Registrations for 5th Power & Gas Forum, March 28, 29, nearing full capacity

Registrations for the upcoming 5th Power & Gas Forum, a highly influential energypress event scheduled for March 28 and 29, in Athens, at the Wyndham Grand Athens Hotel, are nearing full capacity.

Registrations for the event’s few remaining places may be submitted to https://5opowergasforum.eventsadmin.com/Register.

As always, the event will feature the energy ministry’s leadership and prominent speakers. Sponsorship support by energy-sector companies has been strong, highlighting the event’s stature.

The event’s list of confirmed speakers includes: Thodoros Skylakakis, Energy and Environment Minister; Alexandra Sdoukou, Deputy Energy and Environment Minister; Aristotelis Aivaliotis, the Energy and Environment Ministry’s General Secretary of Energy and Natural Resources; Nikos Tsafos, the Greek PM’s special adviser on energy matters; Athanasios Dagoumas, president at RAEEY, the Regulatory Authority for Energy; Dimitris Fourlaris, RAAEY Vice President for the energy sector; Professors Theodoros Tsakiris, Pantelis Kapros, Pantelis Biskas, Stavros Papathanasiou and Antonis Metaxas; Alex Papalexopoulos, president at ECCO International and key designer of the target model; Alexandros Papageorgiou, CEO at the Greek energy exchange; Manos Manousakis, President and CEO at IPTO, the Greek Power Grid Operator; Giannis Margaris, IPTO Vice President; Anastasios Manos, CEO at DEDDIE/HEDNO, the distribution network operator; Giannis Giarentis, President at DAPEEP, the RES market operator; Maria Rita Galli, CEO at DESFA, the gas grid operator; Barbara Morgante, CEO at Enaon; and Aristofanis Stefatos, CEO of EDEYEP, the Hellenic Hydrocarbon Management Company.

Also taking part are: Victor Papaconstantinou, president at ESAI, the Hellenic Association of Independent Power Producers; Konstantinos Xifaras, CEO of DEPA Commercial; Antonis Kontoleon, president at EVIKEN, the Association of Industrial Energy Consumers; Giannis Mitropoulos, President at ESPEN, the Greek Energy Suppliers Association; Irodotos Antonopoulos, President at ESEPIE, the Hellenic Association of Electricity Trading & Supply Companies; Georgios Kouvaris, President at Heron; Elena Giannakopoulou, Chief Strategy Officer at Greek power utility PPC; Tasos Lostarakos, chief executive at NRG; Dionysis Tsitos, General Manger at Volton; Katerina Sardi, Managing Director and Country Manager for Greece at Energean Oil and Gas; as well as Giannis Karydas and Kostis Sifnaios, both officials at the Copelouzos group.

Panagiotis Ladakakos, President at ELETAEN, the Greek Wind Energy Association, and Panagiotis Papastamatiou, this association’s General Manager; Stelios Loumakis, President at SPEF, the Hellenic Association of Photovoltaic Energy Producers; as well as a host of other participants representing operators, the energy sector’s regulatory authority, agencies, as well as the entrepreneurial and academic worlds also feature on the event’s agenda.

The conference will be held with speakers and participants at the venue. All proceedings will be broadcast live, in Greek and English.

For more on participants, sponsors, the event, plus a rich archive of information from previous Power & Gas Forum events, go to https://powergassupplyforum.gr/

For further information and sponsorship details, contact Maria Delli (2108217446, mariadelli@energypress.gr)

RAAEY’s Energy Ombudsman service proving useful

An Energy Ombudsman launched by RAAEY, the Regulatory Authority for Waste, Energy and Water, on February 1 for resolving disputes between consumers and suppliers or market operators is provi ng useful, early data on the new service has indicated.

Some 50 applications concerning disputes, primarily pricing disputes, have already been submitted, but ten of these have not been accepted by the Energy Ombudsman as their cases are currently being examined by other agencies and decisions are still pending, energypress sources informed.

Two cases have already been settled through the new RAAEY service, while outcomes on the others are pending.

Consumers can only resort to the new Energy Ombudsman fcr settlement of disputes if they have not already filed cases to other agencies or courts.

Consumers must first raise their cases with their supplier or the relevant market operator and, if they deem the response as insufficient, can then turn to the Energy Ombudsman for help.

Besides pricing disputes, other disputes that may be settled through the Energy Ombudsman, covering both the electricity and natural gas markets, could include disagreement over clauses, consumption levels, as well as energy-bill ambiguities.

 

5th Power & Gas Forum, an energypress event, March 28, 29

The 5th Power & Gas Forum, organized by energypress, is scheduled for March 28 and 29 in Athens, at the Wyndham Grand Athens Hotel, with participation, as always, by the energy ministry’s leadership and prominent speakers.

Sponsorship support by energy-sector companies is strong,  highlighting the event’s influential standing.

The registration process for event participation is ongoing, but the number of places now available is limited as sector executives have been expressing considerable interest.

Registrations may be submitted to https://5opowergasforum.eventsadmin.com/Register.

At present, the list of confirmed speakers is: Aristotelis Aivaliotis, the energy ministry’s General Secretary of Energy and Natural Resources; Nikos Tsafos, the Greek PM’s special adviser on energy matters; Athanasios Dagoumas, president at RAEEY, the Regulatory Authority for Energy; Professors Theodoros Tsakiris, Pantelis Kapros and Pantelis Biskas; Alex Papalexopoulos, president at ECCO International and key designer of the target model; Alexandros Papageorgiou, CEO at the Greek energy exchange; Loukas Dimitriou, president at ESAI, the Hellenic Association of Independent Power Producers; Antonis Kontoleon, president at EVIKEN, the Association of Industrial Energy Consumers; NRG chief executive Tasos Lostarakos; as well as numerous market operator and RAAEY representatives, plus members of the entrepreneurial and academic sectors.

The conference will be held with speakers and participants at the venue. All proceedings will be broadcast live, in Greek and English.

For a look at the agenda’s topics, go to https://powergassupplyforum.gr/forum-presentation/

For further information, contact Maria Delli (2108217446, mariadelli@energypress.gr)

 

Energean CEO meets with Israeli president on local role

Energean Group CEO Mathios Rigas and the company’s Country Manager in Israel, Shaul Zemach, have held a crucial meeting with the Israeli President Isaac Herzog, for talks focused on the importance of natural gas production for Israel and the energy market of the wider eastern Mediterranean region, according to posts by Energean on its social media accounts.

Mr. Rigas stressed the importance of domestic production for both the Israeli economy and consumers, confirming that he and Energean remain fully committed to Israel’s secure energy supply.

“Strengthening gas exploration, development and production in the Mediterranean will be crucial for a just and secure energy transition in the region. We are proud to be a catalyst for regional energy development as the leading independent exploration and production company focused on natural gas, the environment, society and corporate governance,” the Energean CEO declared during the meeting.

The company, listed on the London and Israeli stock exchanges, which started from Prinos in Kavala, northern Greece, has been producing natural gas in Israel from the Karish field since 2022 with its “Energean Power” unit, the only FPSO (Floating, Production, Storage, Offloading) facility operating in the eastern Mediterranean. It covers about 50 percent of Israel’s domestic gas needs, producing at a rate of about 6 billion cubic meters per year.

Energean also expects to begin producing, in the the first quarter of this year, from the Karish North field, which the company discovered in 2019.

The Israeli government recently approved Phase 1 of the Development Plan for the Katlan gas field. Katlan, also known as the Olympus Area, was discovered in 2022 by Energean and can be used for export if Israel grants the necessary permits.

Israel’s interest in Energean’s production is obviously very high, as highlighted by the Israeli Minister of Energy and Infrastructure Eli Cohen’s recent visit to the “Energean Power” facility.

Doubled TAP capacity by 2030, not 2027 as initially planned

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

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

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

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

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

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

 

Energean: Morocco Country Entry and Farm In to Gas Development

London, 7 December 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has announce that it has farmed into Chariot Limited’s (“Chariot”, AIM:CHAR) acreage offshore Morocco, which includes the 18 Bcm (gross) Anchois gas development and significant exploration prospectivity. This new country entry is well-aligned with Energean’s strategy to become the pre-eminent independent producer in the Mediterranean, with a focus on high quality gas assets.

Highlights:

  • New country entry in Energean’s core Mediterranean region with acreage underpinned by an attractive gas development
  • Farm in to 45% of the Lixus licence, with the option to increase to 55% post drilling results, and 37.5% of the Rissana licence and assumes operatorship of both licences
  • Includes the commercial 18 Bcm (gross) Anchois development, located near to infrastructure for supply of gas to domestic and international markets
  • Up front cash consideration of $10 million
  • Appraisal well planned for 2024, targeting an additional 11 Bcm of gross unrisked prospective resource to be commercialised through the Anchois development
  • Energean to carry Chariot for its share of pre-FID costs, which are recoverable from Chariot’s future revenues
  • Significant additional near-field, near-infrastructure prospectivity that is expected to add attractive, balanced-risk growth potential

Dr Leila Benali, Minister of Energy Transition and Sustainable Development, commented:

“This agreement is pivotal for the wider acreage offshore Morocco, on its Atlantic coast, a key energy asset for the Kingdom. We welcome Energean on these licences as the important investments will contribute greatly to the monetisation of the country’s resources and to our ambitious energy strategy.”

Mrs Amina Benkhadra, General Director Office National des Hydrocarbures et des Mines, (“ONHYM”)  commented:  

“I would like to congratulate both parties on signing this agreement. The discovery and extensive work to date has set an excellent foundation on which the project can be developed and this partnership will now be instrumental in financing and taking it through the next phase. We look forward to working alongside Energean and Chariot in bringing the project to first gas.”

Mathios Rigas, Chief Executive Officer of Energean, commented:

“This is an exciting step in the next stage of our development, one that can only enhance our position as the pre-eminent independent natural gas producer listed in London. These assets are particularly attractive as we understand the core geological, commercial and political drivers of the region, we have a track record in developing material gas resources prioritised for the domestic market and they are a complementary fit with our broader portfolio, not least the potential for surplus supply to other markets. We look forward to working with our partners Chariot and ONHYM, and developing an outstanding resource for the benefit of all parties, including Morocco and its people.”

Adonis Pouroulis, Chief Executive Officer of Chariot, commented:

“In Energean, we have secured a partner with a proven track record of rapidly building and delivering this kind of offshore development. Energean also shares our view that Anchois and its surrounding acreage offers significant upside potential and we are aligned with our plans moving forward. The new partnership is a key step in bringing the development of the Anchois field to reality and we are looking forward to continuing the extensive work undertaken so far to reach Final Investment Decision.”

Assets                                                                                                             

Energean has agreed to farm into a 45% working interest in the Lixus offshore licence, which contains the Anchois gas development (Chariot 30%, ONHYM 25%), and a 37.5% working interest in the Rissana licence (Chariot 37.5%, ONHYM 25%). Energean will assume operatorship for both licences.

Farm in terms

As consideration for the interests in the licences, Energean has agreed to the following terms:

  • $10 million cash consideration on closing of the transaction
  • Energean agrees to carry Chariot for its share of pre-FID costs (which are recoverable from Chariot’s future revenues, see terms below), up to a gross expenditure cap of $85 million, covering:
    • drilling of the appraisal well; and
    • all other pre-FID costs; and
    • up to $7 million of seismic expenditure on the Rissana licence.
  • $15 million in cash, which is contingent on FID being taken on the Anchois Development.

Post appraisal well option to increase working interest from 45% to 55%

Following the drilling of the appraisal well, Energean has the option to increase its working interest in the Lixus licence (which includes the Anchois development) by 10%, to 55%. On exercise of this option, the amount payable would be:

  • Chariot’s choice between either:
    1. 5-year, $50 million of convertible loan notes with a GBP20 strike price and 0% coupon; or
    2. 3 million Energean plc shares, issued immediately upon exercise of the option but subject to a lock-up period until the earlier of first gas and 3 years post FID
  • Energean will pay to Chariot a 7% royalty for every dollar achieved on gas prices (post transportation costs) in excess of a base hurdle
  • An agreement to carry Chariot’s 20% share of development costs for the Anchois development with the following terms:
    • A net expenditure cap of $170 million
    • The carry available for development costs is reduced by costs carried in the pre-FID phase
    • All carried amounts are recoverable from 50% of Chariot’s future revenues with interest charged at SOFR + 7%

If the option is not exercised, subject to FID, the partners agree to progress the Anchois development with an ownership structure of Energean 45%, Chariot 30%, ONHYM 25%. All amounts carried by Energean on behalf of Chariot would be recoverable from Chariot’s future revenues under the same terms as above.

The completion of the transaction is subject to government approval.

Lixus licence and Anchois Development

The Lixus Offshore licence covers an area of approximately 1,794 km2 with water depths ranging from the coastline to 850 m. The area has extensive data coverage with legacy 3D seismic data covering approximately 1,425 km2 and five exploration wells have been drilled historically, including the Anchois-1 and Anchois-2 discovery wells.

Chariot’s latest competent persons report covering the Anchois Field has certified gross 2C contingent resources of 18 Bcm in the discovered gas sands and gross unrisked prospective resources of 21 Bcm in undrilled sands.

Energean and Chariot plan to drill an appraisal well in 2024, with the following objectives:

  • To undertake a drill stem test on the main gas-containing sands
  • To target an additional 5 Bcm of recoverable gas with a 61% geological chance of success through a sidetrack into the O sands in the Anchois Footwall prospect
  • To target an additional 6 Bcm of recoverable gas with a 49% geological chance of success through a deepening of the well into previously undrilled sands in the Anchois North Flank prospect

Once drilled, the well is expected to be retained as a future producer for the Anchois development.

It is anticipated that the licence contains significant additional prospectivity that could allow for further balanced-risk, near-field exploration activity.

 

5th Power & Gas Forum conference, an energypress event, March 28 & 29 in Athens

With the energy crisis becoming the new normal and electricity and gas markets in search of new operating rules at European and national level, the energypress staff is organizing the 5th Power & Gas Forum conference on March 28 and 29, 2024 at the Greek capital’s Wyndham Grand Athens Hotel.

The conference will be held with speakers and participants at the venue. All proceedings will be broadcast live, in Greek and English.

See the conference website here. https://powergassupplyforum.gr/

Ministry launches talks for biomethane sector framework

The energy ministry is currently engaged in consultation with biogas producers, gas transmission and distribution network operators, gas suppliers, other relevant ministries and public bodies, as well as RAAEY, the Regulatory Authority for Waste, Energy and Water, to formulate policies for the promotion of biomethane production in Greece.

The ministry aims to establish Greece’s first ever institutional framework for biomethane production.

Deputy energy minister Alexandra Sdoukou set the procedure in motion by requesting the opinions of all the aforementioned entities on a relevant study conducted by a National Technical University of Athens team headed by professor Sotiris Karellas.

The NTUA study offers a description of biogas production technologies and the country’s potential in this field, while also proposing institutional measures and financial support schemes for this purpose.

Recipients of a related email forwarded by the deputy energy minister have been asked to offer their comments on the NTUA study by December 20.

Measures proposed in the study include upgrading existing biogas facilities into biomethane facilities, particularly if close to gas distribution and transmission networks; establishing new biomethane production facilities, especially in farming and livestock farming areas; issuing renewable gas certificates for the establishment of a renewable gas market; and utilizing carbon captured during the production of biomethane to produce synthetic fuels.

Energean: Further production increase and progress in Prinos CO2 storage project

London, 16 November 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has provided an update on recent operations and the Group’s trading performance in the nine months to 30 September 2023.

Mathios Rigas, Chief Executive Officer of Energean, commented:

“I am sincerely grateful to all our employees, who have shown remarkable resilience, dedication and professionalism in the face of the challenging environment. Their unwavering commitment to our business and our values has been instrumental in delivering both operational excellence and growth. We are proud of our diverse and talented team, and we will continue to invest in their development and well-being.

“The ongoing security situation has not impacted our production. The successful ramp-up of production from our flagship Karish gas field in Israel has increased Group production to above 150 kboed in recent days. We have delivered revenues of over $1 billion and adjusted EBITDAX of $623 million in the nine months to 30 September 2023, reflecting our low-cost, high-margin business model. We have also reduced our Group leverage ratio to 3.5x and continued our dividend payments, demonstrating our commitment to delivering shareholder value.

“We have made significant progress on our growth projects, which will support our near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and deleveraging target of c.1.5x, the timing of which may be impacted by the delay to the second oil train installation. We have commenced drilling of the Orion 1x well in Egypt, where we have signed a farm-out agreement[1] that will reduce our net exposure and enhance our returns. This is in addition to an attractive portfolio of exploration assets that have the potential to add significant value.

“Finally, we have made a major step forward at our Prinos carbon storage project in Greece. It has been adopted by the European Commission as a Project of Common Interest, and we have been committed EUR 150 million of grants from the Greek Government to support its development. These actions set the foundation for a transition of our mature Prinos oil field to an exciting growth investment opportunity and demonstrates our commitment to our broader energy transition strategy and being the best version of Energean we can be.”

Operational Highlights

  • Production during the nine months to 30 September 2023 was 118.5 kboed (nine months 2022: 35.2 kboed); Q3 2023 production was 143 kboed
    • On track to deliver full year production in line with latest guidance of 120 – 130 kboed
    • No production impact from the ongoing security situation in Israel
  • Strong progress on our growth projects
    • Karish North and second gas export riser on track for completion by end-2023
    • Second oil train to be installed as soon as the security situation in Israel allows
    • Katlan FID on track for around year-end 2023
    • NEA/NI completion on track for year-end 2023; Cassiopea first gas on track for 2024
    • Good progress towards the delivery of near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and leverage c.1.5x
  • Attractive portfolio of exploration wells targeting additional upside, including the Orion 1x exploration well in Egypt (Energean 19%, previously 30%), which commenced drilling in October 2023; farm-out agreement signed and expected to complete within the coming weeks, subject to government approvals

Financial Highlights

  • Strong financial performance for the nine months to 30 September 2023, underpinned by a quarter of steady production from Karish
    • Revenues of $1,016 million, a 85% increase (nine months 2022: $550.2 million)
    • Adjusted EBITDAX of $623 million, a 79% increase (nine months 2022: $348.5 million)
  • Strong balance sheet maintained; ongoing deleveraging
    • Group leverage[2] continued reduction to 3.5x (H1 2023: 3.9x; FY 2022: 6.0x)
    • Group cash as of 30 September 2023 was $329.0 million, including restricted amounts of $27.5 million, and total liquidity was $578.6 million
  • Energean Israel’s $750 million 2033 bond was released from escrow in September and was used to repay Energean Israel’s $625 million 2024 bond (redemption date on 30 September 2023).

Corporate Highlights

  • Q3 2023 dividend of 30 US$ cents/share declared today, in line with Energean’s dividend policy, scheduled to be paid on 29 December 2023
  • Scope 1 and 2 emissions intensity of approximately 9.7 kgCO2e/boe, a 12% reduction versus H1 2023

Strategic Highlights

  • Energy transition plan progressing well
    • Prinos Carbon and Storage (“CS”) project in Greece adopted by the European Commission as a Project of Common Interest
    • EUR 150 million of grants committed from the Greek Recovery & Resilience Facility 
 

 

Nine months 2023

$m

Nine months 2022

$m

Increase / (Decrease)

%

Average working interest production (kboed) 118.5 (84% gas) 35.2 (73% gas) 236%
Sales and other revenues 1,016.3 550.2 85%
Cash Cost of Production[3] 360.7 181.4 99%
Cash Cost of Production per boe  ($/boe) 11.2 18.9 (41)%
Cash G&A 26.4 21.1 25%
Adjusted EBITDAX 623.3 348.5 79%
Development and production expenditure 423.2 494.4 (14)%
Exploration capital expenditure 24.7 71.4 (65)%
Decommissioning expenditure 3.1 3.8 (18)%
Nine months 2023

$m

H1 2023

$m

Increase / (Decrease)

%

Net Debt (including restricted cash) 2,926.3 2,715.3 8%
Leverage (Net Debt / annualised Adjusted EBITDAX[4]) 3.5 3.9 (10%)

 [1] Subject to government approvals

[2] Net debt / annualised adjusted EBITDAX

[3] Includes flux costs of $25.3 million in nine months 2023 and $26.8 million in nine months 2022

[4] Nine months 2023 leverage based upon nine months 2023 annualised Adjusted EBITDAX

PM prioritizes south-north link in talks with German leader

Green Aegean, a electricity supply corridor envisaged, by Athens, to run from Greece to Germany’s south, dominated talks between Prime Minister Kyriakos Mitsotakis and German Chancellor Olaf Scholz in Berlin yesterday, sources close to the Greek leader have informed.

Mitsotakis, determined to promote this project, prioritized Green Aegean over the European migrant crisis and the Middle East conflict at yesterday’s meeting.

The German side, no longer appearing worried about the Greek economy, was keen to listen to the Greek leader’s views on the south-north corridor, but, despite agreeing with Mitsotakis on most points raised, refrained from expressing any clear position, either because of other priorities or because Berlin remains unconvinced about the project’s financial sustainability.

Mitsotakis presented Green Aegean as an important plan for both countries, noting Germany’s energy needs are high in winter, and have become even more acute ever since low-cost Russian gas supply stopped flowing as a consequence of Moscow’s war in Ukraine, while energy demand in Greece is high during the summer.

Berlin is well aware of the fact that additional green-energy sources will be needed, beyond large-scale offshore wind farms in the North Sea, if German industry is to become carbon-neutral by 2050.

For its part, Athens knows very well that problems will arise in the future if RES output does not reach central Europe. Greek RES output is already many times over the country’s needs and grid capacity. Also, green energy the country aspires to import from Egypt and the Middle East will require a new electricity corridor to Europe’s north. Without such an export corridor, north African and Middle Eastern producers will surely look elsewhere for pathways to Europe.

Crucial DEPA, Gazprom talks on gas price, take-or-pay clause

Greek gas utility DEPA’s negotiations with Gazprom on new natural gas prices for 2024 and the Russian company’s insistence on activating a take-or-pay clause for a payment of approximately 400 million euros as compensation for unused gas quantities in 2022 and 2023 have reached a crucial stage and could end up in court.

A current price agreement between the two sides, signed in 2021, is 80 percent linked to the TTF index at the Dutch energy exchange and 20 percent linked to the price of oil.

DEPA is seeking an improved price level for 2024 as well as a retroactive price cut from January 1, 2023, which, if agreed on, would result in a reimbursement.

Also, DEPA disagrees with Gazprom’s insistence on triggering a take-or-pay clause in response to the Greek company’s failure to absorb a minimum natural gas amount of 17 TWh per year. DEPA contends its shortfall resulted from the Russian company’s failure to honor a crucial price-related term for gas supply at a price level that would ensure a competitive advantage for DEPA in the Greek market.

Over the past few months, Gazprom has supplied LNG and natural gas to at least one other customer in Greece at price levels lower than those offered to DEPA, sources at the gas utility have claimed.

Despite the introduction of EU measures designed to restrict Russian gas imports into Europe, they remain high in Greece, representing approximately 40 percent of the country’s overall gas imports – both LNG and pipeline gas – compared to just 9 percent in the EU.

Greek energy minister Thodoris Skylakakis, responding to journalists’ questions, contended he remains unperturbed by Gazprom’s dispute with Bulgaria over the Russian company’s refusal to meet a Bulgarian network usage surcharge demand of 10.2 euros per MWh.

Though this dispute could result in a disruption of Russian supply to Bulgaria and, by extension, Greece, the outcome would rid Greece of Russia’s high-cost demands, the minister contended.

The cost of the DEPA-Gazprom take-or-pay clause for 2022 is 150 million euros and is estimated to reach 300 million euros in 2023, according to the minister.

 

Ruptured Israeli-Turkish ties to reshape regional energy map

The rupture in Israeli-Turkish ties, vanishing any hope of Turkish president Recep Tayyip Erdogan’s unlikely proposal for the transfer of Israeli gas to Europe via a Turkish transit route, threatens to rebalance ties in the wider region and reshape the east Mediterranean’s energy map. Hydrocarbon exploration plans and major projects in the east Mediterranean will be impacted.

As an initial consequence, Erdogan’s open support for Hamas in the Israel-Gaza war ends any hope of Turkish collaboration with Israel on energy interests for a very long time.

Up until the outbreak of the Israel-Gaza war earlier this month, the Turkish president had seized on every opportunity to claim a role for Turkey as a constructive player on the east Mediterranean’s energy map.

Erdogan had proposed a closer energy partnership with Israel during a meeting with Israeli prime minister Benjamin Netanyahu in New York last month, even though such a prospect would have been highly improbable, given Israel’s mistrust of Turkey.

The latest deterioration in Israeli-Turkish ties provides Cyprus and Greece with an opportunity to establish themselves as trusted transit partners for transportation of Israeli natural gas to Europe.

Turkey could now reemerge as an aggressive player in the region, which could prompt Ankara to engage in illegal hydrocarbon exploration and drilling at undefined areas, as was the case in 2020, or even obstruct exploration and drilling plans by ExxonMobil consortium off Crete, testing Greek-Turkish ties.

Preventive action plan given green light following revisions

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

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

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

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

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

EU adequately prepared for winter ahead, ACER notes

 

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

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

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

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

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

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

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

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

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

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

DEPA Commercial privatization plan postponed until 2024-25

Gas company DEPA Commercial’s privatization plan has been postponed until its business plan, which includes an expansion strategy, begin reaping rewards, effectively meaning that no further steps concerning the company’s sale should be  expected before late 2024 or early 2025, Greek privatization fund TAIPED appears to have decided.

Besides taking into consideration the potential of a bigger and broader business plan, TAIPED is also weighing in the impact on its plan to sell its 65 percent stake of DEPA Commercial of a long-running legal dispute between the company and fertilizer industry ELFE. The former is seeking unpaid amounts and the latter claims it has been overcharged for gas supply.

This dispute appears set to enter yet another chapter that is most likely to add between one and two years of legal battle following a decision by the Council of State, Greece’s Supreme Administrative Court, to revert the case to an Athens Appeals Court for retrial.

DEPA Commercial’s expansion policy, which includes a 20 percent stake in the prospective Alexandroupoli FSRU in northeastern Greece as well as electricity production in the same region, promises to greatly broaden its business interests, until recently focused on gas trading activity.

TAIPED’s sale of its 65 percent stake in DEPA Commercial at this stage would deprive the Greek State of benefits in the making, industry experts have noted.

TAIPED has reportedly commissioned Piraeus Bank to reevaluate DEPA Commercial’s broadened business plan and determine when, and to what extent, it should begin maturing and generating added value.

Latest events prompt energy market turmoil ahead of winter

Last weekend’s outbreak of the Israel-Gaza war, undermining any attempt at peace in the Middle East and the process of normalizing Israel’s relations with the Arab countries, and, in addition, the suspected sabotage of the Baltic-connector gas pipeline, used by Finland and Estonia for access to an underground gas storage facility in Latvia, are two developments that have come at the worst possible time for European energy security and cost concerns, right before winter and following an EU decision to end energy crisis-related support measures for consumers all over Europe.

The two developments would have impacted energy markets any time of year, but their pre-winter emergence makes them even more critical. This is the time of year when demand for natural gas and oil increases in Europe, along with prices. In Greece, the heating oil trading season is set to begin October 13.

Markets around the continent have not been appeased by the fact that European storage facilities are 95 percent full, but instead, are being driven higher by the unease brought about by the latest events.

Besides the Israel-Gaza war, the Baltic-connector pipeline has just been shut down after a sudden drop in pressure, raising fears of Russian sabotage as retribution for Finland joining Nato in April this year.

The damage to this infrastructure has revived concerns about energy security following the Nord Stream pipeline blasts last year.

According to macroeconomic research consultancy Capital Economics, the combination of events could raise oil prices to levels well above 100 dollars a barrel for some time.

Wholesale natural gas prices rose 12.3 percent in a day, to just under 50 euros per MWh at the Dutch TTF hub.

The Greek government may need to reconsider its decision to end energy subsidies for all consumers. Supply companies may need to hedge prices and factor in the new risk factors. Also, refineries and gas importers may need to secure loads before prices escalate.

With Israel preparing for a ground attack on Gaza, it has become clear that decisions such as the choice of route for Israeli gas exports to Europe; promotion of Israel’s energy cooperation with Greece and Cyprus; and the development of projects such as the Israel-Cyprus-Greece electricity grid interconnection, are, for the time being, not a top priority.

 

DESFA plans to use blockchain technology, pilot project in 2024

Gas grid operator DESFA plans to strive for improved management of its facilities and strengthened liquidity in the secondary gas market by applying blockchain technology to its systems.

DESFA is currently conducting a feasibility study in cooperation with the Aristotle University of Thessaloniki in order to examine the prospect of integrating this technology into its systems.

Blockchain technology, an advanced database mechanism that allows transparent information sharing within a business network, is used by energy companies to create peer-to-peer energy trading platforms and streamline access to renewable energy.

DESFA’s interest in using blockchain technology has a dual objective. On the one hand, the company will seek to optimize the use and management of its facilities and, on the other, to develop tools that will enable grid users to carry out transactions more easily and automatically.

As for the secondary gas market, the system’s ability to simplify transactions is expected to directly impact market liquidity.

DESFA, making use of the ongoing feasibility study’s results, is expected to present an initial plan to RAAEY, the Regulatory Authority for Waste, Energy and Water, by the end of the year.

If the authority approves this plan, DESFA intends to launch a pilot project in 2024.

 

No sum for energy-crisis support in 2024 draft budget

Consumers face a challenging winter in terms of energy costs, as indicated by a number of revisions included in the 2024 draft budget, just submitted to Parliament.

Besides the absence of horizontal energy-support measures, the budget draft does not provide for any special reserve that would cover energy-crisis situations.

Fiscal concerns expressed by the European Commission, pressure by the ECB for an end to generous support that is cancelling out monetary policy, as well as the normalization of energy market conditions are key factors behind these budget restrictions for energy consumers, who were offered substantial support in 2022 and 2023.

A senior member of the government’s economic staff, responding to questions during a briefing yesterday on budget figures, admitted that no energy-related safety cushion for consumers was included in the country’s financial package for 2024. However, the official did point out that corresponding action would be taken to meet any potential needs, should they arise.

This essentially means that certain support measures offered last winter would only be recalled if deemed necessary, to avoid burdening the budget in advance.

For the time being, the only emergency amount included in the draft budget is a 600 million-euro sum for natural disasters.

Contrary to last winter, the draft budget for 2024 does not include any sum for heating fuel subsidies. If any support, on this front, is eventually offered to consumers, it would result from initiatives taken by refineries. Clarity is expected around mid-October, when the heating-fuel trading season commences.

Also, horizontal electricity subsidies, for all consumers, will cease to apply as of January, when electricity suppliers will be introducing new pricing policies, to include indexation clauses or similar pricing tools.

Horizontal support for natural gas purchases also appears set to be scrapped as of January, given the gas market’s currently subdued prices.

The absence of any reserve amount for potential energy crises stands as the draft budget’s fourth major energy-related change, compared to last winter. If needs do arise, they will seemingly be dealt with via the Energy Transition Fund, not the budget.

DEPA Commercial tender soon for PV parks totaling 495 MW

Gas company DEPA Commercial aims to announce, by the end of the year, a tender for the design, procurement and development of its first renewable energy projects, energypress sources have informed.

The tender will concern two projects totaling 495 MW, most of this capacity, 400 MW, for solar energy farms in Kozani, northern Greece, plus 95 MW for solar energy farms in Viotia, slightly northwest of the wider Athens area.

DEPA Commercial, which has shaped a new company strategy striving for vertical integration by also becoming an electricity producer, last year acquired New Spesconcept, holding a 222-MW RES portfolio, and North Solar, possessing a RES portfolio of 500 MW.

Besides its entry into the RES sector, with prospective solar energy projects totaling approximately 730 MW, DEPA Commercial also intends to partner with power utility PPC and the Copelouzos group in a new 840-MW combined-cycle power plant being planned for development in Komotini, northeastern Greece.

Also, DEPA Commercial, as part of its new strategy, has undertaken initiatives to expand its wholesale trading activity in foreign markets. This effort has significantly intensified over the past two years.

At present, DEPA Commercial is active in the Austrian, Hungarian, Romanian and Italian markets and has signed agreements to supply gas to Moldova and Albania.

DEPA Commercial, it should be noted, is the first Greek gas company to have become a member of the Hungarian Energy Exchange (CEEGEX).

The Hungarian market represents a pivotal gas trading hub in central Europe and is also located at the northern end of the prospective Vertical Corridor, a route running from Greece to Bulgaria, Romania and Hungary that will be created by interconnecting the transmission systems of these four countries to enable two-way transport of fuel between south and north.

Energy crisis brings fossil fuels back to the forefront

The energy crisis has brought about a revival of the hydrocarbons sector, as highlighted by a growing number of energy companies that have decided to reactivate exploration and production projects that had been put on hold as a result of climate-target pressure. Much of this reignited upstream activity is occurring in Europe. Greece must not be left behind.

Yesterday, French oil and gas giant TotalEnergies announced it would boost fossil fuel output over the next five years, a contrast to its reduced production in recent years.

Earlier in the week, on Wednesday, the UK’s North Sea Transition Authority approved plans for production at the new Rosebank oil and gas field in the North Sea, estimated to contain approximately half a billion barrels of oil.

Norwegian upstream giant Equinor, holding the biggest stake in the Rosebank field, estimates production will begin in 2030, with initial investments seen reaching roughly 3.8 billion dollars before totaling approximately 10 billion dollars by 2051.

Two two months earlier, UK Oil & Gas Plc had announced it would recommence production at its Avington oil field, estimated to contain 60 million barrels. Production at this field had been disrupted at an embryonic stage six years ago, with output having reached just several hundred thousand barrels.

In late August, Norway, which has captured the biggest share of Russia’s lost natural gas supply to the EU, announced that a latest round of tenders for licenses at 92 locations, 78 in the Barents Sea and 14 in the Norwegian Sea’s northwest, had attracted interest from 25 companies, including majors such as Shell, ConocoPhillips, Equinor and Aker BP.

The heightened interest expressed by majors highlights a turnaround of their green-focused investment policies of recent years. Shell, for instance, has announced it will disrupt an investment cutback plan of between 1 and 2 percent, annually, until 2030, adding it will increase investments in natural gas.

The hydrocarbons sector is also making a comeback in regions closer to Greece, Italy being a prime example. Italy had stopped issuing new licenses for many years but took a turn in November, when officials announced the country will be holding tenders offering ten-year licenses that offer total production potential of 15 bcm in natural gas from deposits in the Adriatic Sea.

Quite soon, companies operating in Greece will receive results from seismic surveys conducted west and southwest of Crete (ExxonMobil – HelleniQ Energy); Gulf of Kyparissia (Helleniq Energy); Ionian Sea (HelleniQ Energy); and Northwest Ionian (Energean – HelleniQ Energy).

In addition, Energean is awaiting an environmental permit to proceed with exploratory drilling in the Zitsa area, close to Ioannina, northwestern Greece.

Given the international developments and Greece’s energy needs – 6 bcm of natural gas a year and 300 barrels of oil per day – imported at lofty prices, the Greek State must facilitate, it has become clear, the endeavors of companies seeking to move ahead with their projects.

Brussels forecasts lower gas prices, concerned about oil

The European Commission has projected energy prices falling at a slower rate for the remainder of 2023 before rising again in 2024, especially for oil prices.

Brussels made its forecast before OPEC+ announced it would extend production cuts until the end of this year, which pushed the price of Brent up to a level of 90 dollars per barrel.

As for electricity and natural gas prices, the European Commission report notes prices have fallen since spring.

For the third quarter of 2023, the European Commission expects price levels to be 21 percent lower for natural gas and 25 percent lower for electricity, compared to its previous estimates.

Brussels has forecast an electricity price average of 109 euros per MWh in 2023 and 140 euros per MWh in 2024, down from 130 and 160 euros per MWh, respectively, in its spring report. This revision was attributed to a rapid expansion of liquefaction terminals on the continent and full gas storage facilities.

The Brussels report projects economic growth of 0.8 percent this year in the Eurozone and the EU, slightly below a previous 1 percent growth forecast, while economic growth in 2024 is seen reaching 1.3 percent, down from 1.6 percent projected in the spring report.

The German economy, Europe’s biggest, is now seen contracting by 0.4 percent this year, rather than growing 0.2 percent, as was previously projected.

EU industrial production fell by 1.1 percent in the second quarter of 2023, compared with the previous quarter, despite falling energy prices, the Brussels report noted.

ICGB concludes non-binding phase for expansion of IGB’s technical capacity

The independent transmission system operator ICGB has announced a successful completion of the non-binding phase of the incremental capacity process launched in July to assess the market interest in increasing the IGB pipeline’s total technical capacity.

“The market interest for a few consecutive gas years is nearly two times higher than our initial expectations. While for now these indications are non-binding for the shippers, this is a great first step towards a potential expansion of the IGB pipeline’s capacity from 3 bcm/y to 5 bcm/y”, said ICGB Executive Officers George Satlas and Teodora Georgieva. The two discussed updates on the plans for the interconnector’s development with other TSOs in the region during an event dedicated to the Vertical Gas Corridor held in Thessaloniki, Greece.

“In less than a year of commercial operations, the interconnector Greece-Bulgaria became an essential part of Bulgaria’s path towards energy diversification, enhanced security of supply and energy independence. Over 82% of the total capacity for the upcoming gas year is already booked and we’re looking ahead towards plans for expansion, further strengthening Bulgaria and Greece’s roles on the region’s energy map”, Georgieva noted.

According to her, gas traders have expressed interest for up to 4 bcm/y additional capacity for the next few gas years in the interconnection points of IGB with the Greek national operator DESFA and the Bulgarian national operator Bulgartransgaz.

George Satlas highlighted IGB’s synergy with the LNG terminal in Alexandroupolis and the pipeline’s key role as part of the Southern Gas Corridor and the Vertical Gas Corridor. “With the changed security environment in the region and the change of gas flow from south to north, Bulgaria is becoming a gas transit country. Together with Greece and its growing efforts towards developing LNG projects, our two countries are showing an excellent cooperation model in the energy sector”, he noted.

IGB is the first route for diversified supplies of natural gas to Bulgaria, guaranteeing increased security of supply and diversity of sources. The gas pipeline enables the transportation of natural gas from new sources to other countries in the region as well, including Moldova and Ukraine.

The IGB (Greece-Bulgaria Gas Interconnector) project is being implemented by the joint venture company ICGB AD, registered in Bulgaria in 2011 with shareholders BEH EAD (50%) and IGI Poseidon (50%). The co-shareholder IGI Poseidon is a company registered in Greece, with shareholders the Greek company DEPA International Projects (50%) and the Italian energy group Edison S.p.A (50%).

In accordance with its charter, ICGB AD is the owner of the IGB gas pipeline, financing its implementation, distributing its transmission capacity and receiving revenues from the transmission of natural gas.

The IGB gas pipeline connects with the Greek national gas transmission system (DESFA S.A.) and the Trans-Adriatic gas pipeline (TAP AG) in the area of Komotini (Greece), and with the Bulgarian gas transmission system (Bulgartransgaz EAD) in the area of Stara Zagora. The total length of the gas pipeline is 182 km, the diameter of the pipe – 32” – and a design capacity of up to 3 billion m3/year in the direction Greece – Bulgaria. Depending on the market interest for larger capacity and the possibilities of the neighboring gas transmission systems, the capacity of IGB is designed with the option for increase up to 5 billion m3/year with additional construction of a compressor station.

 

 

Energean plc: Strong financial results; Karish production steady at 6 bcm/yr

London, 7 September 2023 – Energean plc (LSE: ENOG TASE: אנאג) has announced its half-year results for the six months ended 30 June 2023 (“H1 2023”).

Operational Highlights:

  • Production for the period was 105.9 kboed, near triple that of H1 2022
  • Karish production currently steady at ~6 bcm/yr equivalent
    • Completion of commissioning under the gas sales agreements (“GSAs”) achieved in April, with Practical Completion under the EPCIC with Technip achieved in June
    • Optimisation activities on the FPSO and subsea systems have progressed well, and the Energean Power FPSO achieved 97% uptime in August. Efficiency levels have followed a similarly positive trajectory and production is currently steady, averaging around 570 mmscfd (~6 bcm/yr equivalent) over the last three weeks
  • Key growth projects on track
    • Energean Power FPSO capacity increase to 8 bcm/yr on track for delivery by year-end 2023
    • Positive results achieved at the second and third NEA/NI (Egypt) development wells, reinforcing Energean’s view that the results from NEA#6 would have no read-across to the remainder of the field; NEA#5 came onstream in July 2023 and is producing in line with pre-drill expectations, whilst PY#1 testing has delivered results in line with expectations. Remaining two wells expected onstream in 2023
    • Cassiopea, Italy (Energean 40%), development progressing in line with expectations: pipelaying complete and subsea installation activities progressing well
    • Final investment decision (“FID”) on Katlan (Israel)[1] expected in late 2023
    • Orion 1X exploration well, Egypt, drilling expected to commence in Q4 2023
  • Guidance
    • 2023 production guidance revised to 120 – 130 kboed (from 125 – 140 kboed), reflecting start-up issues that have now been substantially overcome
    • On track to deliver near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion EBITDAX and leverage 1.5x in H2 2024

Financial Highlights:

  • Delivered strong financial results, underpinned by the contribution of Karish and despite the softer commodity price environment
    • Revenues of $587.6 million, a 73% increase (H1 2022: $339.0 million)[2]
    • Adjusted EBITDAX of $345.2 million, a 74% increase (H1 2022: $198.2 million)
    • Cash Cost of Production of $12.1/boe, a 37% decrease (H1 2022: $19.2/boe)
    • Group cash as of 30 June 2023 was $357.9 million, including restricted amounts of $11.5 million, and total liquidity was $897.4 million.
    • In July 2023, Energean’s subsidiary, Energean Israel Finance Limited (“Energean Israel”), issued a $750 million bond, the primary purpose of which was to repay Energean Israel’s March 2024 bond[3]. The newly issued bond matures in 2033, and extends Energean’s weighted average debt maturity from just over five to over six years
    • Group leverage (Net debt/annualised Adjusted EBITDAX[4]) reduced to 3.9x (FY 2022: 6.0x)

Corporate Highlights:

  • Q2 2023 dividend of 30 US$ cents/share declared today, in line with Energean’s dividend policy, scheduled to be paid on 29 September 2023
    • Following this payment, cumulative dividends of $266 million (150 US$ cents/share) will have been returned to shareholders
  • Scope 1 and 2 emissions intensity of approximately 11.0 kgCO2e/boe, a 36% reduction versus H1 2022

Financial Summary

 

 

H1 2023

$m

H1 2022

$m

Increase / (Decrease)

%

Average working interest production (kboed) 105.9 (82% gas) 35.4 (73% gas) 199%
Sales and other revenues 587.6 339.0 73%
Cash Cost of Production[5],[6] 231.1 123.3 87%
Cash Cost of Production per boe ($/boe) 12.1 19.2 (37%)
Cash G&A6 17.9 15.1 19%
Adjusted EBITDAX6 345.2 198.2 74%
Operating cash flow 233.0 146.6 59%
Development capital expenditure 272.5 345.7 (21%)
Exploration capital expenditure 19.0 37.0 (49%)
Decommissioning expenditure 3.8 1.5 153%
H1 2023

$m

FY 2022

$m

Increase / (Decrease)

%

Net Debt (including restricted cash)6 2,715.3 2,518.2 8%
Leverage (Net Debt / annualised Adjusted EBITDAX6,[7]) 3.9 6.0 (35%)

Mathios Rigas, Chief Executive of Energean, commented:

“Energean is now a major energy producer in the Eastern Mediterranean, almost tripling our production in H1 2023 compared to H1 2022. We have also significantly increased our revenue and EBITDAX by 73% and 74% compared to H1 2022, successfully refinanced our 2024 Energean Israel bond, and paid four consecutive dividends to our shareholders, with the fifth declared today.

“On Karish, the Energean FPSO achieved 97% uptime in August and, although ramp-up and commissioning was slower than originally expected, Karish is now producing at around 6 bcm/yr. We are pleased with the positive demand in the market for our gas and will continue to focus on optimising production efficiency.

“On our growth projects, which target to increase production to 200 kboed by H2 2024, Karish North and the FPSO capacity increase projects (Israel), NEA/NI (Egypt) and Cassiopea (Italy) are all progressing well. We remain focused on delivering our near-term targets of 200 kboed, $2.5 billion of revenues, $1.75 billion of EBITDAX and leverage of c.1.5x.”

“We are also preparing for FID on Katlan[8] later in the year. Given the export potential from the Katlan licence[9], we plan to engage with local and international buyers to market our gas. Elsewhere, we look forward to the spudding of the Orion-1X exploration well next quarter, offshore Egypt, with our partner Eni. Finally, in line with our stated net zero policy target, our emissions intensity further reduced by 36% to 11.0 kgCO2e/boe versus H1 2022.

“We continue to be disciplined and focused on stable predictable cashflows, which underpin Energean’s goals of consistent returns to shareholders, low leverage and growth through responsibly produced energy.”

 

[1] Katlan covers gas fields on the Katlan licence (formerly Block 12) and parts of the Tanin licence

[2] Subsequent to 30 June 2023, additional cargoes were sold in Israel and Italy of revenues which totalled $62.4 million. These liquids were included in the inventory balance as at 30 June 2023.

[3] The cash is currently in escrow pending government approvals, which are expected shortly

[4] H1 2023 leverage based upon H1 2023 annualised Adjusted EBITDAX

[5] Includes flux costs of $18.4 million in H1 2023 and $17.4 million in H1 2022

[6] Cash cost of production, Adjusted EBITDAX, Capital Expenditure, Net Debt are non-IFRS measures that are defined in the Financial Review section

[7] H1 2023 leverage based upon H1 2023 annualised Adjusted EBITDAX

[8] Katlan covers gas fields on the Katlan licence (formerly Block 12) and parts of the Tanin licence

[9] Subject to the issuance of an export permit by the Petroleum Commissioner and compliance with the Export Policy, no export limitations exists for Katlan

Lignite, not natural gas, now shaping wholesale electricity prices

Lignite’s presence in the daily energy mix is the decisive factor increasing wholesale electricity prices more than any other energy source, energy exchange data has shown.

Wholesale electricity prices were significantly higher in recent times, up until September 1, as a result of lignite’s entry into the energy mix on a daily basis for several hours per day.

On September 1, for example, despite representing just 0.8 percent of the energy mix, lignite had a disproportionately big effect on wholesale prices.

Prior to September 1, the period of lignite use, wholesale prices reached levels of between 350 and 384 euros per MWh during the 8-9pm peak hour and averaged approximately 130 to 160 euros per MWh per day.

The highest average price during this period of lignite usage was 164 euros per MWh, on August 24, when lignite represented 3.3 percent of the energy mix.

Wholesale electricity prices have been significantly lower since September 2, as lignite has not been a part of the energy mix.

Since September 2, daily peak prices have ranged from 135 to 183 euros per MWh, less than half the peak prices recorded in the lead up. Daily average prices have also been a lot lower since September 2, ranging between 82 and 106 euros per MWh.

Lignite has become the main factor shaping wholesale electricity prices since last spring, when natural gas prices fell to less than 50 euros per MWh and ceased being the price shaper.

 

East Med, Turkey on Nicosia’s Trilateral Summit agenda

Israeli prime minister Benjamin Netanyahu is expected to stress that his country’s strategic alliance with Greece and Cyprus runs deep and will not be affected by Israel’s rapprochement with Turkey during today’s Trilateral Summit in Nicosia, whose agenda will include talks on all major east Mediterranean projects, current and prospective.

In statements made yesterday, Netanyahu noted decisions need to be reached to enable Israeli gas exports to the West, while making clear he will focus on two projects, the East Med gas pipeline and a liquefaction plant in Cyprus, during today’s meeting with Greek prime minister Kyriakos Mitsotakis and Cypriot president Nikos Christodoulides.

The East Med gas pipeline plan has been put on hold as a result of unfavorable developments over the past couple of years, but Greece and Cyprus have never abandoned the project.

Israel’s leader is determined to press ahead with plans facilitating the transportation of Israeli natural gas to European markets. Turkish president Recep Tayyip Erdoğan, meanwhile, considers a Turkish transit route for these Israeli gas exports to be of utmost importance.

The outlook on Turkish-Israeli ties currently remains unclear. Some clarity may be offered when Netanyahu soon visits Ankara. He is likely to make clear to his Turkish counterpart that the improvement in ties between Turkey and Israel, as well as between Greece and Turkey, will not undermine the strategic alliance developed over recent years between Greece, Israel and Cyprus.

DESFA sees Revythoussa LNG regasification in 2024 at 3 bcm

Gas grid operator DESFA estimates that an LNG quantity of just over 3 bcm will undergo regasification at its Revythoussa terminal, just off Athens, in 2024 for subsequent delivery to the country’s grid.

The projection, resulting in 35.7 terawatt-hours (TWh) of natural gas, is slightly lower than the 38.08 TWh of natural gas delivered to the grid in 2022, when the level rose sharply year-on-year, by 54 percent.

 

Wholesale electricity price up in July, year’s first increase

The price of wholesale electricity in the Greek market rose to 112 euros per MWh in July, up from 91 euros per MWh a month earlier, becoming this year’s first month-to-month increase, latest data from the Greek energy exchange has shown.

The average price for natural gas transactions in July was 29.87 euros, up from 28.78 euros in June.

Last year, in July, 2022, wholesale electricity in Greece was priced at 338 euros per MWh and natural gas was at 132 euros.

Natural gas was responsible for 37 percent of electricity generation last month, followed by renewables, which captured a 29 percent share, electricity imports, at 18 percent, hydropower, at 7 percent, and lignite, at 6 percent.

As for electricity usage, 58 percent of electricity generated went to the low-voltage category, 19 percent to medium voltage, and 11 percent to high voltage.

Finally, the electricity import-export balance was dominated by imports with 95 percent, compared to only 5 percent for exports.

Fysiko Aerio net profit for 2022 more than doubles to €32.9m

Energy retailer Fysiko Aerio EEE, a subsidiary of gas company DEPA Commercial, has posted a net profit of 32.9 million euros for 2022, more-than-double its performance a year earlier, 14.184 million euros, while also significantly increasing its customer base in the retail gas and electricity markets.

Revenues at Fysiko Aerio reached 883.192 million euros in 2022, up from 406.16 million euros in 2021.

This heightened performance resulted in an EBITDA increase to 45.601 million euros for the DEPA Commercial subsidiary, up from 19.865 million euros in 2021.

Fysiko Aerio greatly increased its number of customers in the retail electricity market, reaching 51,520 in 2022.

Managing the major challenges that existed in 2022, while achieving financial and commercial targets was important for Fysiko Aerio EEE, the company noted in its financial statements.

Last year, a period marked by a significant increase in commodity energy prices, resulting in margin compression and liquidity pressure, was the company’s sixth year of operation in Greece’s liberalized natural gas market and fifth year in the electricity market, one of intense competition.

The company’s main objectives for the forthcoming period are to continue its growth in both the natural gas and electricity markets, manage cash liquidity and maintain cost control, it noted.

Fysiko Aerio sees maintenance of its robust market share in the wider Athens area’s natural gas market, investments in central and northern Greece’s markets, as well as greater penetration in the electricity market nationwide as the key drivers behind its aforementioned goals.

 

Revised Nabucco pipeline hopes fade, Sofia drops pro-Turkish stance

A Russian initiative to establish Turkey as a central gas hub, through a revival of a revised version of the old Nabucco project plan, as the transitional government in Bulgaria had attempted to do last spring, appears to have hit an impasse and is unlikely to progress further.

Under the leadership of Bulgarian Prime Minister Nikolai Denkov, who assumed office in June, the new government in Sofia has veered away from the pro-Turkish stance of its predecessor. Instead, it has embraced a more pro-Western orientation in the realm of energy policy.

Also, the European Commission has not shown any interest to financially support the project, dubbed Solidarity Ring.

The ambitious plan had received the backing of certain political circles in Bulgaria keen to exploit Azerbaijan President Ilham Aliyev’s intention to more-than-double his country’s gas exports to the EU from 11 to 27 bcm by 2027.

Bulgaria, Romania, Hungary and Slovakia signed an MoU in Sofia in early May, in the presence of Aliyev, for increased gas supply to central Europe via the Solidarity Ring route.

However, talks in support of this gas pipeline project have ceased, despite its supposed intention to help end Europe’s energy reliance on Russia, EU sources have informed.

Athens, along with other major international energy players, contributed to this impasse. In a letter forwarded to the European Commission in May, Athens noted the project would degrade Greece’s role on the international energy map, upgrade Turkey’s, and serve Russia’s efforts to regain access into the European market, indirectly, by supplying Russian gas as Azeri gas.

This is possible as the Solidarity Ring would bypass Greece and follow a Turkish-Bulgarian-Romanian-Hungarian-Slovakian route into central Europe, meaning Ankara could use Turk Stream, the Russian pipeline running through Turkey, to feed Solidarity Ring.

 

Eurogas: Energy crisis threat not yet over for Europe

The energy-crisis threat on the continent has not yet passed, despite lower prices, according to Didier Holleaux, chairman of Eurogas and vice-president of France’s Engie, who has warned that the risks will remain for at least the next four winters, and, in doing so, advised authorities, governments and organizations to avoid complacency.

EUROGAS is a European organization involving the participation of a significant number of major energy companies from all over the EU.

Europe managed to overcome the threat of energy shortages last winter, while a sharp fall in natural gas prices over the past six months has provided a welcome respite for consumers.

European contracts at the Dutch TTF hub are currently being established at levels of between 20 and 30 euros per MWh, just a fraction of last August’s peak of 340 euros per MWh, prompted by a drastic cutback in supply of Russian pipeline gas.

Over the past year, EU officials have adopted a series of measures to reduce natural gas prices. Holleaux, in comments to Natural Gas World, warned that last year’s unusually mild winter was the catalyst behind the price reductions.

He acknowledged the European Commission’s gas storage requirements for EU member states also played a role in subduing prices in Europe, adding, however, that current prices remain considerably higher than levels that were regarded as normal prior to the pandemic.