Natural gas a leading issue at upcoming Greek-Russian talks

Energy matters, especially sharply risen natural prices, will be high on the agenda at a forthcoming 13th Greek-Russian Joint Interministerial Committee scheduled to take place in Moscow on November 29 and 30.

Gas utility DEPA’s current contract with Russia’s Gazprom runs until 2026 but the two sides renegotiate, each year, the details of its pricing formula and a take-or-pay clause incorporated into the agreement.

DEPA’s supply agreement with Gazprom is entirely oil-indexed but an extraordinary revision was made for 2020 and 2021 as oil prices were extremely high, well over LNG price levels. A large proportion of Russian gas received by DEPA was indexed with the TTF gas hub in the Netherlands.

The situation has overturned this year, LNG prices rising well above oil prices. As a result, Gazprom wants to avoid a fully oil-indexed agreement for gas supply to DEPA in 2022 and prefers a hybrid solution that would partially index its gas prices with the TTF.

DEPA and Gazprom have yet to reach an agreement, but the two sides will need to converge by the end of this month, which would enable the Greek gas company to set prices and establish deals with customers in the Greek market.

Prime Minister Kyriakos Mitsotakis is scheduled to travel to Moscow on December 8 for a meeting with Russian President Vladimir Putin, the first direct meeting between the two leaders since Mitsotakis assumed office in July, 2019.

 

DEPA in gas supplier talks for ’22 prices, Gazprom deal crucial

Gas company DEPA is currently engaged in negotiations with its suppliers for agreements  covering 2022, its talks with main supplier Gazprom being the most crucial. The pricing formula to be agreed on by DEPA with Gazprom will greatly shape the prices to be offered by the Greek company to its customers – electricity producers, industrial producers and retail energy suppliers.

Though there are signs of a possible price de-escalation, gas prices remain elevated. The percentage of Gazprom supply to be oil-indexed will be a pivotal factor in price levels offered by DEPA to customers.

DEPA has already reached an agreement with Algeria’s Sonetrach for a one-year extension to a deal expiring at the end of 2021, energypress sources have informed. A hybrid pricing formula primarily based on the Dutch TTF index has been agreed to, the sourced added.

Greece’s agreement with Turkey’s BOTAS, for natural gas originating from Azerbaijan, is set to expire at the end of this year, but no moves have been made for a renewal as Azeri gas has been supplied by Azerbaijan Gas Supply to the Greek market since the end of 2020 through the new TAP route. This supply contract, fixed and not subject to negotiation, is valid until 2044.

DEPA’s pending agreement with Russia’s Gazprom Export, its main supplier, is the most crucial. It expires in 2026 but is subject to annual talks concerning pricing formula and take-or-play clause revisions.

DEPA’s agreement with Gazprom is currently entirely oil-indexed. The the two sides had agreed to an extraordinary revision for 2020 and 2021 indexing prices with the TTF gas index as oil prices were considerably higher. The opposite is now the case, with LNG prices well above oil prices. Gazprom officials now prefer prices to not be fully indexed to oil.