Gazprom

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

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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.

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.

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

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Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.

 

Six Greek heavyweights among DEPA Commercial contenders

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Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

DEPA sales progressing, DEPA Infrastructure VDR in a fortnight

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Gas utility DEPA’s double privatization effort involving DEPA Infrastructure and DEPA Trade appears to be making progress.

The sale’s authorities expect to make accessible a DEPA Infrastructure video data room to prospective buyers between late June and early July. Then, approximately a month later, once a shortlist of final-round qualifiers has been announced, authorities plan to also open a VDR for DEPA Trade.

Meanwhile, DEPA has agreed to a new pricing formula with Russian supplier Gazprom, sources have informed.

The current pricing formula, indexing 40 percent of supply to the Dutch gas trading platform TTF, one of Europe’s biggest hubs, and 60 percent to oil prices, will be reversed.

DEPA and Gazprom also appear to have reached an agreement on an amount the Greek utility will need to pay its Russian supplier for natural gas not absorbed in 2019. A take-or-pay clause is included in their supply contract.

DEPA will pay a little over 40 million euros, well below a figure of 130,000 million euros believed to have been initially tabled. The take-or-pay amount that may result for 2020 remains to be discussed.

DEPA’s agreement with Gazprom is particularly significant for the prospects of the DEPA Trade privatization, as besides its retail gas market presence, this company will also pitch the details of its supply contracts as an important company asset.

DEPA Trade’s list of nine first-round bidders include Shell, which had sold its 49 percent share in EPA Attiki and EDA Attiki to DEPA in 2018 but is again interested in reentering the Greek gas market. The other bidders are: fellow-Dutch company Vitol; Qatar’s Power Globe; Met Holding, a subsidiary of Hungarian group MOL; C.G GAS; as well as four Greek bidders, Motor Oil Hellas with power utility PPC, a surprise partnership; Gek Terna; ELPE-Edison; and Mytilineos.

 

Gazprom gas supply clauses now a major burden for DEPA

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Gas utility DEPA, whose long-term pipeline gas supply agreements with Gazprom have developed into a heavy burden amid a changing market of sharply reduced gas prices, is seeking more favorable terms.

Talks between the two sides have commenced but Gazprom officials do not appear willing to reexamine details at any great depth, sourced informed.

DEPA’s agreements with Gazprom, which include take-or-pay clauses, are no longer competitive. The Greek utility, on one of its unfavorable fronts, is pushing for a favorable revision to its take-or-pay clause concerning supply in 2019.

DEPA absorbed approximately 500 million cubic meters less than it had agreed last year, a shortage expected to cost about 100 million euros, based on the current supply terms agreed with Gazprom.

It is believed DEPA may escape with a smaller payment for 2019 and have leftover quantities transferred to future years.

Even so, the gas utility still faces a major problem for 2020. DEPA recently had its Gazprom supply contract for the year revised so that 40 percent of supply is indexed to the Dutch gas trading platform TTF, one of Europe’s biggest hubs. The other 60 percent has remained oil-indexed.

DEPA’s oil-indexed 60 percent of Gazprom supply for 2020 is far more expensive than LNG prices currently available in the market, meaning the gas utility will not be able to sell this proportion to  customers.

Essentially, DEPA’s ability to sell its Gazprom supply of gas in 2020 will be restricted to the TTF-indexed 40 percent proportion.

DEPA’s first-quarter results are not impressive and the situation seems set to deteriorate as international LNG prices keep sliding amid the global financial impact of the coronavirus pandemic. It is feared DEPA’s take-or-pay clause cost for 2020 will exceed the 500 million amount estimated for 2019.

DEPA Trade sale threatened by unfinished ELFE pricing case

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An unfinished legal battle between gas utility DEPA and ELFE (Hellenic Fertilizers and Chemicals), recently vindicated by an Athens Court of First Instance verdict calling for a 63 million-euro return from the gas utility for gas supply overcharging, threatens to block the launch of a privatization offering 65 percent of DEPA Trade, a new DEPA entity established for the privatization, despite strong investor interest.

The Court of First Instance decision in favor of ELFE, delivered four months ago, is a major blow for DEPA’s finances as the sum could potentially balloon if other firms follow the example set by ELFE and also take legal action, authorities have stressed.

The court ruled that DEPA overcharged ELFE between 2010 and 2015 by applying an oil-indexed gas pricing formula used by Russia’s Gazprom.

DEPA is expected to win an appeal as the utility is backed by a strong case, sector experts have pointed out.

If, however, ELFE ultimately proves these predictions wrong and wins the case then other companies supplied by DEPA, including electricity producers, would be prompted to take legal action of their own against the utility, taking advantage of the legal precedent. This would require DEPA to return sums worth hundreds of millions of euros, in addition to the ELFE amount.

Subsequently, the DEPA Trade sale cannot proceed with such ambiguity hanging in the air as prospective bidders will simply not turn up and submit binding bids if all is not clear.

DEPA, rebounding in wholesale market, looks to capture 40%

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Gas utility DEPA appears set to regain lost ground in the wholesale market as a result of reduced gas prices negotiated over the past few months with international suppliers.

Talks for new deals between the company’s administration and customers, primarily electricity producers and retail gas firms, have indicated DEPA’s market share will increase this year.

DEPA expects a market share rise to a level of approximately 40 percent, up from 33 percent at the end of 2019.

The Greek gas utility recently renegotiated improved supply deals with Russia’s Gazprom and Algeria’s Sonatrach, while a favorable verdict by the ICC (International Court of Arbitration) in an overcharging case against Botas, Turkey’s state-run crude oil and gas company, came as an added boost. DEPA should receive a retroactive amount of around 200 million euros, according to an initial estimate.

DEPA’s revised Gazprom supply deal limits oil-indexed gas pricing to 60 percent of the total order. The other 40 percent will be priced in accordance with the Dutch gas trading platform TTF, one of Europe’s biggest hubs, where prices are significantly lower.

In mid-January, TTF price levels for LNG shipments in February were 14 euros per MW/h, including Greek gas grid entry costs, compared to over 20.5 euros per MW/h for pipeline gas, a 45 percent difference.

DEPA is currently also renegotiating the terms of its take-or-pay clause with Gazprom, requiring the Greek utility to absorb at least 80 percent of its annual contracted amount of 2 billion cubic meters, or 1.6 bcm.

As for Sonatrach, supplying LNG to DEPA, the Greek utility is believed to have reduced amounts and also achieved a discount.

DEPA’s contract with Gazprom, the utility’s biggest in terms of volume, runs until the end of 2026 with an option for a 10-year extension. ICC

The Greek gas utility’s second-biggest contract is with Azerbaijan’s Socar, running until 2040 for one bcm per year and a minimum level of 0.9 bcm. The Turkish Botas contact is DEPA’s third biggest, securing 0.75 bcm, annually, until 2021.

DEPA achieves vastly improved terms for Gazprom supply deal

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Greek gas utility DEPA, headed for privatization, has negotiated a vastly improved gas supply deal with Russia’s Gazprom whose terms also factor in price levels at the Dutch gas trading platform TTF, one of Europe’s biggest hubs.

The new arrangement, virtually finalized but with mere formalities pending, drastically reduces the supply cost for DEPA. Until now, the Greek gas utility’s supply price has been oil indexed.

Under the new agreement, TTF price levels will play a key role. The TTF will count for 40 percent of DEPA’s supply price while 60 percent will be oil indexed.

Just days ago, price levels at the Dutch hub were approximately 14 euros per MW/h compared to over 20.5 euros per MW/h for pipeline gas, a 46 percent difference.

DEPA has also achieved an improved take-or-pay clause in its agreement with Gazprom, offering greater flexibility to the Greek utility.

Under the previous terms of the take-or-pay clause, DEPA needed to absorb at least 80 percent of its annual contracted amount of 2 billion cubic meters, or 1.6 bcm.

Improved Gazprom deal raises DEPA in the eyes of investors

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Lower-price deals sealed or about to be sealed between gas utility DEPA and its international suppliers are among the factors the government is relying on for a successful privatization procedure of the gas utility, a procedure launched yesterday, beginning with DEPA Trade, one of DEPA’s two new entities formed for the sale.

DEPA is believed to have renegotiated a far more favorable supply deal with Russia’s Gazprom, the Greek utility’s biggest supplier.

Forty percent of DEPA’s natural gas orders from Gazprom will no longer be pegged to fluctuating international oil prices. Instead, this percentage of DEPA’s Gazprom orders will be linked to price levels of Dutch gas trading platform TTF, one of Europe’s biggest hubs. Just days ago, prices at TTF were about half those of pipeline gas. The other 60 percent of DEPA’s orders with Gazprom will remain oil indexed.

This development promises to make DEPA’s supply deals with Gazprom far more competitive. Prospective bidders already appear to be warming to the prospect.

Major Greek corporate groups such as Mytilineos, Hellenic Petroleum (ELPE) – already holding a 35 percent stake in DEPA and considering teaming up with its Elpedison partner Edison for the DEPA sale – GEK Terna and Motor Oil are believed to be gearing up for bids. The Copelouzos group’s involvement in the DEPA Trade sale is considered certain – in a partnership with Czech entrepreneur Karel Komarek, holding a key stake in Greek lottery OPAP.

DEPA’s ICC victory over Botas promises wider boost for gas utility

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Considerable time will be needed before a precise retroactive payment amount can be determined for gas utility DEPA following a favorable verdict by the ICC (International Court of Arbitration) in an overcharging case against Botas, Turkey’s state-run crude oil and gas company.

An initial estimate has put the retroactive amount to be received by DEPA at around 200 million euros.

DEPA claimed the Turkish company has overcharged for purchases – by the Greek utility – of Azerbaijani natural gas delivered through Turkish pipelines since 2011.

Importantly, DEPA stands to secure more competitive purchase prices for Azerbaijani gas until 2023, when the Greek utility’s transmission contract with Botas is due to expire.

DEPA covers approximately 40 percent of the total amount of natural gas it trades through this supply source, meaning the ruling’s favorable impact will be significant.

Meanwhile, DEPA is currently seeking more favorable terms from its two other suppliers, Russia’s Gazprom and Algeria’s Sonatrach.

Improved terms and supply prices promise to help DEPA rebound from consistently contracting market shares as a result of tougher competition over the past two to three years. Better conditions also promise a market boost for the Greek gas utility ahead of its upcoming privatization.

 

DEPA set to appeal court verdict ordering ELFE refund

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Gas utility DEPA is expected to submit an appeal by Wednesday challenging an Athens Court of First Instance verdict delivered in October that vindicates ELFE (Hellenic Fertilizers and Chemicals) for gas supply overcharging claims made against the utility.

The court ruling has ordered DEPA to return a sum of 63 million euros to ELFE for supply between 2010 and 2015 as a result of the application of a pricing formula used by Gazprom, pegging gas prices to international oil prices.

The Athens court ruled the pricing procedure should be based on formulas used by northern Europe hubs, which are not pegged to fluctuating international oil prices.

DEPA, in its appeal, will argue the pricing formula is not a local creation but, instead, used by Gazprom customers in the wider area such as North Macedonia, Bulgaria and Romania.

The gas utility, in its appeal, will also contend the Greek gas market, still isolated, cannot be compared to those of west and northern Europe as interconnected gas trading hubs operate in these regions.

The case could have wider ramifications for DEPA if ELFE is victorious because other  customers supplied by the Greek gas utility could emerge to dispute the Gazprom pricing formula and also request pricing revisions.

Also, if unsuccessful, DEPA would need to recalculate ELFE’s entire outstanding amount, currently worth 126 million euros.

DEPA, pivotal for Greek energy plan, pushing ahead internationally

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Through its strategic involvement in an array of pipeline and infrastructure projects, Greek gas utility DEPA is becoming a key driver of Greece’s geopolitical upgrade and the diversification of supply sources for the wider region of South-East Europe.

DEPA is establishing its position in the region through a series of significant international projects such as the acceleration of IGB pipeline construction, participation in the IGI Poseidon pipeline  interconnecting Greece and Italy, and, surely, booking capacity in TAP which, from 2020 onwards, will transport Caspian gas to Europe.

Developments around East Med Pipeline are also rapid, with the most recent being IGI Poseidon’s (the 50% – 50% JV between DEPA S.A. and Edison S.p.A ) BoD decision to fast-track the completion of all pending stages that will bring the project to maturity.  The €70 million Feasibility Study is being accelerated, along with every other stage, to complete the East Med pipeline’s design, which will also pave the way for the final investment decision.

All the above are just one part of DEPA’s multifaceted international activity. Prior to that, in October, a bilateral agreement was signed in Sofia for the start of IGB pipeline construction, a project overseen by ICGB AD, in which DEPA has a 25% stake.

The project is expected to go into operation in July 2021, with an initial capacity of 3 billion cubic meters. At first, the entire load of gas will come from TAP that will go into operation within 2020, delivering Azeri gas to European markets, in which DEPA has booked capacity of 1 billion cubic meters. Thus, through IGB, the company will supply the Bulgarian market with Caspian gas, “breaking” for the first time the existing Russian monopoly.

Another major development took place just yesterday, when the company’s Board of Directors approved the participation of DEPA, with a 20% stake, to the equity of GASTRADE, the company developing the FSRU project in Alexandroupolis.

The Terminal is complementary to the IGB pipeline and consists of an FSRU (Floating Storage Regasification Unit), anchored 10 km off the coastal area of ​​Alexandroupolis, with storage capacity up to 170,000 cubic meters of LNG and 22.7 million cubic meters daily regasification capacity, per day (8.3 billion m3 / year), as well as a 28 km long onshore and subsea pipeline system.

The international presence of the company is also enhanced by the Greek-Italian energy interconnection through the IGI Poseidon pipeline, as well as the CYNERGY program that “breaks” Cyprus energy isolation by establishing a natural gas supply chain in the country.

Apart from its participation in international projects, equally important are the company’s long-term supply contracts with Russian Gazprom, Turkish BOTAS, Algerian Sonatrach, IGSC (Azerbaijan) through the TAP pipeline, as well as the procurement of significant quantities of LNG through the global SPOT market, at competitive prices.

DEPA’s CEO, Konstantinos Xifaras, summed up the company’s international role:

“For thirty years, DEPA has been a leading player in the Balkan energy sector, as well as an integral part of the European strategy for energy diversification and security of supply both of Greece and Europe.

At the same time, by deploying multilayered energy diplomacy and participating in major international projects, DEPA establishes Greece as a regional energy hub and upgrades its economic and geo-strategic importance.”

DEPA’s footprint is solid in the domestic energy market as well, where it recently prevailed in a tender process for natural gas supply to PPC in 2020. The company acknowledged as one of the two bidders, with the ability to supply PPC with 2 million MWh.

Greek-Cypriot-Israeli energy summit highlights US interest

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Washington’s supportive interest in the energy partnership between Greece, Cyprus and Israel has grown, driven by the prospect of hydrocarbon exploration in the southeast Mediterranean region as well as the East Med natural gas pipeline, planned to carry Cypriot, Israeli and, possibly, Egyptian natural gas to the EU via Greece and Italy.

Highlighting this interest, an upcoming Athens energy summit, scheduled to take place on August 6 and 7, comes as a US initiative, energypress sources informed.

It will follow a meeting just days ago, at the East Med Gas Forum in Egypt, that brought together Greek energy minister Costis Hatzidakis with his Cypriot and Israeli peers, Giorgos Lakkotrypis and Yuval Steinitz, respectively. In addition, Greek Prime Minister Kyriakos Mitsotakis recently met with Cypriot leader Nicos Anastasiades.

US Assistant Secretary Francis Fannon, head of the Bureau of Energy Sources, will also take part in the Athens energy summit. Fannon is scheduled to meet with Hatzidakis, Greece’s energy minister, and the country’s deputy foreign minister Konstantinos Fragogiannis on the eve of the event.

The summit highlights the US-fostered partnership between Greece, Cyprus and Israel, united against escalating Turkish tension concerning offshore hydrocarbon exploration plans within Cyprus’ Exclusive Economic Zone (EEZ).

The event’s participants are also expected to discuss the East Med pipeline. An agreement between the three countries and Italy remains pending. Last spring, Italian Prime Minister Giuseppe Conte claimed he sees no benefits for Italy in the project, effectively bringing the country’s effort in the matter to a standstill.

Washington openly supports this natural gas pipeline as it promises to establish an alternative supply route to Europe that would restrict Moscow’s energy dominance on the continent, through Gazprom.

Sideline efforts are being made to alter Italy’s negative stance, sources informed. A message could be projected to Rome through the imminent Athens event.

DEPA awaiting Gazprom news for lower gas price, LNG a market hit

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Gas utility DEPA, which has asked for a lower natural gas supply price from Gazprom, can expect a response around June 15, the Russian gas giant has informed.

DEPA was driven to action by extremely low spot-market prices for LNG currently available in Europe.

Major European hubs, such as the TTF facility in the Netherlands, are currently offering prices of 10.928 euros per MWh, compared to Gazprom’s supply contract for the Balkans, including Greece, of approximately 20 euros per MWh.

It remains to be seen how DEPA will respond if the price-related news from Gazprom is not favorable.

LNG is projected to have captured roughly 55 percent of western European energy markets five years from now, up from approximately 40 percent last year, authorities told a recent forum in Brussels.

According to the World Energy Council, LNG will capture a 51 percent share of the global market by 2025, from 25 percent in 2000 and 45 percent in 2018, as a result of new production line investments in the USA, Qatar and Australia.

Lower LNG prices have coincided with an upgrade at the LNG terminal on Revythoussa, an islet just off Athens, resulting in its capacity increase to 220,000 cubic meters. This has enabled bigger incoming shipments.

So far this year, LNG shipments have arrived from Qatar and the USA. More are expected.

Meanwhile, DEPA’s domestic market share for LNG supply is on a downward trajectory and currently at around 30 percent as a result of intensifying competition.

DEPA makes first ever gas sale abroad with Bulgargaz order

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Greek gas utility DEPA has taken a first step towards actualizing an international trading role in the wider Balkan region, a strategy mapped out by its administration, by clinching a deal to supply a 1.5 million-MW quantity of natural gas to Bulgaraz. The development represents DEPA’s first natural gas sale abroad.

DEPA was the winning bidder of an auction staged by the Bulgarian energy company for its first ever purchase of natural gas not stemming from Russia’s Gazprom Export, the Balkan country’s standard gas supplier through a long-term supply agreement.

Besides DEPA, the Bulgaraz auction also involved Dutch company Colmar and Bulgaria’s Dexia.

The natural gas quantity ordered by Bulgaraz through its auction is scheduled to be delivered by the summer through a Greek-Bulgarian pipeline connection. Russian gas reaches Greece through this reverse-flow pipeline.

DEPA, as part of its plan to expand its gas trading activities in the wider Balkan region, is seeking Gazprom permission to sell Russian gas in Balkan markets. Gazprom has yet to offer such an approval.

IGI Poseidon licensing procedures ‘ready by summer’

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The prospective IGI Poseidon gas pipeline, planned to run though Greece’s north and across the Adriatic Sea to Italy as a supply route for Russian gas to Europe, is expected to be fully licensed by the summer, energypress sources have informed.

Regarded as an investment plan of major global interest, IGI Poseidon is now at the public consultation stage after years of preliminary work.

Its developers, the Greek gas utility DEPA and Italy’s Edison, are currently staging a public consultation procedure on the project’s environmental impact study. Interested parties have until March 27 to submit their views.

The Poseidon company intends to make final investment decisions once all licensing and market test procedures have been completed.

DEPA, Edison and Gazprom have signed a memorandum of cooperation to explore the possibility of the project’s link with Turkish Stream, planned to transmit Russian gas to the Greek-Turkish border. Officials are now also looking into whether the pipeline can be connected with East Med, to link the Greek, Cypriot and Israeli systems, and the Greek-Bulgarian IGB route.

ELPE, PPC among firms eyeing DEPA Trade majority stake

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The field of contenders believed to be examining a majority stake (50% plus one share) of DEPA Trade to soon be offered through a tender include Promitheas (Copelouzos, Gazprom), Motor Oil, Mytilineos and ELPE (Hellenic Petroleum), which revealed an interest in the natural gas market last week, while presenting group results.

The main power utility PPC another firm that has indicated it intends to enter the gas market to offset anticipated losses in the electricity market is another possibility. However, PPC’s financial standing and ability to access capital markets could prove to be an obstacle.

Promitheas has shown particular interest in DEPA’s international agreements, Motor Oil is looking closely at EPA Attiki, the gas utility DEPA’s supply firm covering the wider Athens area, while Mytilineos appears to be focused on the utility’s international trade and gas supply activity.

An energy ministry draft bill splitting DEPA into two new corporate entities, DEPA Trade and DEPA Infrastructure, ahead of the utility’s bailout-required privatization was ratified in Greek parliament late last week.

The tender offering a majority stake in DEPA Trade is expected to be launched in about one month. The privatization fund will not wait for the procedures concerning DEPA’s split to be completed before launching the DEPA Trade tender. Investors will be offered a minority stake in DEPA Infrastructure at a latter date.

 

State veto rights for DEPA Trade despite minority stake

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Investors preparing for gas utility DEPA’s upcoming privatization will face ambiguous operating conditions as the Greek State, to begin by offering a majority 50.1 percent stake in DEPA Trade following an imminent company split ahead of the sale, is expected to maintain veto rights on a number of strategic matters despite its minority status in this trade venture.

Key issues to concern DEPA Trade will include the gas utility’s long-term agreements with major suppliers such as Russia’s Gazprom, Algeria’s Sonatrach and Turkey’s Botas.

DEPA’s contract with Gazprom, which runs until 2026 and is the biggest of all three, features a take-or-pay clause requiring the Greek gas utility to order no less than 1.5 billion cubic meters of natural gas per year or face fines.

DEPA’s supply agreements with Sonatrach and Botas both expire in 2021. The Botas agreement will not be extended as the soon-to-be-launched TAP project will provide direct supply to Greece from Azerbaijan. DEPA has already signed an agreement for one billion cubic meters of TAP-related natural gas per year.

Subsequently, the Greek State will maintain its influence over DEPA’s supply contracts with Sonatrach and Gazprom.

Investors considering the majority stake to be offered in DEPA Trade will not be entirely free.

A draft bill for DEPA’s split into DEPA Trade and DEPA Infrastructure ahead of the privatization is scheduled to be submitted to parliament tomorrow.

A minority stake of DEPA infrastructure will be offered to investors at a latter date. The Greek State will maintain no less than 51 percent of this corporate entity.

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

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Gas utility DEPA and US energy exporter Cheniere have reached an advanced stage in negotiations for a long-term LNG supply agreement that could result in a five-year deal, according to sources.

A 150,000-cubic meter spot-market purchase made by DEPA from the Texas-based company towards the end of last year kindled the current negotiations for a longer-term agreement between the two sides, energypress sources informed.

The US has made clear its interest to establish Greece as a gateway for American LNG into Balkan markets. The US Ambassador to Greece, Geoffrey R. Pyatt, has often made reference to the prospect.

A supply agreement between DEPA and Cheniere would further diversify the Greek gas utility’s sources, currently dominated by Russian natural gas and LNG from Algeria.

DEPA has reserved a one-billion cubic meter capacity through the TAP route as of 2020, when the new gas pipeline carrying natural gas from Azerbaijan is expected to begin operating. The prospect should enable DEPA to offer domestic-market customers more competitive prices and further penetrate Balkan markets, via the IGB Greek-Bulgarian pipeline, to connect with TAP.

The ongoing DEPA-Cheniere talks have not swept Algeria’s Sonatrach out of the picture, sources stressed. DEPA’s current supply agreement with Sonatrach expires in 2020 and the two sides are already discussing a renewal.

DEPA agreements with Cheniere and Sonatrach, combined with Azerbaijani gas supply through TAP, promise to place the Greek gas utility in a more favorable position opposite Russia’s Gazprom, its main supplier.

IGI Poseidon gas pipeline prospects on PM’s Moscow visit agenda

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The development prospects of an IGI Poseidon gas pipeline though Greece’s north and across the Adriatic Sea to Italy as a supply route for Russian gas to Europe, a plan opposed by the US, is expected to be on the agenda of a meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin scheduled for December 7 on Moscow.

The majority of license-related procedures needed by Greek gas utility DEPA and Italy’s Edison for the IGI Poseidon gas pipeline have been completed, the two European firms informed Russia’s Gazprom at a recent three-way meeting in Moscow.

The IGI Poseidon gas pipeline is envisaged to serve as an extension of Turkish Stream.

DEPA and Edison officials are confident a gas pipeline route through Greece, rather than Bulgaria, as suggested by Moscow on occasions, carries definite advantages.

The Greek-Italian pipeline is technically mature as 80 percent of studies have been completed, while license applications have been submitted to energy sector regulatory authorities and Brussels, DEPA and Edison officials informed during their Gazprom meeting.

However, as was made apparent at this three-way meeting, all sides remain concerned as to whether the European Commission will raise objections against the pipeline plan. Washington is pressuring EU member states to find alternative natural gas supply sources not involving Russia.

In Greece, US ambassador Geoffrey Pyatt is taking every opportunity to express America’s opposition to any further penetration by Gazprom of Greece’s energy sector.

Greek energy minister Giorgos Stathakis recently appeared hesitant on the prospect of a new pipeline to transmit Gazprom gas.

Much will depend on the outcome of an upcoming official US visit by Greece’s Alternate Minister of Foreign Affairs Giorgos Katrougalos between December 11 and 14. He will be joined by the energy ministry’s secretary general Mihalis Veriopoulos. DEPA and Edison will be waiting for political decisions concerning their Greek-Italian pipeline investment plan.

 

Revythoussa LNG terminal upgrade ceremony likely on November 22

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Gas grid operator DESFA is considering November 22 as the official launch ceremony date for an additional third storage tank installed at its now-upgraded LNG terminal on Revythoussa, an islet just off Athens, with Prime Minister Alexis Tsipras in attendance.

The LNG terminal’s third tank, a 98 million-euro investment offering a 95,000 cubic meter capacity, will boost the facility’s overall capacity to 225,000 cubic meters, promising to create new gas export potential to Balkan and southeast European markets, until now entirely dependent on Russia’s Gazprom.

The project, begun in 2011 and initially scheduled for completion at the end of 2015, is pivotal for the country’s energy security concerns. Gas utility DEPA has not needed to book an additional shipment to ensure energy supply in the event of a crisis this coming winter.

The Revythoussa LNG facility’s overall upgrade, budgeted at 147 million euros, also includes an LNG gasification capacity increase to 1,400 cubic meters of LNG per hour from 1,000. Annual capacity will reach 7 billion cubic meters, of which 2 billion is expected to cater to domestic needs and the other 5 million to the Balkans.

US officials recently visited the Revythoussa facility for information concerning its ability to absorb US gas shipments. DEPA and energy firm Cheniere, America’s leading natural gas exporter, are currently engaged in talks.

DEPA, Sonatrach close to 2019 LNG deal for price, quantity

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LNG price, pricing formula and order quantity negotiations between Greek gas grid operator DEPA and Algeria’s Sonatrach, initiated last July by the Greek utility’s push for improved supply terms in 2019, are believed to be approaching finalization and could be completed within the next ten days.

On a visit to Algeria in the summer, DEPA chief executive Dimitris Tzortzis and his team countered Sonatrach pressure for higher prices by noting that Algerian LNG needs to remain competitively priced as international gas market conditions are changing. The DEPA team reminded of the planned 2020 launch of the TAP project as a new pipeline route to bring Azerbaijani gas into the Greek market.

Sonatrach currently supplies DEPA between 0.55 and one billion cubic meters of gas, annually, based on a contract that expires in 2021. Russia’s Gazprom supplies DEPA 2.2 billion cubic meters annually based on a contract expiring in 2026. A DEPA agreement with Turkey’s Botas for an annual gas amount of 0.75 billion cubic meters expires in 2021.

Greece’s energy sufficiency this coming winter will be ensured by an additional third tank at gas grid operator DESFA’s LNG terminal at Revythoussa, an islet just off Athens, DEPA officials have informed. The third tank, a 98 million-euro investment offering a 95,000 cubic meter capacity, has boosted the facility’s overall capacity to 225,000 cubic meters and also created new gas export potential into Balkan markets. Until now, Russia has fully covered the Balkan gas market.

 

 

DESFA, Snam also considering Greek-Italian pipeline crossing

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Greek gas grid operator DESFA and Italy’s Snam, heading an all-European gas operator consortium set to acquire a 66 percent stake of the former, are conducting preliminary research to determine whether an interconnection project linking the Greek and Italian grids would represent a viable plan.

Russia’s Gazprom is seeking to establish a Greek-Italian route for Russian natural gas supply to the EU. The plan being considered by DESFA and Snam essentially constitutes an extension of the Turkish Stream, a gas pipeline project being developed by Russia and Turkey.

The project considered by DESFA and Snam would utilize an existing pipeline running from Kipoi, Evros, on Greece’s northeastern tip, by the border between Greece and Turkey, to Komotini, slightly westward. In addition, a new 613-km section would be constructed from Komotini to coastal Florovouni, Thesprotia, in northwestern Greece, along with a submarine pipeline crossing to Italy.

In another preceding action, Greek gas utility DEPA and Italian energy company Edison have already taken licensing initiatives and are seeking national and EU approval for a corresponding project through their ITGI Poseidon partnership. Gazprom support would be needed.

The DEPA-Edison plan is seen as a purely commercial venture whereas the DESFA-Snam alternative is regarded as a bilateral project that would link the national gas grids of Greece and Italy.

 

DEPA infrastructure split likeliest development at utility ahead of sale

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A full or partial separation of gas utility DEPA’s infrastructure from the parent company appears to be the likeliest development in the corporation’s much-discussed split as part of its privatization plan.

The corporation’s resulting corporate stature would remain unchanged if a full or partial split of its infrastructure division is pursued. This would not be so if the trade division were split as a new tax file number and new company would need to be established.

In the latter case, DEPA’s suppliers – Gazprom, Sonatrach and Botas – would need to offer their consent as their existing supply contracts with the gas Greek utlity would need to be transferred to a new company. Their consent cannot be taken for granted. Even if the trio were to agree, privatization-related time, which is running out, could be needed to overcome various objections.

DEPA’s local takeover agreement with Shell still needs to be endorsed by a local Competition Committee. DEPA has agreed to acquire Shell’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area. DEPA already holds the majority 51 percent in these ventures.

The announcement of a tender concerning the privatization of DEPA Trade, originally intended for November, now appears set for a delay and will most likely be rescheduled for within 2019, a tricky period, as next year will be an election year.

DEPA seeking long-term supply agreement with US firm Cheniere

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A long-term LNG supply agreement of between 15 and 20 years has been the main focus of negotiations over the past few months between Greek gas utility DEPA and US energy company Cheniere, primarily active in LNG-related businesses.

DEPA’s recently appointed chief executive Dimitris Tzortzis is seeking a delivery arrangement that would enable the gas utility to not only import gas into Greece but also trade LNG in international markets, to the extent permitted by global market conditions.

Tzortzis mentioned DEPA’s ongoing talks with Cheniere at the Southeast Energy Forum in Thessaloniki last Friday without elaborating further.

The DEPA boss told the event that the two sides have already established a spot cargo LNG agreement for 2018.

DEPA intends to renegotiate existing agreements with gas suppliers Sonatrach, Botas and Gazprom and also assume a trading role in the natural gas market, DEPA officials have commented when asked if the Greek market has capacity for further gas amounts.

At present, DEPA is supplied an annual natural gas amount of 2.2 billion cubic meters by Gazprom. This deal expires in 2026. Sonatrach supplies between 0.55 and one billion cubic meters in a deal ending 2021, when an arrangement with Turkey’s Botas for 0.75 billion cubic meters, annually, also expires.

In 2020, the Trans Adriatic Pipeline (TAP) is expected to bring a further one billion cubic meters of Azeri natural gas into the Greek market.

DEPA planning pricing changes, new formula for all consumers

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DEPA, the public gas corporation, is preparing to revise tariff formulas applied by the company to determine purchase prices offered to all consumer categories, including large-scale consumers, energypress sources have informed.

Until now, electricity producers have been offered special natural gas supply terms compared to household consumption, especially for heating purposes.

The gas company is believed to have completed studies that have produced results indicating leeway exists for adjustments concerning flexibility and supply security offered to customers.

It has become clear at DEPA that tariffs need to be adjusted to the energy sector’s new, liberalized and competitive environment, as shaped by institutional and regulatory changes adopted.

DEPA will seek to adopt fairer pricing formulas for all consumers, regardless of category.

The gas company has already begun negotiations with all its suppliers and is aiming to make changes over two stages. The first stage concerns the period up to 2020 or 2021 when contracts entailing gas supply by Turkey’s Botas and Algeria’s Sonatrach expire. The second stage will factor in the activation of a supply agreement for Azerbaijani natural gas via the TAP gas pipeline and Greece’s geopolitical emergence as an energy hub and role of the country’s energy exchange.

Of course, DEPA’s negotiations will also include Russian giant Gazprom, whose current supply contract for the Greek gas utility ends in 2026, and, possibly, a diversification effort by DEPA that could incorporate American LNG and spot market deals into its portfolio.

Overall, these developments changes could require DEPA to alter its gas prices offered to electricity producers, which could spark reactions from the main power utility PPC as well as independent electricity producers.

If DEPA manages to offer fair and competitive natural gas packages, then it could lay the groundwork for a leading role amid the new liberalized market.

Competition in the wholesale natural gas market is intensifying. Besides DEPA, other importers are also supplying gas to the Greek market, the main players being the Copelouzos group and the Mytilineos group.

 

 

 

 

 

DEPA seeking improved terms for Gazprom, Sonatrach supply

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DEPA, the public gas corporation, is making an effort to renegotiate contracts with its two main suppliers, Russia’s Gazprom and Algeria’s Sonatrach, for improved terms, energypress sources have informed, as a result of market condition changes.

Besides supplying DEPA, Gazprom now also sells directly to other major customers in Greece, such as the Mytilineos group, a development reshaping the country’s natural gas market.

DEPA’s chief executive Dimitris Tzortzis and Gazprom Export deputy director Elena Burmistrova are believed to have discussed the subject at a meeting in St Petersburg last month. Officials of the two gas companies are expected to stage a new meeting in St Petersburg this week, sources informed.

DEPA officials will seek to improve the terms of the Greek gas utility’s existing Gazprom gas supply deal to help offset the Russian firm’s new dealings with other customers in Greece.

DEPA already appears to have ensured an exemption from a take-or-pay clause requiring payments for unconsumed amounts specified in supply contracts. DEPA is also pushing for a lower price but Gazprom officials do not appear willing to discuss such a prospect.

However, DEPA does appear to stand a chance of being granted a right to resell a proportion of gas amounts purchased from Gazprom in Balkan markets.

DEPA is also seeking to improve the terms of its supply deal with Algeria’s Sonatrach, the Greek gas utility’s second biggest source, supplying LNG.

Tzortzis, the DEPA boss, was in Algeria earlier this month for talks with Sonatrach officials on supply security concerning the Greek market in 2019, as well as supply price and pricing formula issues.

At these talks, Sonatrach officials pressured for price hikes as a result of higher international gas prices, but the DEPA boss insisted Algerian LNG needs to remain competitively priced as TAP-pipeline natural gas stemming from the Azerbaijani section of the Caspian Sea will begin entering the Greek market in 2020. A contract ensuring one billion cubic meters per year of Azerbaijani natural gas supply to the Greek market has already been signed.

As is the case with Gazprom, DEPA is also pursuing the right to resell a portion of its Sonatrach gas purchases to foreign markets.

DEPA intends to terminate a third gas supply contract held with Turkey’s Botas in 2020, a year ahead of its expiry date, as the terms of this agreement are regarded as being  unfavorable in view of the imminent supply of Azerbaijani gas to Greece via the TAP pipeline. Though talks between DEPA and Botas have not been held, an extension of their contract has already been ruled out.

Gazprom and DEPA currently hold a supply agreement for 2.6 billion cubic meters per year, until 2026. Sonatrach supplies the Greek gas utility between 0.55 and one billion cubic meters per year based on a contract expiring next year, when DEPA’s deal with Turkey’s Botas, supplying 0.75 billion cubic meters per year, also expires.

 

 

Engie imports gas from north for Heron, Gazprom not involved

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France’s Engie has emerged as a new supplier of natural gas to the Greek market through the country’s northern gateway following a gas auction co-staged yesterday by DESFA, Greece’s natural gas grid operator, and its Romanian and Greek counterparts, to offer capacities available at the Romanian-Bulgarian and Bulgarian-Greek gas grid interconnections.

Engie secured a pipeline capacity at the jointly held auction to import natural gas into Greece for electricity generation by the energy firm Heron. Engie, which holds a 25 percent stake in Heron, has been active in Romania’s energy market, especially natural gas, for a number of years.

Though the amount to be imported by Engie, 1,500 MWh per day over a year, is modest, it represents yet another gas import agreement through Greece’s north that does not involve Russia’s Gazprom.

The agreement is competitively priced, compared to Gazprom’s offers, energypress sources informed.

Besides an import agreement involving DEPA, the Greek gas utility, and Gazprom, Russian gas is also imported into Greece through the northern gateway by Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export. Prometheus Gas has captured a 20 percent share of the Greek market. The Mytilineos group also imports, buying directly from Gazprom.

The gas amount to be brought into the Greek market by Engie covers the pipeline capacity that was available at the Romanian-Bulgarian interconnection. The capacity at the Bulgarian-Greek interconnection was considerably bigger, amounting to 7,500 MWh per day over a year.

The pipeline capacity offered by the Greek, Bulgarian and Romanian gas grid operators at yesterday’s auction represented an amount that needed to be offered to third parties, according to EU regulations. The auction represented the first ever act of collective trans-boundary trade involving the three countries.

The EU has applied pressure on member states to utilize interconnections and diversify their sources of supply.

 

 

ITGI Poseidon seeks license for Turkish Stream Greek segment

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ITGI Poseidon, a partnership established by DEPA, the Greek gas utility, and Italy’s Edison, is moving to develop Turkish Stream’s Greek segment – from a point at the Greek-Turkish borders running across the country’s north for an Adriatic Sea crossing to Italy – as long as Russia’a Gazprom chooses to support this plan as an additional supply route to Europe.

The big question at this stage is whether Gazprom will choose Greek or Bulgarian territory for the continuation of Turkish Stream, whose initial segment is planned to supply the Turkish market.

Roughly one month ago, certain international media outlets reported that Gazprom has chosen Bulgaria as its favored route for the pipeline’s extension beyond Turkey. However, a leading Gazprom official, Elena Burmistrova, chief executive at Gazprom Export, quickly denied these reports, noting that all options are still being examined, including ITGI Poseidon’s extension of Turkish Stream through Greece.

Like the TAP project, Turkish Stream’s extension would be developed as an independent natural gas system without any links to the national grid at any point.

According to sources, ITGI Poseidon has already submitted an application to RAE, the Regulatory Authority for Energy, for a project license as an independent system. Then, as its next step, ITGI Poseidon plans to stage a market test. Gazpom would need to reserve a capacity that makes the pipeline sustainable if the project’s development is to progress.

Three years ago, Turkish Stream’s Greek extension represented a key part of the newly elected leftist Syriza party’s effort to establish closer energy ties with Russia and defy EU obligations. It has since become clear that the project can only be developed within the framework of EU regulations set for independent natural gas systems and terms included in the EU’s third energy package.

At the other end, Russia, too, will seek guarantees from Brussels before reaching any Turkish Stream extension decisions.

Just over a year ago, Gazprom, Edison and DEPA signed an agreement to develop the Southern Corridor at a ceremony attended by Greek Prime Minister Alexis Tsipras.