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Energean plc: 2022 Full-Year Results  

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London, 23 March 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has announced its audited full-year results for the year ended 31 December 2022 (“FY 2022“).

Mathios Rigas, Chief Executive of Energean, commented:

“2022 was a year of transformation for Energean – where a long-held vision became an operational reality. It was a year of positive delivery. We commenced production from the only FPSO in the strategically vital Eastern Mediterranean region, paid dividends to our shareholders, and laid the foundation for our future growth through the discovery and de-risking of new natural gas resources adjacent to our infrastructure. Energean was the sole owner-operator of five deepwater wells, which drove a 20% increase in our reserve base, and marked the 15th consecutive year of reserve and resource base increases for Energean. We are proud to be on track to deliver between 4.5 and 5.5 bcm of gas into the Israeli domestic gas market this year, contributing towards the security of energy supply of the region and improving the living conditions of the Israeli public through the reduction of emissions from the displacement of coal-fired power generation.

“The first quarter of 2023 has continued the positive trend. Production from Karish is in line with our expectations, and in February we supplied the first Israeli hydrocarbon liquids export cargo to international markets. In Egypt, we achieved first gas at NEA/NI with three further wells due to come onstream during the year. In Italy, we are the third largest producer of natural gas and look forward to increasing our contribution towards the country’s energy supply. And in Greece, we are continuing our efforts to explore the untapped resources of the country.

“The remainder of 2023 will see us present the development concept for the Olympus Area, offshore Israel, and increase the capacity of the Energean Power FPSO to 8 bcm/yr. This is alongside delivery of production in line with guidance and deliver on-target returns, as promised, to our shareholder base. Through our gas contracting strategy we are in a unique position to have a very predictable and stable cashflow despite turbulence and challenges in the international financial markets.

“We are committed to investing in projects where we can create value for all stakeholders. The global energy crisis is not over – the global gas market remains dangerously tight and benefitted from a mild European winter, but thousands of industrial jobs are now at risk not just to price but also to availability. We therefore hope that governments understand the value of enhanced domestic and regional energy production, that can only be delivered through long-term investment.”

Highlights

  • Delivered first gas from Karish in October 2022
    • Production and ramp up in line with expectations
    • Energean is now sequentially notifying gas buyers that the commissioning period under the gas sales and purchase agreements (“GSPAs”) has ended and the start date for commercial obligations has commenced. It expects to have completed this process for all gas buyers by the end of March 2023
  • Initiated hydrocarbon liquid exports from Karish field to international markets
  • Delivered first production from NEA/NI, Egypt, in March 2023
  • On track to deliver 200 kboed production target in 2H 2024
  • Confirmed year-end 2P reserves of 1,161 mmboe (+20% increase versus end-2021) representing a reserve replacement ratio of 1400%
    • Including the addition of 31 bcm (approximately 206 mmboe) of 2P reserves in the Olympus Area, offshore Israel, that have now been certified by Energean’s reserve auditor, Degolyer and McNaughton (“D&M”)
  • Delivered strong financial performance, underpinned by strong commodity prices
    • 2022 revenues of $737.1 million, represented a 48.3% increase (2021: $497.0 million)
    • 2022 EBITDAX of $421.6 million, represented a 98.8% increase (2021: $212.1 million)
    • 2022 profit-after-tax of $17.3 million, was an improvement on last year’s loss (2021: $(96.2) million). Profit after tax was negatively impacted by $119.4 million of windfall taxes in Italy[1], which are expected to have been applied on a one-off basis
    • Group cash as of 31 December 2022 was $502.7 million (including restricted amounts of $74.8 million) and total liquidity was $720.0 million. In March 2023, Energean signed a $350 million term loan providing additional financial flexibility
  • Announced dividend strategy and initiated dividend payments
    • Cumulative dividends paid of 60 US$ cents with a further $30 US$ cents declared and not paid, representing an annualised yield of approximately 9%[2].
  • Carbon Disclosure Project (“CDP”) rating increased to A- (from B), outperforming the global average for E&Ps of C

Outlook

  • 2023 production guidance confirmed at 131 – 158 kboed, including 4.5 – 5.5 bcm of gas from Karish
  • Mid-term targets now considered near-term: on track to achieve production, financial targets, and leverage targets in 2H 2024[3] through execution of key development projects
    • Karish growth projects to increase the capacity of the Energean Power FPSO are on track for year-end 2023, following which Israel production is expected to be more than 140 – 155 kboed
    • Three additional wells to be brought onstream at NEA/NI by year-end 2023, following which production in Egypt is expected to be more than 40 kboed
    • Cassiopea expected to deliver first gas in 2024, following which production in Italy is expected to be approximately 20 kboed
  • Communication of development concept for the Olympus Area expected in the coming months
  • Orion X1 well, Egypt, (Energean 30%, expected to farm down to 18%) expected to spud in late 2023, slightly delayed due to rig availability
  • Declaration of quarterly dividends in line with previously communicated policy
    • $50 million per quarter initially, rising to $100 million per quarter following achievement of near-term targets
    • Cumulative dividends of at least $1 billion by end-2025
    • Post-2025 target to maintain a progressive dividend policy, underpinned by existing reserve volumes

Financial Summary

 

    FY 2022 FY 2021 % Change
Average working interest production kboed 41.2 41.0 0.5%
Sales and other revenue $ million 737.1 497.0 48.3%
Cash Cost of Production $ million 284.3 261.6 8.7%
Adjusted EBITDAX[4] $ million 421.6 212.1 98.8%
Profit/(loss) after tax $ million 17.3 (96.2) 118.0%
         
Capital expenditure $ million 728.8 403.5 80.6%
Exploration expenditure $ million 141.0 48.7 189.5%
Decommissioning expenditure $ million 8.9 2.7 229.6%
         
Cash (including restricted amounts) $ million 502.7 930.5 (46.0%)
Net debt – consolidated $ million 2,518.2 2,016.6 24.9%
Net debt – plc excluding Israel $ million 143.8 102.6 40.2%
Net debt – Israel $ million 2,374.4 1,914.0 24.1%

 [4] During 2022, Italy introduced: 1) a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit margins that rose by more than 5 million euros between October 2021 and April 2022 compared to the same period a year earlier. The amount of the windfall tax paid by Energean Italy was $29.3 million and 2) In November 2022, Italy introduced a new windfall tax that imposed a 50% one-off tax, calculated on 2022 taxable profits that are 10% higher than the average taxable profits between 2018-2021. This amount has a ceiling equal to 25% of the value of the net assets at end-2021. Based on this, Energean would be required to pay an additional one-off tax of €87 million in June 2023.

[4] Based on 21 March 2023 share price of GBp 11.00

[4] On an annualised basis

[4] Adjusted EBITDAX is calculated as profit or loss for the period, adjusted for discontinued operations, taxation, depreciation and amortisation, share-based payment charge, impairment of property, plant and equipment, other income and expenses, net finance costs and exploration and evaluation expenses.

Greece promoting power corridors linking Europe’s north and south

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Greek Prime Minister Kyriakos Mitsotakis is pushing for an expanded and reinforced European grid that would facilitate the transfer of RES-generated electricity northwards from the continent’s south, energy minister Kostas Skrekas and the Greek leader’s special adviser for energy, Nikos Tsafos have revealed at the ongoing Power & Gas Forum organized by energypress in Athens.

The plan entails developing European energy networks for the transfer of RES-generated electricity from north African and southeastern Mediterranean countries to Europe via Greece and other southern European countries.

Electricity interconnections from Egypt and Tunisia are in the pipeline but their effectiveness would depend on the development of a greater number of higher-capacity transmission lines by EU member states.

The Greek proposal is based on data provided by ENTSO-E, the European Network of Transmission System Operators, according to which an additional overall capacity of 64 GW can be added at 50 cross-border electricity interconnections in Europe between 2025 and 2030, a development that would boost the European grid’s efficiency by 55 percent.

The Greek initiative, placing emphasis on the development of electricity corridors linking the continent’s north and south, would enable more consistent green energy supply all over Europe throughout the year. At present, scattered and differing RES yields generated by wind and solar technologies in various parts of the continent have limited reach.

An upgrade of the continent’s grid would enable continual flow of RES-generated energy between European countries of the north and south, maximizing RES efficiency.

 

Overdevelopment danger for LNG terminals in Europe, IEEFA warns

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Major LNG terminals being developed in various parts of Europe, including Greece and Germany, in response to reduced Russian gas supply, could fail to achieve full commercial potential as the continent may end up possessing a far greater number of such facilities than required by 2030, the Institute for Energy Economics and Financial Analysis (IEEFA) has warned.

If REPower EU objectives are attained and Turkish gas demand remains steady, then European demand for LNG will be restricted to a level of just 150 billion cubic meters in 2030, down from 175 bcm in 2022, IEEFA pointed out. At such a level in 2030, LNG terminals in Europe would operate at less than 40 percent of capacity.

IEEFA also stressed that European gas operators have an incentive to over-expand their infrastructure and asset base in order to deliver profits to shareholders, even if projects do not end up being fully utilized.

Existing legislation provides operators with guaranteed revenues collected through tariffs, IEEFA pointed out. Evidence strongly suggests the Russian attack on Ukraine has accelerated Europe’s energy transition by dramatically boosting the penetration of green technologies that reduce demand for gas and LNG, the institute added.

 

GAP Interconnector promising additional Greek-Egyptian grid link

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The GAP Interconnector project, planned to link Egypt with Greece, via Crete, promises to serve as a further step towards transforming Greece into an exporter of green energy to the rest of Europe, officials of the Eunice Group, heading the project, budgeted at 1.3 billion euros, have highlighted at a news conference.

It represents an additional Greek-Egyptian grid interconnection project, following the GREGY Interconnector, a 3.5 billion-euro project being promoted by Elica, a subsidiary of the Copelouzos group.

The GAP Interconnector project promises to reinforce Greece’s geostrategic role, making it a transmission hub to the rest of Europe for RES-generated electricity from Egypt, Andreas Borgeas, the project’s chief executive and a former California Senator, told journalists.

A feasibility study has already been conducted for the GAP Interconnector, as have oceanographic studies to map the areas concerning the project’s route, the Borgeas informed.

Two cables to offer a 2,000-MW capacity and run from coastal Matruh in Egypt to Crete’s Atherinolakko, a distance of approximately 450 kilometers, will serve as the project’s backbone. Converter stations will be installed at both these locations.

The project, whose subsea cable installations will reach as deep as 4,445 meters off Crete and 3,500 meters off Egypt, was described as “challenging” by Borgeas, the project chief, who added advanced deep-sea cable installation technology is now available.

The aim is to establish a multinational consortium for the GAP Interconnector project and induct, as a first step, the US company McDermott, one of the world’s biggest developers of subsea projects, Borgeas informed. French, Greek and Italian companies are also expected to soon join this consortium, the official added.

The GAP Interconnector project and the GREGY Interconnector are not rival projects but they will compete for points concerning PCI-PMI lists, Borgeas pointed out.

A direct, straight-line connection from Egypt to Crete planned for the GAP Interconnector offers it a comparative advantage as it is shorter and subsequently lower in cost, Borgeas noted, adding the project lies entirely within the boundaries of the Greek-Egyptian exclusive economic zone (EEZ).

It is planned to be complemented by the Southern Aegean Interconnector (SAI), a 1.5 billion-euro project to connect Athens, the Dodecanese islands, and Crete.

European electricity prices fall, demand down, RES output up

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European energy market price levels fell last week, influenced by lower demand as well as increased renewable energy output by wind and solar farms.

Energy markets across southeast Europe recorded noteworthy price reductions last week that averaged 17.44 percent, compared to a week earlier. Favorable weather conditions in this region led to a 60 percent increase in RES output, wind farms being the main contributor.

Serbia posted the biggest week-to-week price reduction in southeast Europe, a 21.34 percent drop in wholesale electricity prices, followed by Greece, where the week’s drop averaged 20.31 percent. Bulgaria and Romania both recorded average price reductions of 19.16 percent last week. Prices in Turkey have also been on a downward trajectory.

In central Europe, spot markets fell to weekly averages of less than 135 euros per MWh. The weekly average, for this region, was lowest in Germany, at 119.05 euros MWh, a 12.61 percent reduction compared to a week earlier as a result of lower demand and increased wind energy output.

Central Europe’s highest wholesale electricity prices last week were recorded in Switzerland, at 134.48 euros per MWh, despite an 11.22 percent reduction compared to a week earlier. France followed with a weekly average price of 131.07 euros per MWh, driven higher by power utility EDF strikes that reduced output at nuclear power plants, covering roughly 70 percent of the country’s energy mix.

NECP adjusted to meet loftier EU aim for energy usage drop

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The Greek government has adjusted its National Energy and Climate Plan (NECP), setting a loftier energy consumption reduction goal that aligns the plan with an even more ambitious EU target just set.

Greece has now set a loftier 8 percent energy consumption reduction goal, compared to 2020, by the end of the decade, while the EU, through a provisional agreement reached by the European Council Presidency and Members of the European Parliament, is aiming for an overall 11.7 percent drop by 2030, compared to 2020, above the target of a 9 percent reduction that was set in 2021.

The 11.7 percent reduction goal, at EU level, is a binding target and means EU consumers will need to limit annual energy usage to the equivalent of 763 million tons of oil by the end of this decade.

The EU reduction target is not proportionally shared by member states but, instead, takes into account their capacity to limit respective consumption, a realistic approach offering a certain degree of flexibility.

Greek authorities intend to intensify the country’s energy-efficiency drive concerning buildings, further promote smart management of energy consumption, and maintain efforts aiming to reshape consumer behavior for an overall reduction of energy demand.

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.

 

Greek-Bulgarian oil pipeline MoU signed, US offers support

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Following months of diplomatic and entrepreneurial activity, Greek energy minister Kostas Skrekas and his Bulgarian counterpart, Rossen Hristov, have just signed a Memorandum of Understanding in Athens for the development of an oil pipeline to run from Alexandroupoli in Greece’s northeast to Burgas, on Bulgaria’s Black Sea coast.

The two ministers signed the MoU within the framework of a meeting between Greek Prime Minister Kyriakos Mitsotakis and Bulgarian President Rumen Radev.

Greece’s Alexandroupoli port – developing into one of the eastern Mediterranean’s most pivotal energy hubs as a result of the reversal of energy source flow, nowadays moving from south to north as a result of Europe’s decision to end its reliance on Russian fossil fuels – will facilitate oil primarily imported from the Middle East and headed to east European markets.

The oil pipeline will cover a distance of 260 kilometers, equally divided between Greece and Bulgaria, and offer an annual capacity of 10 million tons, down from an original plan of between 35 and 50 million tons.

A section of the Greek-Bulgarian oil pipeline is planned to run parallel to the IGB gas pipeline linking the neighboring countries.

Work on the oil pipeline is expected to begin within the next two years, while its completion is slated for three to four years from now, a swift procedure for such projects, as environmental permits have already been issued.

The Greek-Bulgarian oil pipeline has not been embraced by Turkey as it will reduce the geopolitical importance of the Bosphorus Strait. Contrary to the past, the US is now expressing full support for the Greek-Bulgarian oil pipeline.

 

Greek-Egyptian grid link prospects gaining ground

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A prospective Greek-Egyptian subsea grid interconnection, planned to exclusively transmit green energy from Egypt to Greece as a means of increasing the energy-mix share of renewables in Greece and the wider region, while also bolstering energy security in Europe, has gained further ground on a number of key fronts.

Political support has been expressed, progress is being achieved on the project’s engineering study, and the Copelouzos group, seeking to develop the project, is in talks with potential investors.

As for the technical side, agreements are being worked on for a detailed engineering study as well as a feasibility study for the project, whose cable installation will reach as deep as 2.7 kilometers at certain sections.

A Copelouzos group team headed by its president, Dimitris Copelouzos, has held talks in Cairo with Egyptian president Abdel Fattah El-Sisi and other leading Egyptian officials on regions where wind and solar farms could be developed to feed the Greek-Egyptian subsea cable.

The focus of these talks, also involving Egypt’s minister of electricity and renewable energy Dr. Mohamed Shaker El-Markabi, was on developing wind energy facilities in areas offering wind speeds of more than 10 meters per second. Such speeds are exceptional, well over those of locations hosting Greece’s best-performing wind energy facilities, where wind speeds reach 6.5 to 7 meters per second.

As for the solar energy sector, production tariffs of between 15 and 17 dollars per MWh offered at previous auctions in Egypt, a country offering flat land, are extremely competitive compared to prices in the Greek and Italian markets, even if energy transportation costs to Europe are taken into account.

Solar and wind energy investments offering a total capacity of 9.5 GW are planned to be developed in Egypt by the Copelouzos group, with partners, at a cost of approximately 8 billion euros. European, US, Middle East and Japanese companies have expressed interest to join the Copelouzos group for these projects.

Though investor interest for the Greek-Egyptian grid interconnection is strong, the European Commission’s stance will be crucial as it will be called upon to decide on the project’s inclusion in the projects of common and mutual interest (PCI/PMI) list, which would ensure EU funding support.

The Copelouzos group submitted its application last December. Brussels is expected to release PCI/PMI short lists in June, followed by finalized decisions in November.

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.

Officials fear local infrastructure impact of Turkish-Bulgarian gas deal

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A Turkish-Bulgarian gas supply agreement reached last month is troubling Greece’s energy players at institutional and market levels as its impact could affect the role of Greek infrastructure, officials have told energypress.

Local officials are mostly concerned about the deal’s gas supply quantity eventually growing in size rather than the small gas quantities it currently involves, as they only cover a small percentage of Bulgaria’s gas needs.

The majority of Bulgaria’s gas needs are still planned to be covered by LNG shipments coming in through the LNG terminal at Revythoussa, close to Athens, while the prospective Alexandroupoli FSRU in Greece’s northeast will, no doubt, contribute to cover Bulgarian gas demand, once the project is launched.

Turkey and Bulgaria, represented by their respective state energy companies, Botas and Bulgargaz, signed a 13-year gas supply agreement on January 3, according to which Turkey is required to supply Bulgaria an annual gas quantity of 1.5 bcm.

EFET, the European Federation of Energy Traders, wants the Turkish-Bulgarian agreement investigated by the European Commission’s Directorate-General for Energy and Directorate-General for Competition, contending European regulations and the overall institutional framework defining the operation of gas infrastructure within the EU and access to interconnection points have been breached.

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.

Greek-Bulgarian MoU for oil pipeline likely in February

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Greece and Bulgaria are likely to sign a Memorandum of Understanding in Athens next month for the development of an oil pipeline to run from Alexandroupoli in Greece’s northeast to Burgas, on Bulgaria’s Black Sea coast, sources have informed.

If so, a joint Greek-Bulgarian working group would soon commence work on a new study for the project, unchanged at many sections, compared to an original plan.

However, contrary to the original plan, the pipeline will flow in the opposite direction to supply oil from Greece to Bulgaria.

This project promises to further upgrade the geopolitical significance of Alexandroupoli, a prospect not embraced by Turkey as the pipeline would reduce the geopolitical importance of the Bosphorus Strait.

The Alexandroupoli-Burgas oil pipeline, to cover a 260-km distance, equally divided between Greece and Bulgaria, is planned to have a 24-inch diameter and capacity of 10 million tons.

Oil will be transported to Burgas’ Lukoil refinery, which will need a capacity boost from 7 to 8 million tons at present to 10 million tons.

The revised oil pipeline plan appears to have the backing of the EU and the USA, as part of Europe’s wider effort aiming for an end of its reliance on Russian fossil fuels.

Officials estimate work on the Alexandroupoli-Burgas oil pipeline will begin in one to two years for a possible launch in three to four years’ time.

 

 

Greek onshore wind energy generation tops European output

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Onshore wind energy generation in Greece yesterday was the biggest recorded in Europe, capturing a 55 percent share of the country’s energy mix, according to data provided by the WindEurope association on wind energy yields across the continent.

Greece was followed by Spain, where onshore wind energy production yesterday captured 49 percent of the country’s energy mix, and Portugal, whose wind-energy share was 35 percent.

The increased wind energy generation in Greece helped lower the country’s wholesale electricity price, at 58.44 euros per MWh today. The price level is below 10 euros per MWh for half the day, ELETAEN, the Greek Wind Energy Association, noted in an announcement.

This lower wholesale electricity price directly benefits consumers and the Greek economy, the association added.

Joint RES projects with Bulgaria proposed in Greek Embassy study

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The Greek Embassy in Sofia has proposed the development of business clusters for joint RES projects with Bulgaria.

This proposal for synergies and cooperation with Bulgaria in the RES sector resulted from a study on “Renewable Energy Sources (RES) in Bulgaria: Opportunities, Challenges and Prospects”, recently carried out by the Greek Embassy’s Office of Economic and Commercial Affairs.

Renewable energy opportunities promise to not only promote economic cooperation but also research and innovation in the RES sector, the study noted.

Expanded strategic cooperation between Greece and Bulgaria in the energy sector could be extended to also cover the development of cross-border RES projects, the study determined. These projects could offer significant benefits to both countries, it added.

Greek economic diplomacy, in the context of a further strengthening of bilateral economic relations with Bulgaria, should undertake initiatives to inform private enterprises in Greece of opportunities that exist in Bulgaria for the development of joint projects in the RES sector, and to also offer assistance should interest exist for the establishment of business clusters, possibly with the public sector’s participation as a coordinator or investor, the study noted.

PPC ‘transforming rapidly, entering natural gas, LNG market’

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Power utility PPC’s participation at the 22nd World LNG Summit indicates the energy group is transforming rapidly, on many levels, one of these being its involvement in natural gas and LNG markets, Konstantinos Nazos, PPC’s General Director of Energy Management, has pointed out in comments to energypress.

“It is a very interesting conference and I think the fact that it is being held in Athens highlights the role that our country has to play in the future in terms of LNG and, more generally, electricity supply security in the wider region,” Nazos noted.

Energy security, in relation to sustainability and cost-effectiveness of solutions, is the most challenging matter that needs to be resolved, the PPC official determined, having heard summit speeches and held meetings during this event.

“We are still close to the crisis. We have successfully dealt with many risks without having left it behind. We have managed to turn those risks into opportunities and we are looking for more,” Nazos commented.

 

PM hopeful of a European gas price cap agreement

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Prime Minister Kyriakos Mitsotakis, on his way to today’s Council summit of EU leaders, expressed hope that a European agreement on a gas price cap could be achieved either today or next Monday, the latest, when the EU’s energy ministers are scheduled to meet.

The Greek leader stressed it is absolutely essential that Europe sends a clear message to energy markets as well as to Russia by underlining that Moscow’s exploitation of natural gas as a tool to burden European citizens and businesses will not be tolerated.

“We are close to being able to impose a price cap on gas. Our arguments are now known to all member states and I believe that, one way or another, we will find the necessary majorities to move in this direction,” Mitsotakis noted.

Greece supports the implementation of a gas price cap at 200 euros per MWh or less, applicable at all European hubs with an accompanying limit-up mechanism. Though well below the European Commission’s initial proposal of 275 euros per MWh, it seems to have gained increased acceptance by fellow EU member states.

However, a group of six EU member states – Germany, Austria, the Netherlands, Denmark, Estonia and Luxembourg – remains skeptical, fearing a low-level price cap could prompt market instability.

“In any case, regardless of European decisions, the Greek government is continuing to take all measures needed to support Greek households and businesses,” Mitsotakis noted, pointing out that 900 million euros in state budget money will be used in December to support low-income households and offer allowances for heating oil purchases.

Greece becoming a key gas exporter, rise in loads relayed

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Greece is developing into a major exporter of natural gas with roughly one in three shipments that reach the country relayed to other countries, well over last year’s level of 9.8 percent.

Russia’s war on Ukraine has increased the geostrategic importance of Europe’s south, including Greece, in terms of gas transportation, supply routes from the continent’s south to north now dominant, a reversal of the flow in previous decades.

LNG shipments to Greece supply a large number of landlocked European countries, all the way north to Ukraine. As a result, Greece’s gas exports have skyrocketed in 2022.

In the first eleven months this year, the country’s gas exports reached 26 TWh, more than triple the level recorded for all of 2021, when the year’s gas exports totaled 7.6 TWh.

Greece’s gas exports are expected to rise even more in 2023 as a result of last October’s launch of the IGB pipeline running from Greece to Bulgaria.

Technical solutions are now being sought so that gas exports can also be made via the IGB pipeline as soon as the Alexandroupoli FSRU, a project led by Gastrade, is launched in late 2023. The Alexandroupoli LNG terminal’s arrival will further boost Greece’s capacity to export gas.

 

 

RES project investors, facing higher costs, call for tariff increases

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RES project investors are calling for an upward revision of fixed tariffs secured at previous auctions as a result of higher costs impacting their business plans.

Costlier prices for equipment and building materials, such as steel, as well as higher lending rates, have exceeded initial budget estimates of investors, making development of their projects extremely difficult, and, in some cases, impossible.

The call by investors for higher RES tariffs has yet to be officially expressed by any RES association.

According to sources, the energy ministry is well aware of the issue and considers the call by investors for higher tariffs a fair request. Officials at the ministry are believed to be working on a formula that would resolve the problem.

RES tariffs were recently increased in France and Portugal after officials determined their respective national green energy targets were in danger under the current market conditions.

PCI application in making for Greek-Austrian-German grid link proposal

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Austria and Germany are considering a Greek proposal for a 3-GW electricity grid interconnection, a project that would directly transport green energy produced in Greece to the two countries.

Energy minister Kostas Skrekas unveiled this project plan during a speech yesterday at the Renewable & Storage Forum, a two-day conference organized by energypress, continuing today.

Germany is believed to be seeking alternative green energy sources as, according to the minister’s comments at the conference, the country cannot develop RES projects in its south as a result of environmental measures protecting the Black Forest.

Sources informed that officials are working on an application for PCI classification concerning this grid interconnection.

Power grid operator IPTO, the sources added, has prepared plans for two alternative routes, one crossing Albania, Montenegro, Croatia and Slovenia, before reaching Austria and Germany’s south, the other a subsea route from Albania’s coastline to Slovenia followed by an overland crossing to Austria and Germany’s south.

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

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

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

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

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

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

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

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

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

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

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

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

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

Gas price cap hopes fading, new EU benchmark in place of TTF likely

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Prospects for an adjustable gas price cap in the EU appear to have faded following Berlin’s  rejection of the plan, despite latest efforts made yesterday by several EU energy ministers, including Greece’s minister. The group, representing the EU’s most supportive members of a gas price cap, forwarded a related request to European Commission president Ursula von der Leyen.

On the contrary, a European Commission proposal for the introduction of a new benchmark concerning the price of natural gas in the EU, to replace the current TTF, appears to be gaining wide acceptance among EU member states. Officials are already believed to be working on this plan.

Despite yesterday’s setback for the gas price cap, Greek Prime Minister Kyriakos Mitsotakis and fellow supporters of the plan intend to once again table a request at next week’s EU summit.

Yesterday’s rejection of the plan by Germany was attributed to disagreement within the German government, and objections by the Netherlands.

According to sources, German Chancellor Olaf Scholz ultimately deemed that a gas price cap could lead to side effects in energy markets after signs, yesterday, that Germany could accept the plan.

EU gas price cap hopes set back, weekend talks needed

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

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

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

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

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

 

EU energy ministers agreement in Prague today highly unlikely

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

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

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

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

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

 

Political agreement sought for gas price cap, eyes on Germany

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Though no gas price-cap decision is expected at today’s informal EU meeting of heads of state, participants will be expected to establish the basis for a political agreement at the European Council meeting on October 20.

All eyes are on Germany following a significant step taken by the European Commission to adopt a proposal forwarded by 15 EU member states supporting a price cap on gas. The German government now appears to the considering the proposal but an agreement is not yet guaranteed.

If Berlin is to accept the gas price cap proposal, assurances will be needed on how the risk of LNG shipments straying to Asian markets – where buyers appear willing to offer whatever sums are necessary to secure shipments, instead of staying in Europe – may be eliminated.

Another issue the German government would want addressed to offer its consent concerns how a rise in gas demand, as a result of lower prices, can be prevented.

Disagreement between Berlin and other EU member states on a gas price cap has now somewhat softened. The matter is gradually shifting away from the political sphere and closer to market reality.

Greece, Belgium, Italy, Poland and Spain, the five EU member states most supportive of a price cap on natural gas, represent the nucleus of the 15 member states calling for a gas price cap and are working feverishly on a flexible proposal to be forwarded to the European Commission as soon as possible.

Germany considering price cap, gas usage drop a condition

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

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

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

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

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

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

Firmest gas price cap backers in talks with German minister

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

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

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

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

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

 

DEPA’s TotalEnergies LNG deal a break away from Russia, TTF

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A gas supply agreement reached between DEPA Commercial and France’s TotalEnergies, securing, for the former, French LNG quantities totaling 10 TWh, nearly one-third of annual Russian gas supply, based on references prices not linked to the Dutch TTF hub, up to 90 euros per MWh more expensive than other hubs, paves the way for further agreements not connected to the TTF and Russian supply.

According to sources, DEPA Commercial is currently working on a strategic long-term LNG supply agreement with another major international player, once again using a pricing formula linked to a hub other than the TTF.

These moves are ensuring energy sufficiency for DEPA Commercial’s customers as well as the country, at competitive prices.

DEPA Commercial’s 10-TWh LNG agreement with TotalEnergies, which, according to sources, will result in supply from November until March next year, is equivalent to five months of Russian gas consumption in the Greek market.

The TotalEnergies amount should be enough to cover the country’s needs during this five-month period if Russia completely disrupts gas supply to Europe. In 2021, Greece’s gas imports from Russia totaled 35.37 TWh.

The Greek energy ministry’s leadership and DEPA Commercial officials are preparing for a trip to Azerbaijan, postponed three weeks ago, to seek an agreement for further gas quantities, at prices that are more competitive than the current Azerbaijani supply deal, DEPA Commercial’s most expensive.