gas pipelines

Greek-North Macedonian gas pipeline decisions imminent

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Greek gas grid operator DESFA and its North Macedonian counterpart NOMA Gas are believed to be nearing respective investment decisions for the construction of a natural gas pipeline linking the neighboring countries.

Company officials have been meeting more frequently of late, their most recent session held in Skopje for talks on how to better coordinate funding efforts for the gas pipeline project and to move ahead with tenders concerning its procurement and construction.

DESFA, sources informed, is expected to reach an investment decision by the end of summer, or early September, for the Greek segment of the gas pipeline project, a 55-km stretch starting from Nea Mesimvria in the country’s north.

The Greek gas grid operator is also preparing for tenders concerning pipeline procurement and the project’s construction.

This gas pipeline project promises to diversify the gas supply sources of North Macedonia, currently entirely dependent on its Bulgarian interconnection, experiencing congestion. It will also offer new gas supply routes to the western Balkans.

Greek-US energy agenda focused on 3 projects

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Three energy infrastructure projects, the Alexandroupoli FSRU in Greece’s northeast, an oil pipeline running from the Alexandroupoli port to Burgas, on Bulgaria’s Black Sea coast, and a Greek-Egyptian grid interconnection, were focal points in talks yesterday between Greek and American officials, as part of US Secretary of State Anthony Blinken’s official visit to Athens.

The two sides, meeting for the 4th round of a Greece-US Strategic Dialogue, appeared determined to push ahead with the three projects, propelled by Russia’s war on Ukraine, which has prompted Europe to move in a direction ending its reliance on Russian fossil fuels.

It was agreed that Athens and investors need to accelerate efforts for the aforementioned projects to further marginalize Russian energy supply to Europe.

Besides offering full support for the three energy infrastructure projects, US officials also expressed satisfaction about the recent launch of the Greek-Bulgarian IGB gas pipeline as well as ongoing plans for a pipeline to run from Greece to North Macedonia.

However, the US officials kept a distance from the discovery of gas deposits by Israel, Cyprus and Egypt in the east Mediterranean, as well as the East Med gas pipeline plan – which would connect Israel, Cyprus and Greece before crossing to Italy visa the Poseidon pipeline – presumably to avoid upsetting Turkey, despite problems that have weighed down US-Turkish ties of late.

 

Analysts expect new round of gas price increases this year

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Analysts are projecting an eventual rise in gas prices over the next few months as a result of the combined effect of several factors, the main one being Europe’s almost entire dependence, these days, on imported LNG.

This LNG dependence, following Europe’s drift away from Russia, along with Europe’s limited LNG gasification infrastructure, until at least 2025, will inevitably lead to price increases at some point in 2023, analysts have noted.

Natural gas prices have been falling in recent times and are expected to, once again, drop below the price level of coal. This price descent, analysts believe, will reignite industrial activity in Europe, boosting gas demand.

Also, Chinese production, currently operating at below full capacity as a result of the country’s strict adherence, until recently, to a zero-Covid policy, is also expected to get back into top gear within 2023.

In addition, if Europe avoids recession, then global gas orders will skyrocket.

Taking these factors into account, Europe needs to maintain links with pipeline gas supply if energy security is to be ensured on the continent, analysts have noted.

This highlights the significance of projects such as the East Med gas pipeline plan, now seeming to be back in favor. It promises to connect Israel, Cyprus and Greece, over a total distance of 2,000 kilometers, before crossing to Italy via the Poseidon pipeline, a 210-kilometer stretch.

Israel injecting new life into East Med gas pipeline project

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The newly elected Israeli government appears set to inject new life into the prospective East Med gas pipeline, its interest emerging one year after the US had announced it would no longer support the project, a stance now likely to be revised.

Israeli foreign minister Eli Cohen expressed the country’s interest in the project to his Greek counterpart Nikos Dendias during the latter’s official visit to Israel earlier this week.

The prospective pipeline is planned to cover a total distance of 2,000 kilometers, of which over 1,400 kilometers will run underwater, to connect Israel, Cyprus and Greece before crossing to Italy visa the Poseidon pipeline, a 210-kilometer stretch.

“We agreed to the exportation of Israeli gas through Greece and Cyprus, which will reach all of Europe. At a time of global energy crisis, it will strengthen our international position and bring a lot of money to the country,” Cohen, Israel’s foreign minister, announced following his meeting with his Greek counterpart.

Reiterating this interest, Israeli prime minister Benjamin Netanyahu, who has returned to the country’s top post after his Likud party formed a coalition with ultranationalist and ultra-Orthodox Jewish allies, announced that he instructed the head of Israel’s National Security Council to initiate a trilateral meeting of the leaders of Greece, Israel and Cyprus for energy-related talks.

Tel Aviv is seeking to reimpose itself as a force in eastern Mediterranean energy matters.

The East Med gas pipeline plan is likely to be on the agenda when US secretary of state Antony Blinken visits Athens on February 21 and 22.

East Med has gained renewed significance as Europe is looking for alternative sources of natural gas and major oil companies, especially US firms such as ExxonMobil, focusing on a venture south of Crete, are involved in hydrocarbon exploration efforts in the eastern Mediterranean.

Given the strained Israeli-Turkish ties, Israeli officials know well that the development of a gas pipeline across Turkey is not a viable option.

DESFA development of west Macedonia pipeline set to start

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Gas grid operator DESFA is set to begin its development of a gas pipeline in northern Greece’s west Macedonia region next month, an official ceremony for the start of work slated for end of February or early March, energypress sources have informed.

According to the operator’s ten-year development plan covering 2022 to 2031, the gas pipeline, a project budgeted at 147 million euros, is scheduled to be completed in autumn, 2026.

The gas pipeline project’s financing will be covered by DESFA capital as well as a syndicated 505 million-euro bond loan agreement reached by the operator with the country’s four main banks for its ten-year development plan from 2021 to 2030.

The pipeline will cover a total distance of 147 kilometers, running from Trikala in the Imathia region to Ptolemaida. It will branch off at four points for distribution to the region’s urban centers, namely Edessa, Skydra, Naoussa, Veria, Florina Amynteo, Ptolemaida and Kozani, and will be equipped for a prospective extension to the Kastoria area.

This pipeline, it is worth noting, will be totally compatible to carry and transport hydrogen, making it Greece’s first and one of Europe’s few pipelines fully supporting transportation of renewable gases.

It will make up part of the European Hydrogen Backbone (EHB), a plan shaped by European operators and companies for the development of a European pipeline network hosting hydrogen. Their objective is to have developed a network covering a total distance of 40,000 kilometers by 2040.

 

West Macedonia gas pipeline development starting February

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Preparations leading to the construction of a new gas pipeline in northern Greece’s west Macedonia region, including licensing for land to host the project, are on the final stretch, and should enable the project’s development to commence by February, 2023.

According to gas grid operator DESFA’s ten-year development plan, the gas pipeline, which will connect the west Macedonia region with the country’s gas network, also represents part of the decarbonization strategy for the lignite-dependent region, as well as its fair transition into the post-lignite era.

The new pipeline is scheduled to begin operating in August, 2023 before being integrated into the grid a month later.

The project, budgeted at 147 million euros, is planned to be co-financed by DESFA capital as well as a portion of a 505-million bond loan agreement reached by the operator with the country’s four main banks, National Bank, Eurobank, Alpha Bank and Piraeus Bank, to finance its ten-year development program.

The pipeline is planned to cover a total distance of 156 kilometers, running from a point roughly two kilometers east of Trikala to an area north of Ptolemaida, close to Komnina in the Kozani region.

 

 

IGB gas pipeline nearing launch, doubts dismissed

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The prospective IGB gas pipeline linking Greece and Bulgaria is believed to be almost ready for its commercial launch, scheduled for October 1, despite recent doubts that were cast over the entire project.

Certain analysts recently questioned whether American LNG supply to Bulgaria, through the IGB pipeline, would go ahead, claiming the new Bulgarian government wants to renegotiate a supply agreement with Russia’s Gazprom.

ICGB AD, the consortium behind the IGB project has announced, in what is seen as a response to the scare, that an auction offering pipeline capacity to users will be held this Thursday through the online platform BALKAN GAS HUB EAD, from 9am to 12pm (Sofia time).

Greek construction company AVAX, developing the project, has set itself an end-of-August objective, which could be stretched to September 8, the latest, to complete pending work and obtain required permits from the Bulgarian authorities.

If all this goes according to plan, the IGB gas pipeline will be ready to operate on October 1.

Northern pipeline’s environmental permit paves way for development

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The energy ministry has approved environmental terms for gas grid operator DESFA’s natural gas pipeline project covering northern Greece’s west Macedonia region, a decision that paves the way for work to commence in autumn.

The project, budgeted at 110 million euros, promises to extend the national gas grid’s coverage, contribute to the country’s decarbonization plan and support the transition of the west Macedonian region, until now a lignite-dependent local economy.

The pipeline is planned to run from a location two kilometers east of Trikala to a point north of the provincial town Ptolemaida in the Kozani region, a 93.56-km distance.

The project, already fully certified to transport hydrogen, will offer a capacity of 388,000 Nm3/h.

The pipeline’s completion is scheduled for the first half of 2023.

 

 

 

Talks in progress for Italy’s East Med gas pipeline entry

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Talks are in progress for Italy’s official entry into the East Med gas pipeline project, a prospective 2,000-km pipeline planned to carry natural gas to Europe via Greece, Cyprus, Israel and Italy, energypress sources have informed.

Greece, Cyprus and Israel signed an agreement for the project’s development in 2020, without Italy’s participation, as the country’s government at the time, citing environmental issues, had reacted against the project reaching its shores.

Italy’s current Prime Minister, Mario Draghi, recently stressed that the East Med gas pipeline needs to be pursued as a result of Russia’s invasion of Ukraine.

The project has now gained political support in Italy, through a resolution issued in parliament urging the government to co-sign the transboundary agreement, energypress sources informed.

Italy has revised its stance on the East Med project as a result of a recent EU-27 decision to drastically reduce Europe’s reliance on Russian natural gas.

Italy could officially announce, in May, its intention to co-sign the East Med agreement, sources informed.

Egypt appears keen to accelerate plan for natural gas pipeline to Greece

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Egypt’s minister of petroleum and mineral sources Tarek El-Molla (photo, right) has underlined the potential of energy-sector collaboration between Cairo and Athens and the significance of an MoU signed by Egypt and Greece for joint development of energy infrastructure.

The Egyptian minister was speaking at the annual Egypt Petroleum Show, Egypts, before 2,000 attendants from 65 countries, among them top-ranked officials from multinational energy giants.

Agreements already signed between Egypt and Greece pave the way for the development of a subsea natural gas pipeline linking the two countries, El-Molla noted.

According to diplomatic sources, this special mention by the Egyptian minister highlights his country’s interest to push ahead with the natural gas pipeline project, which, on the one hand, would facilitate Egyptian natural gas exports to the EU and, on the other, help the continent further diversify its energy sources.

A further increase in activity between Athens and Cairo for an acceleration of procedures leading to the gas pipeline project’s development has not been ruled out by the diplomatic sources.

In addition, the potential of a subsea electricity grid interconnection between the two countries also seems to be gaining momentum, the diplomatic sources noted. Greek power grid operator IPTO and Egyptian counterpart EETC are collaborating on this latter project.

The current Russia-Ukraine problem once again highlights Europe’s need for further energy source diversification. Russia, through gas giant Gazprom, covers approximately one third of European natural gas consumption in the household and business sectors.

 

DESFA market test for North Macedonia gas pipeline link in March

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A DESFA gas grid operator market test for a gas pipeline project to link the Greek and North Macedonian systems is set to begin following the launch, by the Regulatory Authority for Energy (RAE), of a related public consultation procedure, ending February 7, the authority has announced.

The project’s market test will follow and is expected to be launched by March, the latest.

Towards the end of 2021, DESFA signed a 25 million-euro loan agreement with the European Investment Bank for the project’s Greek segment. This loan had been approved by the EIB more than a year earlier, in August, 2020.

At the time its approval was announced, EIB noted the project promises to further optimize Greece’s gas grid and also promote supply security and competition in the neighboring country through gas source and route diversification.

The project’s Greek segment, budgeted at 67 million euros, is planned to run from Nea Mesimvria, on the western outskirts of Thessaloniki, to the Evzoni area on the northern border.

Late in December, the EIB also approved a 28.9 million-euro loan agreement for the project’s North Macedonian segment. An agreement for this loan is expected to be signed within the next few weeks.

The EIB has also extended a 12.4 million-euro loan to North Macedonia from the Western Balkans Investment Framework (WBIF) for technical support and development of the project.

The gas pipeline, whose overall cost is estimated at 110 million euros, is planned to cover a total of 123 kilometers.

 

 

DESFA reaches FID for west Macedonia region gas pipeline

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Gas grid operator DESFA has reached a final investment decision for the development of a natural gas pipeline covering the country’s northern region of west Macedonia, paving the way for the project’s development in 2022 and  completion by the end of 2023.

The bulk of the project is expected to be ready sooner, by January, 2023, which will enable swifter natural gas distribution to many areas.

DESFA chief executive Maria Rita Galli, commenting on the gas pipeline project during a recent session of parliament’s standing committee on production and trade, informed that solutions are being sought for natural gas supply to areas even sooner, by October, 2022.

The gas pipeline project, measuring 157 km, will connect the west Macedonian region with the country’s natural gas grid. Its cost is budgeted at 147 million euros. Financing has already been assured from the grid operator’s own capital as well as a 505 million-euro loan agreement reached with the country’s four main banks, National Bank of Greece, Eurobank, Alpha Bank, and Piraeus Bank.

Galli, the chief executive, noted that an effort will be made to have the project inducted into the new National Strategic Reference Framework in order to minimize network usage costs.

DESFA forced to revise project budgets as metal prices rise

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Gas grid operator DESFA is being forced to reevaluate its budget for projects included in its existing ten-year development plan and set for inclusion in its forthcoming updated plan as a result of rising metal commodity prices in international markets, which have impacted the cost of gas pipelines and other equipment.

Metal price levels are projected to remain elevated in the foreseeable future. As a result, DESFA officials are striving for solutions that may prevent the transfer of increased project costs to consumers, and also subdue, to the greatest degree possible, additional project costs for the company.

DESFA is expected to deliver its updated ten-year development plan, covering 2022 to 2031, in September, according to sources.

The updated plan will not unveil any surprises in terms of the projects included, the sources added. A gas pipeline project linking the Epirus region in Greece’s northwest with the country’s grid is expected to be added to the DESFA list.

Two options for this project are being considered. One option entails the development of a pipeline from Ptolemaida, northern Greece, to Ioannina, in the northwest, and the other, the construction of a storage facility at the northwestern port of Igoumenitsa, from where a pipeline would run to Ioannina.

 

 

DESFA: NER North Macedonia pipeline agreement, market test next month

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Two further important steps in the lead-up to the construction of a natural gas pipeline linking the Greek and North Macedonian grids are expected to be made in September.

DESFA, Greece’s gas grid operator, and North Macedonia’s energy sources company NER are expected to sign an agreement next month as a follow-up to an agreement signed a month ago by the energy ministers of the two countries in Lagonisi, east of Athens.

The latest agreement will stipulate technical issues, as well as guarantees, concerning the new pipeline, paving the way for tenders concerning the project’s development.

In addition, also in September, DESFA and NER also plan to stage a market test that will determine the commercial feasibility of the project. The two sides want to ensure the existence of a sufficient number of buyers for gas quantities planned to be transported through the pipeline.

The Greek section of the gas pipeline, budgeted at 51.4 million euros, is planned to stretch 54 kilometers. The North Macedonian section will cover a 100-km distance.

A September 13 registration deadline has been set for a tender concerning the procurement of steel pipelines for the project. Also, a draft of the tender concerning the project’s construction has been forwarded for public consultation until August 16.

 

DESFA considering 2 options for gas transportation to Epirus

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Gas grid operator DESFA is examining two alternative solutions for the transportation of natural gas to Greece’s northwestern region of Epirus, one of the company’s most important projects of its ten-year development plan covering 2022 to 2031, still not finalized.

One option being considered by DESFA is an extension of a gas pipeline in west Macedonia, northern Greece, from Ptolemaida all the way to Ioannina, the Epirus prefecture’s capital.

The other solution being considered entails the development of an LNG terminal at Igoumenitsa port, from where a 50-km gas pipeline would be constructed into the Epirus region.

The options will undergo public consultation for comments and observations by market players before RAE, in conjunction with DESFA, decides which of the two will be implemented.

DESFA aims to finalize its ten-year development plan covering 2022 to 2031 within the summer before delivering it to RAE in September.

DESFA pipeline agreement with North Macedonia’s MER in July

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Gas grid operator DESFA expects ongoing negotiations with North Macedonia’s energy sources company MER, for a cooperation agreement concerning the construction of a natural gas pipeline linking the two countries, will be successfully completed in July, enabling the staging of a market test for the project, whose Greek segment will run north from Thessaloniki’s Nea Mesimvria area.

DESFA plans to stage a market test for the pipeline in early autumn, assuming its cooperation agreement with MER is signed in July.

The cooperation agreement will commit both sides to the project’s construction, serving as a road map for its development and also specifying responsibilities to be taken on by DESFA and MER.

RAE, Greece’s Regulatory Authority for Energy, has set conditions, demanding a market test, and its successful outcome, in order to give the green light for construction of the Greek segment.

Apart from the cooperation agreement to be signed between DESFA and MER, the governments of Greece and North Macedonia plan to sign a corresponding bilateral agreement concerning the interconnection of the two countries through the project.

The details of this bilateral agreement are just about ready and have already been submitted to the European Commission for approval, Greek energy minister Kostas Skrekas told a recent conference.

Brussels’ approval is needed for North Macedonia to qualify for Western Balkans Investment Framework (WBIF) support funds for its segment of the gas pipeline.

The Greek segment, budgeted at 51.4 million euros, will cover a 57-km distance.

IGB gas pipeline launch delayed by 8 months for late-June, 2022

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The commercial launch of the Greek-Bulgarian IGB gas pipeline has been deferred by 8 months, for June 30, 2022, as a result of pandemic-related obstacles faced during the project’s development.

The gas pipeline’s technical work is now expected to be completed by the end of this year, instead of April, 2021, as was originally scheduled.

Two months earlier, ICGB, the consortium developing the project, informed companies that have reserved pipeline capacities through a market test of the unavoidable delay in the commercial launch.

Contractor AVAX, the winning bidder for the project’s construction in an international tender staged by ICGB, began developing the pipeline in May, 2019, prior to the pandemic, whose emergence and impact forced the company to drastically reschedule the IGB project.

International quarantine rules have delayed the IGB project’s progress as many workers needing to regularly cross the Greek-Bulgarian border have been forced to quarantine, each time, for days.

The quarantining rules have also complicated the transfer of equipment needed from one country to the other.

The ICGB consortium is comprised of Bulgaria’s BEH, holding a 50 percent stake, and IGI Poseidon, a 50-50 partnership involving DEPA International Projects and Italy’s Edison.

The IGB gas pipeline, to cover a total length of 182 kilometers, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria, offering a second interconnection between the two countries, in addition to the nearby Sidirokastro link.

The project is planned to begin operating at an annual capacity of 3 bcm, which could be boosted to 5 bcm at a latter date.

 

North Macedonia energy business opportunities for local players

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Greek companies stand a great chance of gaining further presence in North Macedonia’s energy market through participation in projects and investments promising to contribute to the country’s diversification of energy sources and capture a bigger energy-mix share for green energy, the neighboring country’s Prime Minister Zoran Zaev made clear during comments in Athens yesterday.

North Macedonia appears determined to reduce its dependence on Russian fossil fuels and also cut back on carbon emissions, objectives offering investment opportunities for Greek energy groups, currently eyeing the neighboring market as part of plans to increase their business interests abroad.

The North Macedonian leader said yesterday that an agreement concerning the relaunch of Hellenic Petroleum ELPE’s Thessaloniki-Skopje oil pipeline is nearing finalization.

“The idea is to have reached an agreement with them by the end of May so that this important pipeline can begin operating,” Zaev remarked.

The oil pipeline’s reopening would be combined with the conversion of ELPE’s North Macedonian OKTA refinery into a petroleum products distribution hub covering the western Balkan region.

ELPE currently operates 27 petrol stations in North Macedonia through its OKTA subsidiary. Also active in Bulgaria, Serbia, Montenegro, the Greek petroleum group operates over 200 petrol stations in the wider region.

Zaev added that North Macedonia is involved in negotiations with a Greek company, presumed to be Mytilineos, for the development of a natural gas-fueled power station in the capital, Skopje. These talks, however, still appear to be at an early stage.

Also this week, Greek energy minister Kostas Skrekas told participants of the Delphi Economic Forum that a bilateral agreement for a Greek-North Macedonian gas pipeline interconnection is virtually ready and awaiting the approval of European authorities.

For North Macedonia, this gas pipeline project would end Russia’s monopoly in the country’s gas market, enabling more competitive gas prices and reinforced supply security, while for Greece, the gas pipeline’s development would represent a further step in the country’s objective to transform into a regional gas hub.

EastMed alliance broadens, eight countries express support

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Support for the EastMed pipeline, planned to transport natural gas from offshore Levantine Basin gas reserves in the southeast Mediterranean to Greece and further into Europe, is growing in numbers with an initial Greek-Israeli-Cypriot alliance promoting this project now joined by five additional partners, Bulgaria, Romania, Hungary, Serbia and North Macedonia.

Energy ministers representing these eight countries forwarded a letter of support for the EastMed project to the European Commissioner for Energy Kadri Simson late last week, Greece’s energy and environment minister Kostas Skrekas has told local media.

The pipeline, to be developed by IGI Poseidon SA, a 50-50% joint venture between Greek gas utility DEPA and Italian gas utility Edison, is planned to cover a 1,470-km distance.

IGI Poseidon plans to develop EastMed all the way to Italy via Cyprus, Crete, the Peloponnese, mainland Greece and Epirus, the country’s northwestern flank.

This latest move, bringing the eight energy ministers together for the joint letter, was initiated by Skrekas, Greece’s energy minister, sources informed, following an initiative taken two months earlier by his Israeli counterpart Yuval Steinitz to organize a joint virtual conference involving ministers of all eight countries.

In their letter to Simson, the EU energy commissioner, the eight ministers highlight the importance of EastMed, noting the project promises to contribute to the wider region’s energy security and offer benefits to consumers as a result of increased competition and reduced natural gas price levels.

Regional gas interconnections, including the Greek-Bulgarian IGB, Bulgarian-Serbian IBS, Bulgarian-Romanian IBR and the Romanian-Hungarian IRH would be utilized to extend EastMed’s reach, the letter notes.

Greece and North Macedonia are currently planning a new gas pipeline interconnection whose Greek segment is being promoted by gas grid operator DESFA.

DESFA 2021-30 plan endorsed, west Macedonia, Patras pipelines included

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Gas grid operator DESFA’s ten-year development plan for 2021 to 2030, featuring projects budgeted at over 500 million euros in total, including pipelines in the country’s west Macedonia and Patras regions, has been approved by RAE, the Regulatory Authority for Energy.

Speaking at the 2nd Power & Supply Forum, on online event staged earlier this week by energypress, DESFA’s chief executive Maria Rita Galli pointed out that this amount is double that of the previous plan and includes 54 projects through which the company will strive to contribute to strengthening Greece’s role as a regional energy hub.

The west Macedonia pipeline, a new entry to the ten-year plan, is budgeted at 110 million euros and planned to cover a 130 km distance in northern Greece.

Despite not being included in the national recovery plan for subsidy support, DESFA is prepared to develop this project with company reserves and loans.

Even if developed without subsidy support, the eventual cost of the west Macedonia pipeline for gas consumers will be spread out into limited amounts if gas demand in the region is high, as is anticipated.

Power utility PPC’s chief executive Giorgos Stassis, another energypress forum participant, informed that the company’s prospective Ptolemaida V lignite-fired power station will have converted to natural gas by 2025.

The conversion promises to boost the facility’s capacity, which will increase its consumption and add to the west Macedonia gas pipeline’s feasibility.

The gas pipeline planned for Patras, budgeted at 85 million euros, will cover a distance of approximately 140 km, from Megalopoli, in the central Peloponnese, to the western city’s industrial zone. Patras’ industrial sector is expected to ensure strong demand for natural gas.

The Patras project could, in the future, be extended to reach other cities on Greece’s west side, such as Pyrgos, western Peloponnese, and Agrinio, in the northwest.

 

Ministry seeks recovery fund aid for west Macedonia gas pipeline

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Development of a high-pressure gas pipeline in west Macedonia, in the country’s north, which would enable the country’s gas grid to be extended to the area, is among the energy ministry’s proposals for EU recovery fund inclusion.

Though still too early to tell if this project will become eligible for financial support through this fund, it should be pointed out that the European Commission is generally hesitant about backing natural gas-related projects.

The project’s inclusion, or not, in a national recovery and resilience plan being prepared by a special energy-ministry committee, currently filtering proposals by this ministry and other ministries, stands as a crucial test that could determine whether the west Macedonia gas pipeline project will become eligible for EU recovery fund support.

A national plan’s finalized list is expected within the next few days before it is forwarded, by early April, to the European Commission, whose approval will be needed.

The energy ministry is also seeking 300 million euros through the recovery fund for the redevelopment of the power utility PPC’s mining areas in west Macedonia, a lignite-dependent economy.

Regardless of whether the west Macedonia high-pressure gas pipeline plan will qualify for EU recovery fund support, gas grid operator DESFA appears determined to move ahead with the project, budgeted at 110 million euros and constituting part of the country’s decarbonization strategy.

The new National Strategic Reference Framework (NSRF) could serve as an alternative financing source, while DESFA will also consider company cash reserves and a bank loan if necessary.

 

DESFA to push ahead with west Macedonia gas pipeline

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Gas grid operator DESFA is determined to push ahead with the development of a natural gas pipeline in northern Greece’s west Macedonia region, a project budgeted at 110 million euros, either with financial support from the EU’s current National Strategic Reference Framework or other financing solutions, including bank loans, if the project is ultimately excluded from EU recovery fund support.

Though a finalized decision on the list of projects to receive EU recovery fund support has not been reached, DESFA, according to energypress sources, will proceed with this pipeline project, part of the operator’s ten-year development plan for 2021 to 2030, totaling 545.5 million euros.

In examining its financing options for this gas pipeline project, DESFA will take decisions based on containing network usage fees to be paid by consumers.

The European Commission and European Investment Bank (EIB) no longer finance conventional gas-based infrastructure projects, unless eco-friendly hydrogen is incorporated into their plans. Even so, the west Macedonia gas pipeline has been included in the recovery fund catalogue as the project is linked to the post-lignite era.

Possessing a clearly developmental role with multiple benefits for the wider region, the pipeline represents part of the energy transition plan for west Macedonia, a lignite-dependent local economy, as it will help replace lignite-based energy, contribute to growth, and support the region’s industry.

The pipeline, to stretch 130 km, could be swiftly licensed, DESFA officials believe, as long as its financing plan is settled and municipal and regional authorities acknowledge the region’s gas penetration need. The pipeline’s delivery was forecast for within 2023 before questions concerning the project’s financing emerged.

DESFA focusing on gas pipeline for west Macedonia network

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Gas grid operator DESFA and energy ministry officials are currently discussing financing options that could be sought for the operator’s plan to develop a gas pipeline needed to facilitate a gas network expansion in northern Greece’s west Macedonia region, energypress sources have informed.

DESFA is awaiting approval by RAE, the Regulatory Authority for Energy, for its ten-year development plan, worth more than 545 million euros, including the gas pipeline project.

The talks between DESFA and the energy ministry officials are focused on public funding possibilities, primarily European, to cover part of the cost of the gas pipeline, which would ultimately help contain the level of network usage tariffs to be covered by consumers.

Local officials anticipate this network expansion plan should qualify for EU development fund support, even though EU policy generally does not favor gas projects, as it clearly represents a development project that promises multiple regional benefits, including replacement of lignite-based energy, on the way out as a result of the country’s decarbonization strategy.

Besides the EU recovery fund, officials in Greece are also considering the prospects of financial support from the EU’s National Strategic Reference Framework or a number of regional development programs.

The gas network expansion plan in the country’s west Macedonia region will require the development of a 130-km gas pipeline from Trikala, in the mainland’s mid-north, a project budgeted at 110 million euros.

According to sources, DESFA has revised an original pipeline route plan, bringing the pipeline closer to cities where medium and low-pressure networks for households and businesses are to be developed by gas distributor DEDA.

North Macedonia pipeline market test by September

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Gas grid operator DESFA has begun preparations with the energy ministry to stage a market test by September for the Greek segment of a gas pipeline interconnector to run to North Macedonia.

RAE, the Regulatory Authority for Energy, requested a market test, to ensure sufficient capacity reservation by users, for the project when it endorsed DESFA’s development plan covering 2017 to 2026.

North Macedonian authorities are also working on preparations for the project’s development. Just days ago, the country’s transport and communications minister Blagoj Bocvarski noted that all will be ready by the end of 2021 for the announcement of a tender concerning the construction of the project’s North Macedonian segment.

All licensing requirements will have been resolved earlier, by the middle of this year, Bocvarski added.

DESFA and its North Macedonian counterpart MER signed a Memorandum of Understanding in October, 2016 for the pipeline project.

Its Greek segment, budgeted at 51.4 million euros, will cover a 57-km distance, beginning from Thessaloniki’s Nea Mesimvria area.

The pipeline will be linked to Greece’s prospective Alexandroupoli FSRU in the northeast. North Macedonia currently fully depends on Russian gas supply through a Balkan pipeline.

Bulgaria gas pipeline explosion highlights need for local projects

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Yesterday’s Bulgarian gas pipeline explosion in Bulgaria, prompting a supply cut into Greece from a northern route, yet again highlights how vital it is for Greece to develop two gas infrastructure project plans in Alexandroupoli, northeastern Greece, and Kavala, in the north.

The explosion of this pipeline, carrying Russian gas into Greece via Bulgaria, has not affected Greece’s energy security as supply from the alternate Kipoi route remains uninterrupted, while the contribution of high LNG reserves at the Revythoussa terminal, just off Athens, has also been crucially important.

However, a Greek energy crisis could have resulted if this accident were more serious, or if the Revythoussa facility did not exist, or, worse still, the accident coincided with even greater Greek-Turkish tensions than at present, which could have meant a cut in gas supply from Turkey, hosting one of Greece’s key gas import corridors.

The intensifying geopolitical instability of the wider region, which includes Turkey, an extremely troubling neighbor, makes imperative the existence of sufficient gas storage facilities to safeguard Greece’s energy security. Despite the precarious conditions in the region, Greece remains one of the European countries without sufficient energy storage infrastructure.

In addition to the existing Revythoussa LNG terminal, Greece’s infrastructure definitely needs to be reinforced by projects such as the Alexandroupoli FSRU and an underground gas storage facility at a virtually depleted offshore deposit south of Kavala.

 

Long-standing DESFA northern Greece pipeline plan scrapped

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Gas grid operator DESFA has scrapped plans for a natural gas pipeline that had been envisioned to run across northern Greece, from Komotini in the northeast to Thesprotia in the northwest, after maintaining the project in the company’s business plans for about a decade.

DESFA reached this decision as Russian President Vladimir Putin is supporting Gazprom’s development of a second branch for the wider Turkish Stream gas project, deviating Ukraine, to supply the Balkans and central Europe via Bulgaria, not Greece, as was initially considered.

A first Turkish Stream branch supplying Russian gas to Turkey is already operating.

“The project remained on the business plan for approximately ten years without progressing to the construction stage, while there is no sign of conditions leading to its construction in the immediate future,” DESFA announced.

The Komotini-Thesprotia pipeline project was budgeted at 1.8 billion euros.

The total cost of projects included in DEFSA’s development plan for 2021-2030 is now budgeted at 545.5 million euros.

DESFA considering west Macedonia pipeline expansion

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Gas grid operator DESFA’s next ten-year development plan, for 2021 to 2030, may include gas network extension projects in areas that have not featured in previous plans, including northern Greece’s west Macedonia region.

The shape and extent of the pipeline network expansion plan will depend on the development, or not, of regional natural gas-fired power stations by electricity producers.

Preliminary considerations for DESFA’s new ten-year development plan come just weeks after a delayed approval by authorities of the operator’s ten-year plan covering 2020 to 2029.

A prospective decision by power grid operator PPC on whether its Ptolemaida V power station will operate as a natural gas-fired unit will be instrumental in shaping DESFA’s investment decisions for pipeline network expansions in the west Macedonia area.

DESFA also intends to develop metering stations at TAP project corridor points as the capacity to be offered by the TAP project will not suffice to cover regional needs if natural gas-fired power stations are developed in the west Macedonia region.

DESFA plans to construct three new metering and regulating stations in the Eordea, Kastoria and Aspros (Edessa, Naoussa, Giannitsa) areas, their budget totaling 8 million euros. These stations, whose completion is expected by the end of 2022, will enable the development of a mid and low-voltage network for natural gas transmission to these areas.

 

DEPA International Projects, EDEY, the hydrocarbon company, to merge

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An amendment permitting a prospective merger between DEPA International Projects – a new entity resulting from a split at gas utility DEPA – and EDEY, the Greek Hydrocarbon Management Company, is now being prepared at the energy ministry, energypress sources have informed.

A number of DEPA-related projects have been added to the DEPA International Projects portfolio, including the Greek-Italian IGI interconnection, EastMed and the Greek-Bulgarian IGB pipeline interconnection.

In addition, any future DEPA-related projects – directly or indirectly – concerning development, construction or management of interconnection infrastructure linking Greece with neighboring countries will also be added to the DEPA International Projects portfolio.

EDEY, the hydrocarbon project licensing authority in Greece, has assets of approximately 12.5 million euros. The company reported a post-tax profit of 4.3 million euros in 2019.

EDEY’s range of activities will be broadened as a result of the company’s merger with DEPA International Projects.

Special categorization for the new company that would exempt personnel remuneration packages and hiring policies from strict state monitoring is likely, sources noted.

The merger plan’s legal details could be attached to an energy ministry draft bill on environmental matters that is expected to be submitted to parliament following the Greek Easter break.

 

Alexandroupoli FSRU market test offers total 2.6 bcm, viability assured

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Binding capacity reservations for the prospective Alexandroupoli FSRU in northeastern Greece, whose second-round market test expired on Tuesday afternoon, amounted to 2.6 bcm, a tally that secures the project’s sustainability and paves the way for a finalized investment decision, energypress sources have informed.

Two Greek utilities, gas company DEPA and power company PPC, are among the participants who have reserved capacities, for long-term periods, the sources noted.

Bulgaria’s Bulgartransgaz and a Serbian company also confirmed earlier requests for capacity reservations.

Romania’s Romgaz did not turn up for the market test’s second round after expressing interest for a considerable capacity covering a lengthy period in the first round. Instead, two private-sector Romanian trading companies ended up submitting binding offers for Alexandroupoli FSRU capacities.

The Bulgarian, Serbian and Romanian interest highlights the potential of the Alexandroupoli FSRU to serve as a new natural gas gateway for southeast European markets, via the Greek-Bulgarian IGB pipeline, now under construction, as well as other existing and planned gas pipelines in the region.

Alexandroupoli FSRU project sustainable, reservations show

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A second-round market test offering capacity reservations for the prospective Alexandroupoli FSRU in northeastern Greece has drawn enough interest to ensure the project’s sustainability ahead of a final business decision, energypress sources have informed.

The deadline for this market test, a binding procedure, expires today following a ten-day extension granted in order to give Romania’s Romgaz more time to confirm the duration and quantity of its offer.

Romania has entered a period of political crisis after interim prime minister Ludovic Orban’s Liberal Party government was toppled in a no-confidence vote called by the main opposition last month. The coronavirus crisis has worsened the situation. Orban and his entire Cabinet have quarantined themselves after coming into contact with a senator who was later confirmed to have the coronavirus.

Greek gas utility DEPA and power utility PPC have reserved Alexandroupoli FSRU capacities for lengthy periods, the sources added.

Bulgaria’s Bulgartransgaz and a Serbian company are also believed to have confirmed earlier requests for capacity reservations.

The Bulgarian, Serbian and Romanian interest highlights the potential of the Alexandroupoli FSRU to serve as a new natural gas gateway for southeast European markets, via the Greek-Bulgarian IGB pipeline, now under construction, as well as other existing and planned gas pipelines in the region.