gas

Brussels proposes gas price cap for extreme pricing situations

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A price cap on gas, to serve as a market correction mechanism, will only be activated under certain combined conditions, according to a draft proposal sent by the European Commission to the EU’s 27 energy ministers.

A first round of negotiations took place yesterday between representatives of member-state delegations, ahead of an informal Council of energy ministers on November 24, when a first attempt will be made to reach an agreement on the price cap plan.

According to well-informed sources, Brussels’ draft proposal, seeking to reconcile two opposing EU blocs, one comprising Greece, Italy, Poland and Belgium, and the other, Germany, the Netherlands, Austria and Hungary, will not lead to consensus at next week’s Council of energy ministers and, as a result, will be referred to their ensuing meeting.

Brussels’ draft proposal is intended to act as an effective tool against excessive and extremely high gas prices. The plan is to trigger it into action only if prices reach extremely high levels (compared to international markets), the objective being to avoid significant disruptions in supply contracts, which could lead to serious risks concerning security of supply.

European effort for energy cost solutions well underway

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European discussion for electricity market reforms that could lead to permanent solutions for lower-cost energy by detaching the cost of electricity from natural gas is well underway.

European Commission authorities, institutions, major enterprises and other electricity market players are currently putting forward proposals until December, when Brussels is expected to issue its own proposal for consultation, as has just been noted by Mechthild Wörsdörfer, deputy director general for the European Commission’s Directorate-General for Energy.

Discussion for longer-term reforms is planned to continue in February and March. Reforms will need to be approved by the European Parliament, as well as by the Energy Council of Ministers, in order to become binding.

The overall approach is based on a proposal forwarded by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, supporting the need for remuneration of renewable energy, as well as electricity production generated by other low-emission technologies, such as nuclear, to be based on actual cost through long-term agreements rather than through the day-ahead market, whose levels are determined by wholesale market prices.

According to Kapros’ proposal, wholesale market prices should be used to determine remuneration levels for fossil fuel-based energy production technologies (coal, lignite, natural gas) as well as hydropower facilities with water reserves and energy storage units.

Big 2030 RES, energy storage target boosts for revised NECP

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The energy ministry is preparing to set even more ambitious renewable energy and storage targets for 2030 through the country’s National Energy and Climate Plan, currently being revised as part of national and EU plans aiming to diminish reliance on fossil fuels, especially Russian natural gas.

The energy ministry is expected to set a total RES capacity target of between 25 and 30 GW for 2030, an objective that could be achieved with new wind and solar energy installations, as well as development of hydropower stations.

At present, RES facilities already operating in Greece offer a total capacity of 10 GW, meaning renewable energy projects producing an additional overall capacity of up to 20 GW will need to be developed over the next eight years if the energy ministry’s anticipated RES target boost in the revised NECP for 2030 is to be achieved.

Greece’s revised NECP will also include a major energy storage capacity boost to between 5 and 8 GW by 2030, well above the present target of 1.5 GW, through a portfolio comprising batteries and pumped storage stations.

Also, the 2030 target for the RES sector’s share of the country’s energy mix is expected to be increased to 80 percent from the current NECP target of 65 percent.

Energean moving ahead with wider exploration and development plan

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Energean is moving ahead with its exploration and development program both in Israel and in other Mediterranean markets following the commencement of production at its Karish field, offshore Israel, and positive results from the neighboring “Zeus” and “Hermes” wells.

Energean has reported significant developments regarding the installation of a second processing line at its Karish North field, which promises to upgrade production to 8 billion cubic meters and 32,000 barrels of oil in total. The upgrades are expected to be completed by the end of 2023.

Along with its first-half results, the company has noted its next step is first gas production from the NEA/NI license in Egypt. Subsea installations have been completed and gas production is expected to commence by the end of this year.

Meanwhile, Energean plans to conduct four more drilling efforts at its Abu Qir licence, also in Egypt, in 2023 and 2024.

As for its offshore Cassiopea license in Italy’s Strait of Sicily, Energean plans to begin gas production in the first half of 2024 with an objective to boost its production in Italy from 9,300 bpd at present to 20,000 bpd.

Energean has made two important discoveries at its Athena and Zeus offshore Israel licenses, both west of Karish. The Athena field has been certified, by an independent appraiser, as having potential reserves (2C) of 11.75 bcm of natural gas, while, two weeks ago, an initial estimate of 13.3 bcm of natural gas was made for the Zeus field.

Energean has also made a third discovery further south, at Block 31 (Hermes deposit), estimated to be holding between 7 and 15 billion cubic meters. Drilling at the Hercules well, in the same area, has been in progress over the past few weeks.

Energean has announced it will have a report, from an independent appraiser, on the potential of new discoveries in early 2023, the company’s aim being to present a specific development plan in the first half of the year.

Options being considered for additional volumes include the sale of additional gas to the Israeli market, exports to Egypt, as well as exports to Cyprus with the prospect of liquefaction for sales of quantities to European markets.

Energean has already signed contracts for the supply of 7.2 billion cubic meters of gas to Israel. Significant quantities are expected to start reaching customers in 2023.

RAE clarifying criteria for key industries to avoid rationing

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RAE, the Regulatory Authority for Energy, is working on clarifying the selection process for a list of vital industries to continue being given priority status for natural gas supply should gas imports be subject to major disruptions.

RAE, conducting related consultation, needs to assemble this list following a European Commission order requiring all EU member states to name their respective industries of vital social and economic importance. These enterprises would be exempted from natural gas rationing, if such an extreme measure needs to be adopted.

However, the selection criteria for this list remain ambiguous, preventing Greek authorities from proceeding with the selection process.

A total of 104 industrial enterprises operating in Greece have submitted applications for inclusion on this special-status list. To date, no member states have put together a special-status list.

Helleniq Energy set for 3D surveys off Greece’s west

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Helleniq Energy is preparing to conduct 3D seismic surveys at two licenses, block 10 in the Gulf of Kyparissia, west of the Peloponnese, and the “Ionio” block in the Ionian Sea, within the next few weeks, chief executive Andreas Siamisiis has told analysts during a presentation of the group’s financial results for the nine-month period.

Helleniq Energy, which recently underwent a name change from ELPE (Hellenic Petroleum), had previously conducted 2D surveys at these two blocks last February. Its decision to take a step further with 3D surveys at the two licenses suggests a clearer picture of promising targets already identified is needed.

The energy group’s decision to move ahead with its hydroexploration plans reflects the overall determination of the government, HEREMA, the Hellenic Hydrocarbons and Energy Resources Management Company, and investors to press ahead with exploration programs to identify potential targets with natural gas reserves.

Elsewhere, Energean is pushing ahead with its survey work at block 2 in the Ionian Sea, adjacent to Italian territory in the Adriatic Sea.

In addition, an ExxonMobil-led consortium involving Helleniq Energy as a junior partner is moving rapidly with survey work at two offshore block licenses west and southwest of Crete.

 

Revythoussa LNG gasification demand doubles capacity

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Gasification demand for prospective LNG shipments to be delivered to the LNG terminal on the islet Revythoussa, just off Athens, by importers who have secured slots at the facility, has doubled the facility’s gasification capacity during the second stage of gas grid DESFA’s ongoing annual auction for 2023.

Gas companies secured Revythoussa slots for their LNG imports at the auction’s first stage last week and are now bidding for gasification places in the procedure’s second stage, which started yesterday and will be be completed tomorrow.

Gasification capacity available at the Revythoussa LNG terminal is approximately 15 million cubic meters per day, but gasification bids, it has become known, are currently two times over this capacity.

High gasification demand had been anticipated given the enormous potential for natural gas exports to the Balkans, as was highlighted be the high bids for Revythoussa LNG slots placed by importers at last week’s auction. Slot prices reached as high as 4 million euros, three-and-a-half times over price levels recorded a year earlier.

Athens gas prices fall 55% in October, power up 2%, HEPI study shows

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Natural gas prices in Athens plunged 55 percent in October, compared to the previous month, while electricity price levels rose by just 2 percent during this period, making the Greek capital one of Europe’s cheapest for household energy, a monthly study conducted by the Household Energy Price Index, covering European cities, has shown.

Local energy subsidies have played a key role in subduing energy prices, coming as crucial support for households in Greece, where disposable income levels are well below European standards.

Athens ranks 17th – in terms of household gas cost – among 28 cities surveyed for the HEPI study. October’s 55 percent drop in household gas prices for Athenian consumers was Europe’s biggest drop for the month, the study showed.

On the contrary, significant natural gas price increases were recorded in a number of cities, including Rome (97%), Luxembourg (64%), Lisbon (58%) and Dublin (34%).

The cost of a kilowatt hour for households in Athens was 0.1235 euros, almost 0.06 euro per KWh less than the EU average of 0.18 euros.

Households in Budapest were charged less than Athenians for natural gas in October, the price level in the Hungarian capital averaging 0.0252 euros per KWh. So, too, were households in Belgrade, where the gas cost last month was 0.0353 euros.

On the contrary, the cost of natural gas was highest for households in Amsterdam, reaching 0.4208 euros per KWh, Copenhagen (0.4055 euros per KWh) and Vienna (0.3390 euros per KWh).

The HEPI study, which surveyed 33 European cities for household electricity cost in October, placed Athens in 15th place with a cost of 0.3022 euros per KWh, 0.05 euros per KWh below the EU average.

Greece ranked among Europe’s most affordable cities in terms of energy cost as a result of considerable electricity and gas subsidies offered in the country.

A total of 2.3 billion euros has been raised though an extraordinary tax on electricity producer earnings between July and the present to help fund government subsidies for household electricity.

Energean plc commercial gas discovery at Zeus, offshore Israel

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London, 7 November 2022 – Energean plc has announced that i) the Zeus-01 exploration well, offshore Israel, has made a commercial gas discovery of 13 bcm ii) contingent resources at neighboring Athena have been upgraded following post-well analysis; and iii) the Stena IceMax drilling rig has moved to block 23 to drill the Hercules structure, the final well in Energean’s 2022 drilling campaign.

Zeus well results

The Zeus exploration well, block 12, offshore Israel, has made a commercial discovery with preliminary estimates indicating that the structure contains 13.3 bcm of recoverable natural gas resources (pre-drill estimate 10 – 12 bcm). Energean is now undertaking post-well analysis of the data collected during drilling.

Athena resource upgrade

Energean’s reserve auditor, DeGolyer & MacNaughton (“D&M”), has certified contingent resources of 11.75 bcm in the Athena discovery, an increase of 3.75 bcm on the Company’s 8 bcm preliminary estimate. This increase follows post well studies undertaken on data collected during the drilling process.

Olympus area

The results from the Zeus well and the Athena post-well analysis provide Energean with additional confidence about the volumes and commerciality of the Olympus area, and the Company is now progressing its field development plan. Energean expects to update the market on the total resource volumes within the Olympus area, taking into account the uplifted volumes in both Zeus and Athena, in early 2023. This update will be based upon a Competent Persons Report that is being undertaken by D&M.

Hercules well

The Stena IceMax has now moved to block 23 to drill the Hercules structure, where the Miocene gas prospect will be targeted.

Mathios Rigas, CEO of Energean commented:

“Following the start of production from our Karish reservoir last week, I am pleased that our drilling programme, which has now delivered five successful wells from five, continues to deliver value, ensuring security of supply and energy competition across the region. We are evaluating a number of potential commercialisation options for the Olympus area that leverage both new and our existing, unique Med-based infrastructure, and we expect to commit to a development concept in 1H 2023. ”

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ExxonMobil-Helleniq Energy seismic surveys off Crete

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US oil and gas corporation ExxonMobil has been conducting seismic surveys under complete secrecy and at a rapid pace over the past week or so at two offshore block licenses, west and southwest of Crete, held with Helleniq Energy, formerly named ELPE, as its junior partner.

The two blocks share similar geological traits with Egypt’s giant offshore Zohr gas field and, according to early estimates, may contain rich natural gas quantities.

American presence is being assured, through ExxonMobil, in the southeast Mediterranean region at a particularly critical geopolitical period, both because of the Russian invasion of Ukraine and Turkey’s provocative moves against Greece (aggressive rhetoric and the Libya pact), political analysts told energypress.

ExxonMobil acted swiftly to increase its stake in a consortium holding licenses for the two offshore Cretan blocks following a recent  decision by France’s TotalEnergies to withdraw. ExxonMobil acquired TotalEnergies’ share to now hold a 70 percent share in the consortium as the venture’s operator.

The ExxonMobil-led seismic surveys off Crete, which began on October 24, are being conducted by Norway’s PGS and the company’s Sanco Swift seismic vessel. It is conducting 3D surveys, meaning ExxonMobil is focusing on specific areas for possible natural gas deposits.

Energean set for seismic survey at Ionian Sea’s block 2

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A consortium comprising Energean and Helleniq Energy, formerly Hellenic Petroleum, is set to begin a seismic survey at the Ionian Sea’s block 2, adjacent to Italian territory in the Adriatic Sea, reliable sources have informed energypress.

Norwegian company PGS will collect 3D data covering an area of 2,000 square kilometers with its Ramform Hyperion seismic vessel, following orders by Energean, the operator, the sources added.

The Hellenic Navy has issued a Navtex, offering navigational and meteorological warnings and forecasts, for the seismic survey, to be conducted a long way off the coast, by the sea border shared with Italy.

The Energean – Helleniq Energy consortium has decided to conduct this offshore survey at block 2 in the Ionian Sea following a government decision last spring to accelerate Greece’s exploration plan for the identification of potential natural gas deposits. The 3D seismic data to be acquired will replace existing 2D data.

The upcoming effort promises to be the sixth seismic survey to be conducted in Greece over the past seven years following surveys at Prinos in 2015, the Gulf of Patras in 2016, Ioannina in 2018-2019, and at blocks in the Ionian Sea and Gulf of Kyparissia-northwest Peloponnese last spring.

 

Heating cost comparisons for November still unclear

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Heating energy cost comparisons for November regarding natural gas and heating oil remain unclear. Should gas utility DEPA reduce its subsidies, as is anticipated following a sharp recent drop in international gas prices, heating oil would become marginally cheaper, even if heating oil subsidies at refineries are disrupted, as long as the Brent index does not continue rising.

The retail price of natural gas in Greece is currently at 11 to 12 cents per KWh, a level that would exceed 20 cents per KWh without DEPA’s subsidy of 9 cents per KWh. Subsidies of such extent are currently unnecessary as a result of the recent plunge in natural gas prices, dropping to 99 cents per MWh (TTF) yesterday.

This major drop in gas prices will inevitably prompt a reduction in gas subsidies. It is still unclear if energy minister Kostas Skrekas will make any related announcements today or hold back for a latter date.

Heating oil prices have been subdued at a level of 1.35 euros per liter, or 12 to 13 cents per KWh, as a result of two separate subsidies, a state subsidy, to be provided until at least the end of the year, worth 25 cents per liter, and an additional subsidy of 7.5 cents per liter, being offered by refineries until the end of October, according to their announcements. It remains unclear if refineries will continue subsidizing heating oil beyond October.

November power prices at 15-16 cents/MWh after subsidies

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Retail electricity prices for November are expected to fall to levels of about 15 to 16 cents per MWh following subsidies, set to be announced tomorrow by energy minister Kostas Skrekas.

The state budget will benefit greatly as a result of the sharp drop in natural gas prices, but, for consumers, final retail electricity prices will more or less remain unchanged compared to October levels.

Given current price levels in markets, budget money will probably not be needed for the government’s energy-crisis support effort to consumers as this support will most likely be fully covered by the Energy Transition Fund through electricity producer windfall earning injections into the fund.

Subsidies for the bulk of consumers, using up to 500 KWh per month, are expected to be set slightly below 24 cents per MWh.

Power utility PPC, the dominant market player, last week announced a November price of 39.7 cents per KWh for a month’s first 500 KWh of consumption, which, following the subsidy deduction, drops to between 15.7 and 15.9 cents.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Consumers using electricity of over 500 and 1,000 KWh per month will receive inversely related lower subsidies.

It remains unclear whether natural gas will be subsidized in November. With the TTF benchmark down to 100 euros per MWh, gas company DEPA does not need to subsidize households at a rate of 90 euros per MWh, as it had done in October.

DAM decoupling from gas prices for lower-cost electricity

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European officials have tabled at least three proposals that would decouple electricity prices from gas prices in order to provide a permanent solution resulting in lower-cost electricity.

The proposal for a split of day-ahead electricity markets, promoted by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, would remunerate fossil fuel, renewables, nuclear, biomass and other forms of electricity generation in different ways.

The idea has been gaining greater acceptance in Europe, while certain EU member states are already looking at technical details.

Some European officials insist that eco-friendly generation, such as renewables, should operate exclusively through bilateral contracts. Others, mainly in Germany and the UK, prefer a mandatory pool with a marginal price and even a cap when there is a scarcity of renewable energy sources. Furthermore, some officials are advocating a mixed solution entailing co-existence of bilateral contracts with an organized market for renewables, along with a pool, which would be used as a last resort.

RAE seeks equality on Brussels plan for gas consumption restrictions in EU

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RAE, the Regulatory Authority for Energy, has called for natural gas consumption restrictions to also be imposed on neighboring Bulgaria, a country to which Greece exports gas, if Athens is subject to such a European Commission restriction.

The authority reasons that the same rules should apply for all EU member states in the event of serious gas supply disruptions to Europe, energypress sources noted.

“Greece cannot adopt mandatory consumption reduction measures of 10 percent or 15 percent in industry, for example, while, at the same time, a similar effort is not being made in countries to which we are called upon to export gas in the context of EU solidarity,” one local source pointed out.

The European Commission proposal for gas consumption restrictions, still not approved, will soon be forwarded by RAE for consultation in a process involving ACER, Europe’s Agency for the Cooperation of Energy Regulators, as part of the effort to prepare as best as possible ahead of the forthcoming winter, which could be challenging.

Energy crisis gap bridging the main aim at today’s EU summit

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The EU’s 27 leaders participating at today’s EU summit will strive to heal divisions that have created blocs within Europe for energy crisis solutions rather than seek finalized solutions on how price levels could de-escalate.

The EU-27 will be asked to agree to European Commission proposals announced yesterday. They include collective natural gas orders for reinforced bargaining power and prevention of bidding wars by fellow EU member states for LNG quantities, as well as a supplementary gas benchmark offering a more accurate reflection of market conditions.

A Brussels request concerning a temporary price cap on gas used for electricity generation, a strategy already adopted by Spain and Portugal, is expected to be contested by the EU leaders.

Brussels considers the proposal for a price cap on gas used for electricity production should be further examined, judging by European Commission president Ursula von der Leyen’s comments in European Parliament yesterday.

France, using minimal amounts of gas for electricity generation as a result of its considerable nuclear capacity, has expressed support for such a plan. Germany accepts it but Greece, Italy, Belgium and other EU member states object as a result of the significant fiscal cost entailed.

Some EU members favoring a general price cap on gas, including Greece and, more recently, the Netherlands, are expected to remain adamant on their  preferred approach at today’s summit.

Germany strongly opposes a general price cap on gas, fearing it will repel gas suppliers and push up prices as a result of reduced supply and higher demand.

November electricity prices, out tomorrow, down 15-20%

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The country’s electricity suppliers, now finalizing their pricing policies for next month, are expected to announce, tomorrow, reduced tariffs for November, down by 15 to 20 percent compared to the current month’s levels, sources have informed.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Supplier tariffs, sources informed, should range between 0.45 to 0.50 euros per MWh, which, if confirmed, will result in a reduction of between 15 and 20 percent, compared to October’s prices.

The government’s level of subsidy support for electricity bills next month has yet to be announced. Given the current de-escalation in electricity prices, the government may choose to only rely on the Energy Transition Fund for next month’s subsidies and not use any budget money for this purpose, sources said.

Market analysts are projecting further electricity price reductions until the end of the year as a result of a drop in TTF natural gas prices. The Dutch index has fallen by 66 percent since an August 26 peak of 349.90 euros per MWh, reaching 116.45 euros per MWh yesterday.

The EU’s overachievement of gas storage levels, now averaging 91 percent of capacity, as well as an abundance of LNG supply to Europe, are key factors that have driven down the TTF.

 

EU gas price cap hopes set back, weekend talks needed

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A mild winter ahead appears to be the only cost-containment hope left for European consumers following yesterday’s failure by the EU’s 27 energy ministers to reach an agreement on an adjustable gas price cap or some other drastic measure that could ease the pressure of the energy crisis.

Yesterday’s impasse greatly diminishes the possibility of an agreement at the forthcoming EU summit, a two-day meeting scheduled for October 20 and 21.

However, officials will continue making efforts ahead of next week’s EU summit. The European Commissioner for Energy Kadri Simson, reacting to yesterday’s failure by EU energy ministers to reach an agreement, said talks for a solution would carry on over the weekend.

Greece, along with Belgium, Italy and Poland, have been the most supportive of a gas price cap.

German and Dutch resistance appeared to have softened in recent days, seemingly bridging the gap between the EU’s two opposing sides for and against the measure. But German officials, citing an inability for agreement within their own ranks, informed Greek officials that a gas price cap agreement is not on the cards.

 

EU energy ministers agreement in Prague today highly unlikely

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Today’s extraordinary meeting of EU energy ministers in Prague, their third informal session since early September, appears unlikely to produce agreements on unresolved issues, including a decision for a temporary price cap on gas.

Participants have remained subdued ahead of this latest session, which is indicative of the lack of progress. The feared stagnancy is believed to have prompted officials to seriously consider a fourth extraordinary meeting of EU energy ministers – since early September – ahead of the next EU summit, scheduled for October 20.

This all essentially means that serious energy-crisis disagreements continue to divide the EU’s 27 member states, despite the fact that many leaders claimed positive steps were taken at last Friday’s informal summit.

The seemingly fruitless situation has been confirmed by sources associated with European Commissioner for Energy Kadri Simson and further backed by the absence of any announcement.

Disagreement over an adjustable price cap on gas is the main dispute. The proposal will be further discussed today by the EU’s energy ministers. Greece and four other EU member states, Belgium, Italy, Poland and Spain, are the most supportive members of the plan.

 

Germany considering price cap, gas usage drop a condition

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The German government now appears to be considering an EU proposal for a price cap on gas ahead of tomorrow’s informal EU meeting of heads of state, but Berlin’s acceptance of such an initiative would be conditional, requiring a compulsory and significant reduction in gas consumption levels throughout the EU.

Germany’s Vice Chancellor Robert Habeck, who heads the country’s energy portfolio, set this condition during a meeting yesterday with the energy ministers of Greece, Belgium, Italy, Poland and Spain, representing the five EU member states most supportive of a price cap on natural gas.

The European Commission’s recent proposal for an optional reduction in gas consumption would need to be made compulsory if Berlin is to accept a price cap on gas, Habeck told the five energy ministers, according to sources.

Despite Germany’s softer stance, work is still needed if a price cap on gas is to be implemented. An official decision cannot be reached at tomorrow’s EU meeting of heads of state as it is an informal session.

It will be followed by another informal meeting in Prague next Tuesday between the EU’s energy ministers.

Brussels is also working on the establishment of a new benchmark for natural gas that better reflects Europe’s new energy reality in which LNG, not pipeline gas, is now the dominant gas source.

Firmest gas price cap backers in talks with German minister

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The energy ministers of Greece, Belgium, Italy, Poland and Spain, representing the five EU member states most supportive of a price cap on natural gas, are scheduled to stage a teleconference with their German counterpart Robert Habeck today to analyze their price-cap proposal in an effort to overcome Germany’s resistance.

Berlin’s opposition to a European gas price cap and unilateral announcement of a 200 billion-euro national package for the energy crisis have disappointed many European governments, going into an informal EU meeting of heads of state this Friday with little hope of bold decisions.

EU member states are generally feeling increasingly frustrated by Germany’s refusal to back a collective European decision for the energy crisis, a stance Berlin will not be able to keep justifying.

According to sources, the group of five’s gas price cap proposal is set at a level that would ensure gas suppliers do not turn their backs on Europe and send their tankers to markets in Asia, where demand is set to rise in the lead-up to winter.

To guarantee supply to Europe, the continent’s price cap level will need to be set slightly higher than price levels at Asian energy exchanges.

 

Uncertainty, multiple thoughts ahead of EU ministers meeting

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The EU’s energy ministers meet in Brussels today amid a climate of uncertainty, exacerbated by a barrage of energy-crisis proposals, inappropriate conditions for crucial decision making.

Today’s session comes in the wake of the European Commission’s rejection of a proposal by 15 EU member states for a universal price cap on gas. Many proposals have since emerged.

Brussels yesterday brought back a price-cap proposal for Russian gas. However, it is believed there is little chance of the EU-27 reaching consensus on this measure for two key reasons. Firstly, it is feared Moscow would be prompted to disrupt its European gas supply through all remaining pipelines, including TurkStream, which supplies Greece. Secondly, a price cap on Russian gas supply would represent a breach of contract, by European companies, of Gazprom’s supply agreements, experts have warned.

Other proposals that have been brought forth in the lead-up to today’s meeting of EU energy ministers include European agreements with major LNG producers; the establishment of an alternative to the TTF benchmark that would be connected to the American Henry hub; a price cap on gas used for electricity generation; a windfall tax on excess refinery earnings; a limit to electricity producer windfall profits; and a compulsory reduction of electricity consumption.

Regardless of the choices made and route taken, ordinary European citizens will be anxious to see a reduction in energy costs.

European gas index may link TTF with US, Japan, S. Korea

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The European Commission is moving towards establishing a new European benchmark for natural gas that would link the Dutch TTF index, currently providing reference prices for Europe, with the American hub Henry, as well as other indices, including the Japanese and South Korean systems.

Brussels is looking to broaden the scope of the European bloc’s reference pricing system so that it could reflect Europe’s gas imports market with greater accuracy and objectivity.

A new European benchmark will need to also factor in LNG quantities being traded and could be linked with the Japanese and South Korean indices, European sources noted.

European Commission officials explained it would be more appropriate and realistic to establish a new benchmark linked to real supply and demand conditions, rather than relying on the TTF, no longer reflecting the continent’s balance between supply and demand.

 

Minister to propose general gas price cap, protection fund

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Greek energy minister Kostas Skrekas, taking part in an emergency meeting of EU energy ministers this Friday, will propose the establishment of a European fund to counter consequences of any future energy crises, as well as a general price cap on natural gas for all exporters, the latter proposal supported by Greece and three other member states.

A European fund for future energy crises could be designed to help protect European households and businesses from future price explosions, the proposal’s backers will support.

This fund’s structure and principles could be based on a Greek risk compensation mechanism announced by Skrekas, the country’s energy minister, in late August.

The Greek mechanism is now ready to be implemented following revisions to the public service compensation system, taking effect October, to generate increased revenues for energy crisis tools.

Financial sources for the European fund proposal have yet to be specified by Greece and the proposal’s three other backers. The money needed for this fund could stem from a low-interest European Investment Bank loan, carbon emission rights, as well as leftover Recovery and Resilience Facility (RRF) amounts.

 

 

Gas heating most affordable option following new subsidy

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The energy ministry has announced a natural gas-heating subsidy of 9 cents per liter, making gas heating the lowest-cost heating solution for households – compared to fuel and electricity – despite a 300 percent natural gas price increase compared to a year ago.

This gas subsidy comes as crucial support for the mass of households that took pre-crisis decisions to convert to gas heating over the past decade or so, only to see gas prices skyrocket in recent months.

Taking into account the gas subsidy, announced yesterday by energy minister Kostas Skrekas, gas heating will begin the winter season at 12 cents per liter (120 euros/MWh), below the cost of 13 to 14 cents per liter for heating fuel and 16 cents for electricity heating.

The gas heating subsidy level is based on the assumption, by gas companies, of TTF price levels of roughly 200 euros per MWh in coming months.

Given the aforementioned figures, the heating cost for a 100 square-meter apartment requiring 9,000 KWh for heating over a winter is 1,000 euros for gas heating, 1,250-1,300 euros for fuel heating, and 1,450-1,500 euros for electricity heating.

Without the gas heating subsidy, the resulting gas heating cost, priced at 21 cents per liter, would reach nearly 2,000 euros for a 100 square-meter property.

 

 

October tariffs slightly lower than September levels

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Electricity tariff levels for October, to be announced late tonight by electricity retailers, are expected to be lower than September’s levels but still higher than August prices, energypress research has shown.

The anticipated retail electricity reduction has been attributed to a recent reduction in natural gas prices at the Dutch TTF hub.

Most suppliers are expected to set their tariffs for October at levels between 60 and 68 cents per KWh, while prices, by some suppliers, slightly below the level of 60 cents per KWh, have not been ruled out.

Under new market rules, electricity retailers must announce their tariffs for forthcoming months by the 20th of each preceding month.

September’s tariffs ranged between 68 and 80 cents per KWh, well over August’s levels of between 47 and 58 cents per KWh.

The government is seeking to stabilize prices for consumers through a latest subsidy package, whose amounts offered will be inversely related to consumption levels. It will be implemented as of October 1.

According to sources, highest subsidies will be offered to consumers making a low-consumption category, to be set at a maximum of 500 KWh per month. Slightly lower medium-category subsidies will be offered to consumers using between 501 and 1,000 KWh per month, while consumers exceeding 1,000 KWh per month will be offered the smallest level of subsidies, the sources added.

Higher-level energy consumers who succeed to reduce electricity usage by at least 15 percent compared to a year earlier will be transferred to the next-highest subsidy category, the sources informed.

Natural gas subsidies are expected to be universally applied.

 

 

‘EC intervention acceptance of energy market failure’

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The European Commission has finally decided to adopt state intervention measures in energy markets, mainly electricity, after much delay, essentially accepting the failure of markets to produce desired results, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has noted in an analysis.

Major energy price increases needed to spread throughout Europe for Brussels to decide to intervene, the energy expert noted.

Fixed price offers and price hedging contracts – which, in many countries, secured, over a considerable period, relatively stable retail electricity prices not reflecting rising electricity prices at energy exchanges – have become impossible to maintain as a result of the extended energy price crisis, the professor pointed out in his analysis.

Consumer prices are now skyrocketing virtually everywhere in Europe, increasing the risk of bankruptcies, a perilous situation that has prompted EU governments to push the European Commission for state intervention proposals, the professor underlined.

During this crisis, electricity markets have failed to achieve consumer prices at levels reflecting the true long-term average cost of electricity, as healthy competition would, the professor noted.

Given the exorbitant natural gas prices at present, green hydrogen would represent a lower-cost alternative, if infrastructure was in place, the professor noted, concluding green transition is the only positive way out of the problem, as has now been recognized by all.

Major industries turning to natural gas alternatives

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Energy-intensive industries are abandoning, one after another, natural gas as an energy source and turning to alternatives in order to contain their operating costs.

Aluminium of Greece has switched to diesel for smelting procedures at its Agios Nikolaos facility in Viotia, northwest of Athens, while Motor Oil, has begun using naphtha for some of its energy needs, in place of natural gas, whose price levels have spun out of control.

According to sources, another major industrial player, ElvalHalcor, is also examining LPG as an alternative to natural gas, which the company uses for its aluminum and copper smelting furnaces.

However, this fuel switch cannot be carried out instantly as specialized studies focused on safety matters must precede the change. In addition, equipment needed for this fuel switch is not readily available. Also, ElvalHalcor is examining the extent of LPG availability in Greece as an industrial enterprise of its size would require big amounts.

European Commission energy crisis measures set to be announced, which will require energy savings and discourage the use of natural gas, are driving industrial players to seek energy source alternatives.

 

Brussels placing energy crisis hopes on windfall profits tax

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The European Commission is placing its hopes on greater revenues to be generated by a windfall profits tax on refineries, wholesale gas companies and electricity producers as a solution to get the EU through the energy crisis.

According to the plan, the EU-27 will use these increased tax collections to subsidize, as widely and as generously as possible, electricity bills of European households and businesses.

Thoughts of imposing a price cap on natural gas from all sources, including Russia, have been abandoned, following objections raised by many EU member states at a recent meeting of EU energy ministers.

The windfall profits tax on oil, gas, coal and refining companies, to be announced today by European Commission president Ursula von der Leyen, could reach as high as 33 percent, according to Bloomberg. Drafts of this extraordinary tax measure do not include its tax rate.

 

Heating fuel subsidy boost for minimal electricity heating

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Heating fuel subsidies will continue being offered universally in Greece this coming winter, but at a higher level, up to 20 cents per liter, or 25 cents per liter including VAT, along with more generous income criteria, as the government wants to make fuel-based heating the lowest-cost heating solution this winter in order to minimize the number of households turning to electricity for heating.

Increased electricity usage would mean increased demand for natural gas, the costliest energy source at present. Natural gas represents roughly 40 percent of overall electricity generation in Greece.

The new subsidy package for fuel heating is expected to enable all consumers to purchase heating fuel at a level of 1.30 to 1.40 euros per liter, instead of 1.60 euros per liter, the price level if supply were to start now.

Heating fuel subsidies in Greece were worth a total of 174 million euros last winter, a sum seen rising to 300 million euros this season.

The number of households eligible for heating fuel subsidies is expected to increase to 1.3 million from 800,000 last winter as a result of a planned income criteria revision widening the offer’s eligibility.

The offer’s personal income criterion is expected to increase to between 17,000 and 18,000 euros per annum from 14,000 euros at present for single-resident homes, while corresponding income criteria rises will be made for families.