Balkan Pipeline runs from Russia, crossing Ukraine, Moldova and Bulgaria, before branching out to Greece and Turkey.
Investments, including compressor stations in Bulgaria, will be needed to fully utilize the capacity offered by the Trans Balkan Pipeline, sources pointed out.
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.
ExxonMobil, Energean and Helleniq Energy, formerly ELPE, all conducting hydrocarbon surveys at Greek licenses, have not only stuck to their schedules but even taken initiatives to speed up procedures for sooner-than-expected drilling. Even so, two factors beyond their control, namely bureaucracy and imminent elections, may hold up their plans.
Energean skipped 2D surveys at its Block 2 offshore license in the Ionian Sea’s northwest, moving straight on to 3D surveys.
Hellenic Energy moved swiftly in 2022 to complete 2D and 3D seismic surveys at two offshore licenses, Ionio and Block 10, both in the Ionian Sea.
ExxonMobil is considering to start drilling sooner than originally planned at its offshore Cretan licenses. As a result, it is staging more comprehensive 2D surveys for a clearer picture of geological details.
State bureaucracy is an obstacle for upstream companies operating in Greece. The overall procedure concerning social and environmental impact studies, which require energy ministry approval ahead of drilling, requires at least eight months to be completed.
Then, upstream companies usually require a further six months or so to make arrangements for drilling rigs, configure sites and identify a port or base area for their drilling rigs.
The uncertainty created by the upcoming Greek elections, expected within the first half of the year, is another factor troubling the efforts of upstream companies.
Natural gas prices, up 20 percent over the past week on levels that had plunged to less than 65 euros per MWh in the last month, are establishing a new upward trajectory, market experts believe.
Colder weather anticipated around Europe over the next few months, a slight drop in gas storage facility reserves around the continent, as well as slightly higher prices offered by Asian buyers, already attracting some LNG shipments to China, now moving again after letting go of its zero-Covid policy, are the key factors seen putting an end to the recent decline in gas prices.
The combined effect of these factors is expected to maintain natural gas prices at levels of between 70 and 80 euros per MWh. Natural gas was priced at 74.80 euros per MWh on the TTF index yesterday, a rise based on expectation rather than any substantial change in current market conditions.
Natural gas storage capacities in Europe have now dropped to an average of 83.5 percent after reaching levels of 95.5 percent of capacity in November.
Though gas prices are currently roughly 40 percent below levels of 120 to 130 euros per MWh recorded this time last year, market volatility is expected to remain a concern in 2023, market analysts told energypress.
Price levels, they have forecast, will soon climb back up to levels of more than 100 euros per MWh before falling again next autumn, when gas storage facilities have been refilled to 90 percent of capacity.
European natural gas prices tumbled to 65 euros per MWh yesterday, a new 12-month low last reached in mid-January, 2022, prior to Russia’s invasion of Ukraine.
The price drop has been attributed to mild European winter conditions, so far, that have flattened demand and kept the continent’s energy storage facilities 84 percent full, well above the level recorded a year ago and approximately 30 percent higher than the average level recorded over the past five years.
Analysts insist European market conditions remain fragile, despite the favorable price trajectory of natural gas so far this winter. A sudden change of weather conditions, combined with a complete disruption of Russian gas supply to Europe, could spark a new round of price volatility and deplete European gas reserves by the end of winter, analysts have warned.
The European energy market, experts have long pointed out, will face its toughest test in spring, when EU member states will begin efforts to refill their gas storage facilities in preparation for the winter of 2023-2024.
This refilling period could once again spike natural gas prices to levels of 120 euros per MWh, analysts have noted. Russian pipeline gas supply is expected to be considerably lower in spring, while the LNG market, on which Europe now greatly depends, is expected to be tight in spring.
A worst-case scenario for Europe would combine a complete disruption of Russian natural gas supply with an increase of LNG demand in the Chinese market. Such a combination would prompt a natural gas shortage estimated to reach as much as 57 billion cubic meters, or 15 percent of projected demand.
RAE, the Regulatory Authority for Energy, has approved five-year development programs submitted by Greece’s three gas distribution operators, EDA Attiki, EDA Thess and DEDA, covering Athens, Thessaloniki-Thessaly and the rest of Greece, respectively, energypress sources have informed.
RAE is expected to soon publish these development programs, the sources noted.
The three operators have already submitted their ensuing five-year development plans, covering 2023 to 2027, to the authority, expected to offer its approval within the next two to three months, after two pending issues are settled.
Italgas, the new owner of the EDA companies, has set ambitious objectives to expand Greece’s existing gas distribution network in order to facilitate further market penetration of gas around the country.
Italgas aims to increase total gas connections in Greece to a level of one million by 2028, from roughly 600,000 at present.
However, RAE has maintained a cautious stance as it wants to ensure these investments do not end up becoming an excessive burden for consumers.
Natural gas prices are on a downward trajectory, confirming projections that an EU gas price cap agreement, reached earlier this week, would help contain international prices.
Yesterday, wholesale gas prices dropped to below 100 euros per MWh for the first time in months, ending the day at 97.752 euros per MWh. During trading today, the price level has dropped as low as 96.325 euros per MWh.
Though the gas price cap appears to be having a calming affect on international gas prices for now, the mechanism is expected to face a tougher test in spring, when gas demand will be greater as EU member states move to refill storage facilities following winter.
EU energy ministers agreed to trigger a cap if prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark.
ExxonMobil could begin drilling at licenses offshore Crete a year earlier than planned as the American energy giant tends to adopt a more direct approach when exploring for natural gas, sector authorities have noted.
Such was the case at Cyprus’ Block 10, for which ExxonMobil conducted seismic surveys before skipping the 3D survey stage to go straight ahead with drilling that led to the discovery of the Glafkos deposit, the officials pointed out.
A consortium comprised of ExxonMobil and Helleniq Energy, formerly ELPE, holds licenses for two offshore Crete blocks, one west of the island, the other southwest. The consortium has commissioned PGS to conduct 2D seismic surveys at both these licenses. They are in full progress and are expected to be completed towards the end of January.
According their original plan, ExxonMobil and Helleniq Energy planned to follow up with 3D surveys at the end of 2023 or early in 2024. However, if ExxonMobil, the consortium’s operator, opts to skip the 3D surveys, initial drilling offshore Crete will begin sooner, in 2024, instead of 2025.
Elsewhere, in the Ionian Sea, a consortium made up of Helleniq Energy and Energean expects to have the results of 3D surveys at three blocks, Ionio, Kyparissiakos, and Block 2, by the end of 2023 or early in 2024. It will then decide if it will continue with initial drilling.
Power utility PPC’s participation at the 22nd World LNG Summit indicates the energy group is transforming rapidly, on many levels, one of these being its involvement in natural gas and LNG markets, Konstantinos Nazos, PPC’s General Director of Energy Management, has pointed out in comments to energypress.
“It is a very interesting conference and I think the fact that it is being held in Athens highlights the role that our country has to play in the future in terms of LNG and, more generally, electricity supply security in the wider region,” Nazos noted.
Energy security, in relation to sustainability and cost-effectiveness of solutions, is the most challenging matter that needs to be resolved, the PPC official determined, having heard summit speeches and held meetings during this event.
“We are still close to the crisis. We have successfully dealt with many risks without having left it behind. We have managed to turn those risks into opportunities and we are looking for more,” Nazos commented.
A Czech EU presidency proposal for a gas price cap of 188 euros per MWh, which would be triggered if wholesale prices have exceeded this level for three days at the TTF index, represents a good compromise solution, Greek energy minister Kostas Skrekas noted today ahead of the day’s Energy Council of EU energy ministers.
A gas price cap of 188 euros per MWh is well below a price cap of 275 euros per MWh initially proposed by the European Commission, which Greece, along with a number of countries, including Belgium and Poland, have rejected as too high.
This group of countries preferring a lower gas price cap believes a level of less than 200 euros per MWh is needed if higher natural gas prices for consumers are to be countered.
Decision on the price cap’s details are expected today following a political decision reached by EU leaders at last week’s Summit.
EU energy ministers are expected to decide on the gas price cap level, whether it will be applicable at all EU energy exchanges, and if it will be suspended should any EU member state request the measure’s suspension for reasons concerning supply security.
Prime Minister Kyriakos Mitsotakis, on his way to today’s Council summit of EU leaders, expressed hope that a European agreement on a gas price cap could be achieved either today or next Monday, the latest, when the EU’s energy ministers are scheduled to meet.
The Greek leader stressed it is absolutely essential that Europe sends a clear message to energy markets as well as to Russia by underlining that Moscow’s exploitation of natural gas as a tool to burden European citizens and businesses will not be tolerated.
“We are close to being able to impose a price cap on gas. Our arguments are now known to all member states and I believe that, one way or another, we will find the necessary majorities to move in this direction,” Mitsotakis noted.
Greece supports the implementation of a gas price cap at 200 euros per MWh or less, applicable at all European hubs with an accompanying limit-up mechanism. Though well below the European Commission’s initial proposal of 275 euros per MWh, it seems to have gained increased acceptance by fellow EU member states.
However, a group of six EU member states – Germany, Austria, the Netherlands, Denmark, Estonia and Luxembourg – remains skeptical, fearing a low-level price cap could prompt market instability.
“In any case, regardless of European decisions, the Greek government is continuing to take all measures needed to support Greek households and businesses,” Mitsotakis noted, pointing out that 900 million euros in state budget money will be used in December to support low-income households and offer allowances for heating oil purchases.
The EU 27’s energy ministers appear to have made progress on a gas price cap agreement at yesterday’s emergency Energy Council, but divisions remain over the impact of such a measure.
Greek energy minister Kostas Skrekas’s proposal for a gas price cap of 200 euros per MWh, or possibly even less, applicable at all European hubs with an accompanying limit-up mechanism, appears to have gained further EU acceptance.
The European Commission’s original proposal called for a more elevated gas price cap that would go into effect if prices on the Dutch TTF hub reached 275 euros per MWh for two weeks and were more than 58 euros per MWh higher than LNG prices on the global market.
If adopted, the latest proposal’s purpose would be to subdue any rampant speculation and prevent a repeat of the spike in gas prices last August, when they briefly reached 350 euros per MWh.
A gas price cap at a level of approximately 200 euros per MWh, questioned by a group of five countries – Germany, Austria, the Netherlands, Denmark and Hungary – as they fear it could prompt market instability, and favored by roughly 12 countries, including Greece, will now be discussed by EU leaders at tomorrow’s Council summit.
If the leaders reach an agreement, the EU 27 energy ministers will meet finalize its formula and wrap up the deal at a meeting on December 19.
An agreement now would not result in an immediate drop in gas prices. Its main purpose would be to avoid any new surge in gas prices, as has been forecast by international analysts for around March, 2023, in the wake of increased winter demand and the need for countries to refill storage facilities for the rest of 2023 and the following winter.
Any chance of a gas price cap agreement at today’s Energy Council, involving the bloc’s 27 energy ministers, appears to have already been written off judging by European Commission president Ursula Von der Leyen’s comments yesterday, who noted a political solution will need to be sought at Thursday’s Summit of EU leaders.
Despite the ongoing energy crisis and need for solutions at a time when gas and electricity prices are once again rising, the EU appears more divided than ever on a gas price cap agreement. Proposal and counter-proposals have so far failed to lead towards compromise and a deal.
Greece and a further eleven EU member states are pushing for a gas price cap level of 160 euros per MWh, strongly opposed by six member states, Germany, the Netherlands, Austria, Luxembourg, Denmark and Estonia, a group supported on the issue by the European Central Bank. They contend a price cap would threaten market stability.
Germany appears willing to consider a higher gas price cap of 220 euros per MWh proposed by the Czech Republic, currently holding the EU’s rotating presidency.
The EU’s Committee of Permanent Representatives, tasked with agenda preparatory duties, failed to make any progress on the matter at a meeting yesterday following a previous failure on Saturday.
EU officials failed to make any progress over the weekend on a natural gas price cap plan whose foundations were established by the bloc’s 27 leaders nearly two months ago, strongly suggesting an agreement will not be reached at tomorrow’s meeting of EU energy ministers but, instead, be deferred until the EU summit on Thursday.
A German-led group including Austria, Denmark, Estonia, Luxembourg and the Netherlands, now also backed by the European Central Bank, wants to avoid a natural gas price cap at 220-euro per MWh, as proposed by the European Commission, or any alternative of equal worth, in an effort to subdue gas prices and wild fluctuations, as was the case in August, despite signs of yet another surge in gas and electricity prices.
The group of six opposes Brussel’s gas price cap proposal, warning it could backfire and result in even higher natural gas prices as the measure could repel major gas suppliers from the European market. The group of six appears to prefer a gas price cap level well above the level proposed by Brussels.
Greece, Belgium, Italy and Poland are the biggest supporters of the the European Commission’s proposal.
Over the past few months, the price cap issue has gone around in circles, passed on by the EU’s 27 leaders to their respective energy ministers, who, in turn, have relayed it to their permanent representatives in Brussels, and back again.
The EU’s energy ministers appear headed towards another deadlock for a gas price cap agreement at an upcoming council meeting on December 13, which will prove a disappointment for Europeans as prices surge again.
Several EU member states seem to be resisting any sort of compromise for the establishment of a gas price cap level ahead of next week’s meeting of energy ministers, a measure now more urgent than ever before as winter temperatures begin to fall.
Gas prices surged yesterday at the Dutch energy exchange, a European benchmark, reaching 160 euros per MWh before easing to 140 euros per MWh and ending the day at 138 euros per MWh.
Though the prospect of high-priced natural gas is alarming, a price cap agreement does not appear to be a priority for a group of EU member states, led by Germany. Berlin, according to sources, wants the issue deferred until a summit of EU leaders, scheduled for next Thursday, two days after the meeting of EU energy ministers.
This, of course, would be a setback as it was at the previous summit, in October, that EU leaders referred the issue to the Energy Council, asking its members to work on details of an agreement reached by the 27 EU leaders.
Germany, joined by the Netherlands, Austria, Denmark, Estonia and Luxembourg, appears to be insisting on gas price cap at the level initially proposed by the European Commission, 275 euros per MWh, well above the 220-euro proposal forwarded by the Czech Republic, currently holding the EU’s rotating presidency.
The government is determined to keep offering generous energy subsidies for as long as is necessary, regardless of their cost and negative impact on GDP, in order to ensure fair prices for consumers, despite facing pressure at a Eurogroup meeting to reduce subsidy levels.
The administration, facing an election year in 2023, will obviously make sure energy prices are subdued when voters head to the polls, even if this strategy undermines economic growth, as was the case in the third quarter this year.
GDP growth in the third quarter, normally the Greek economy’s strongest due to the country’s robust tourism industry, was restricted to 2.8 percent, well below the 7.9 and 7.1 percent rates in the first and second quarters, respectively, as a direct result of the energy crisis.
Rather than reduce energy subsidies, the government will instead increase them, if required by international price developments, currently on an upward trajectory.
The government has already begun calculating the cost of subsidies for January. Electricity suppliers will announce their retail prices for next month on December 20, based on a recent rule requiring them to announce each forthcoming month’s prices by the 20th of the preceding month. State budget money was not needed to cover the government’s energy subsidy costs for November and December.
The Hellenic Energy Exchange’s natural gas trading floor, launched eight months ago, has been positively evaluated for its operations to date and is steadily growing.
The natural gas trading floor was launched with eleven participants and now involves eighteen, plus the gas grid operator DESFA, significantly expanding its gas market presence.
For its part, the Energy Exchange has set as a key objective a further increase of transactions in the short term and, at the same time, registration of a greater number of participants.
At present, 5.5 percent of the total volume of natural gas distributed through the DESFA grid is traded at the Energy Exchange’s natural gas trading floor, the bulk of it as bilateral agreements between participants.
According to energypress, the Energy Exchange plans to further develop by launching new products next year.
It is worth noting that an increase in day-ahead contracts has been observed, not just for gas balancing, which is a good sign for the market’s liquidity and the further maturation and consolidation of the natural gas trading floor in the Greek gas market.
According to data presented by Dr. Christoforos-Anestis Zoumas, Acting COO & Director – Markets Operations of the Hellenic Exchange at a recent IENE conference, the share of the day-ahead market in terms of trading volume is 52.28% and is constantly increasing.
