DEPA sales down by €210m in 2019, LNG, competition factors

Gas utility DEPA’s sales, down by approximately 210 million euros in 2019, a year in which gas consumption and import records were broken, highlight the domestic gas market’s intensified competition and impact on the corporation, which has just posted its annual results for last year on the company website.

Gas consumption in the Greek market last year reached 57.4 TWh, up from 52.4 TWh in 2018, while gas imports in 2019 totaled 57.7 TWh, the majority, 54.5 percent, in the form of LNG and the remaining 45.5 percent as pipeline gas.

Intensified competition and lower LNG prices were cited as key reasons behind DEPA’s reduces sales, from 970.9 million euros in 2018 to 760 million euros last year.

“International gas market conditions during 2019 were characterized by significant price reductions at international hubs and an LNG oversupply, which led to a corresponding reduction of LNG prices in spot markets,” DEPA noted.

These conditions encouraged opportunistic imports by major consumers in Greece who generally cover a great part of their needs through DEPA long-term supply contracts, the gas utility noted.

Besides lower LNG prices, DEPA’s long-term contracts for pipeline gas supply were another factor behind DEPA’s reduced sales figures in 2019.

DEPA’s administration successfully negotiated a supply contract revision with Russia’s Gazprom, effective as of the second half of 2019, enabling greater LNG indexing on pipeline gas prices. This revision will help bring about a rebound, the company anticipates.

Gas imports up 17% in first four months, LNG at the forefront

Gas imports for both large and small-scale consumers increased by 17 percent in the year’s first four-month period, defying unprecedented market conditions brought about by the pandemic, especially during March and April, the peak of the lockdown.

Gas imports totaled 21,393 GWh between January and April this year compared to 18,211 GWh during the equivalent period a year earlier, according to data provided by DESFA, the gas grid operator.

During the four-month period, gas imports at DESFA’s LNG terminal on the islet Revythoussa just off Athens rose to 11,679 GWh, a 45 percent increase compared to a year earlier. This terminal was the national gas grid’s biggest entry point.

Sidirokastro, at the Greek-Bulgarian border, followed with a pipeline-gas quantity of 7,952 GWh, an 8 percent drop compared to the equivalent four-month period a year earlier. Even so, Sidirokastro remains an important entry point.

The country’s other pipeline-gas entry point, Kipoi, in the Evros region, northeastern Greece, registered a 13 percent year-on-year increase of natural gas imports to reach 1,762 GWh.

The aforementioned data reconfirms a market overturn that emerged last year to show LNG imports exceed incoming pipeline gas amounts via the grid’s Sidirokastro and Kipoi entry points.

This trend highlights the fact that major Greek energy market players have been able to secure competitively priced LNG and favorable delivery solutions.

Lower LNG prices prompt terminal congestion fears

A considerably heightened interest for LNG imports, prompted by lower prices, has generated congestion concerns at gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens.

Importers need to declare their LNG orders for 2020 by tomorrow, following a deadline extension of a few days.

The terminal slots to be requested by importers could exceed the LNG facility’s total capacity.

RAE, the Regulatory Authority for Energy, acting on a request made by DESFA, recently sharply increased a penalty rate for unfulfilled terminal capacity reservations, as has often been the case in the past.

The resulting cost for importers not following up on LNG capacity reservations with actual usage has been increased from 50,000 to 200,000 euros per day.

Some market officials preferring milder rules have requested the staging of auctions as a means of filling slots left vacant and imposing penalties on importers only if the auctions have failed to fill these capacity gaps.

DEPA gas sales drop 11.5% in 2018 amid greater competition

Gas utility DEPA’s sales in 2018 fell 11.5 percent, to 37.8 million MWh, compared to the previous year, highlighting the growing competition in this liberalized sector.

Besides the intensified competition, DEPA also attributed the result to slightly weakened gas demand in the Greek market.

Total turnover for DEPA dropped to 996 million euros in 2018 from 1.08 billion euros in 2017, an 8.4 decline prompted by lower natural gas sales.

Gas auctions DEPA has been obligated to stage since 2016 have also played a key role in fueling competition and reducing the utility’s market share.

DEPA auctioned off a gas quantity of 7.2 million MWh in 2018, up 22 percent compared to a year earlier.

The gas utility’s share of Greece’s overall natural gas imports, and, by extension, the wholesale gas market, dropped further in 2018 as a result of a significant increase in pipeline gas and spot-market LNG imports made by competitors.

DEPA’s soon-to-be-appointed new administration expects sales to drop further in 2019 to a level of approximately 29 million MWh, primarily as a result of favorable conditions in international LNG markets. Current conditions are prompting greater spot-market LNG orders to Greece by electricity producers and independent suppliers.

Elpedison set to begin importing gas via Bulgarian link in 2019

Energy firm Elpedison has finalized all details, including grid capacity reservations, to begin importing natural gas into Greece as of 2019 via the Greek-Bulgarian interconnection, according to sources.

The company’s move, promising to add Elpedison to a growing number of major domestic energy players engaging in cross-border natural gas trade, aims to improve the firm’s supply mix and bolster its portfolio.

Elpedison is expected to begin importing at levels of 500 MWh with a view to increasing amounts.

Besides the gas utility DEPA, three private-sector players, Promitheas – a member of the Copelouzos group – Mytilineos and Heron, are already importing natural gas through the Greek-Bulgarian border.

The Greek-Bulgarian border was opened for natural gas trade in 2017 following agreements signed by the respective gas grid operators of the two countries.

Elpedison’s turn to natural gas follows its already heightened level of cross-border electricity trading activity, reaching as far as central Europe and Hungary.

Elpedison, on a positive course, is expected to end 2018 with favorable EBITDA results.

 

DESFA, Botas working on deal to liberalize Greek entry point

Greek gas grid operator DESFA and Turkish state-run crude oil and gas company Botas are working on an agreement concerning the Kipous grid interconnection in Evros, at Greece’s northeastern tip, which would enable third parties, in addition to Greek gas utility DEPA, to use the link as an entry point for natural gas imports.

DESFA has already reached an equivalent agreement with Bulgarian operator Bulgartransgaz for the gas grid interconnection at Sidirokastro, by the Greek-Bulgarian border. Subsequently, since 2017, five new firms besides DEPA, until then Greece’s only natural gas importer from this entry point, have brought gas quantities into the local market via the Sidirokastro link.

DEFSA and Botas have now been engaged in talks over the matter for several months. It is unclear how much more time will be needed for an agreement.

Their negotiations are focused on technical measure-related issues and a reverse-flow agreement that would also enable gas outflow from Greece to Turkey.