EastMed alliance broadens, eight countries express support

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

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

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

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

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

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

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

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

Market coupling with Bulgaria expected by early May

Market coupling to unify the Greek and Bulgarian day-ahead markets, representing a second step for the participation of Greek wholesale electricity markets in a pan-European unification of markets through the target model, is planned for late April or early May, sources have informed.

The forthcoming step was preceded by market coupling between Greece and Italy, unifying, as of December 15, the day-ahead markets of the two countries through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm). It calculates energy allocation, net positions and transboundary electricity prices.

Greece’s market coupling with Bulgaria promises to create an even broader trading platform for market participants, sector officials noted. Besides bilateral contracts for energy imports and exports, market coupling will also facilitate automatic energy flow from the higher-priced country to the lower-priced country.

To date, Greece has clearly been an energy importer in its transboundary energy trading relationship with Bulgaria. It remains to be seen if this will be maintained under the new conditions.

Once market coupling of the Greek and Bulgarian day-ahead markets has been accomplished, Greece’s next step towards unification with European energy markets will be to link its intraday market with that of Italy, a step expected by next summer, through the implementation of complementary regional intraday auctions (CRIDA).

Further ahead, a third step, balancing market coupling through two European platforms, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), is planned for the second half of 2022.

 

Gas developments in the East Med

The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Greece, Israel eyeing broader alliance for Balkans, central Europe

The Greek-Israeli energy alliance is broadening its scope by aiming for the establishment of a Greek gateway to facilitate Israeli gas supply to the Balkan region and, by extension, central Europe.

This objective, part of strong diplomatic relations between the two countries in energy, was confirmed during a recent virtual meeting between Greece’s newly appointed energy minister Kostas Skrekas and his Israeli counterpart Yuval Steinitz.

Their bilateral talks will be followed up by broader meeting today to involve the energy ministers of Greece, Israel, Cyprus, Serbia, Bulgaria, Romania, North Macedonia and Hungary.

The participating officials will seek to lay the foundations for a closer energy alliance that would facilitate distribution from Israel’s Leviathan gas field via alternate routes – the Alexandroupoli FSRU and the IGP – to soon be offered by Greece.

The aforementioned Balkan and central European countries are extremely keen on securing alternative supply routes, diplomatic sources informed.

Much work is needed by Israel and Greece to establish energy alliances with Balkan countries, but a first step will seemingly be taken today.

Spain’s Repsol on verge of exiting Greek upstream market

Spanish petroleum firm Repsol, a member of consortiums holding licenses to three fields in Greece, is on the verge of leaving the country’s upstream market as a part of a wider strategic adjustment prompted by the oil crisis and the pandemic, developments that have impacted exploration plans, as well as a company plan to reduce its environmental footprint, sources have informed.

The upstream industry has been hit hard by the pandemic, which has driven down prices and demand. The EU’s climate-change policies are another key factor behind Repsol’s decision.

Repsol is believed to have decided to significantly reduce the number of countries in which it is currently present for hydrocarbon exploration and production, the intention being to limit operations to the more lucrative of fields.

All three fields in Repsol’s Greek portfolio are still at preliminary research stages and do not offer any production assurances, meaning they will most probably be among the first to be scrapped by the company from its list of projects.

Respol formed a partnership with Hellenic Petroleum (ELPE) for offshore exploration in the Ionian Sea. Repsol is the operator in this arrangement. A license secured by the two partners for this region in 2018 was approved in Greek Parliament a year later.

Also, in 2017, Repsol agreed to enter a partnership with Energean Oil & Gas, acquiring 60 percent stakes, and the operator’s role, for onshore blocks in Ioannina and Etoloakarnania, northwestern Greece.

Repsol maintains interests in over 40 countries, producing approximately 700,000 barrels per day.

Greek-Italian market coupling boosts transaction efficiency

The Greek-Italian electricity market coupling of day-ahead markets, launched on December 15 as part of the target model, is living up to its expectations as a safety valve facilitating optimal electricity flow between countries.

The initiative, operating through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm), which calculates energy allocation, net positions and transboundary electricity prices, has run smoothly since its launch over a month ago.

Greek-Italian transboundary electricity transactions admittedly enjoyed a high level of maturity prior to the introduction of market coupling, courtesy of reliable price forecasts by participants for the Greek and Italian markets.

A grid interconnection, in the form of a 163-km, 400-kV voltage and 500-MW capacity subsea cable, has been in service since 2002.

However, the market-coupling initiative has taken the efficiency of these transboundary Greek-Italian electricity transactions to a higher level as auctions allocating grid interconnection capacities are no longer required.

Since the mid-December coupling of the Greek and Italian energy markets, electricity has constantly flowed from the market offering lower prices to the higher-priced market, proving this market system’s ability to utilize interconnections to their fullest.

Market coupling of the Greek and Bulgarian day-ahead markets is planned to follow, its launch scheduled for spring.

An increased number of interconnected electricity markets promises to give the Greek wholesale electricity market a regional role. However, transboundary grid interconnections will need to be upgraded if this is to be achieved.

Brussels forwards new PCI list, to be finalized late this year

The European Commission’s fifth PCI (Projects of Common Interest) list in the electricity and natural gas sectors, being forwarded for public consultation, features, for now, a number of project additions and removals, compared to the previous edition.

Market officials and state authorities will have the opportunity to offer their views and observations over the consultation procedure’s twelve-week period before the European Commission adopts a finalized version of the fifth PCI list towards the end of 2021, based on an existing Trans-European Networks for Energy (TEN-E) framework, focused on linking the energy infrastructure of EU countries.

PCI projects are entitled to EU funding support. Brussels authorities introduced selection criteria revisions in December, ascertaining, however, that the impact of all projects, especially on CO2 emissions, will be appraised when finalizing the PCI list’s fifth edition.

The provisional list includes a number of electricity and gas sector projects concerning Greece.

Electricity-sector projects involving Greece include: a Bulgarian-Greek grid interconnection, expected to be completed in 2023; an Egyptian-Greek-Libyan grid interconnection headed by Green Power 2020 and scheduled for delivery in 2025; as well as three Egypt-Greece interconnections, two of these featuring Kykladika Meltemia SA as project promoter and expected to be respectively completed in 2025 and 2028, and a third headed by Elica SA and scheduled for completion in 2028.

An energy storage project planned by Eunice for Ptolemaida, northern Greece, and scheduled for completion in 2022 is a new entry on the PCI list.

In the natural gas sector, the PCI list includes: the Alexandroupoli FSRU (2022); a subsea pipeline between Greece and Italy, known as the Poseidon Pipeline (2025); EastMed, a pipeline planned to carry natural gas from the east Mediterranean to European markets, via Crete (2025); a compressor station in Thessaloniki’s Nea Mesimvria area (2022); a metering and regulating station in Megalopoli, Peloponnese (2025); a compressor station in Abelia, in Greece’s mid-north (2023); a compressor station in Kipoi, northeastern Greece (2024); a pipeline link for the Alexandroupoli FSRU (2022); a TAP pipeline capacity increase (2025); and the development of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece (2023).

Greek-Italian market coupling, soon, target model’s next step

Domestic market players and officials are eagerly awaiting to see how the target model’s next stage, Greek and Italian day-ahead market coupling, scheduled for December 15, will influence wholesale electricity prices.

Wholesale electricity prices in the day-ahead market and, especially, the balancing market, have escalated since the target model launch in Greece a month and a half ago.

Greece’s market coupling with Italy will be a crucial step as it promises to take Greece to the essence of the target model effort, namely gradual unification of national energy markets – electricity and gas – into one common European market.

Once market coupling is established between Greece and Italy, energy will flow from the country with lower energy prices to the higher-cost country – to the extent permitted by grid interconnection capacities – until price discrepancies have evened out.

All preliminary work for next week’s Greek-Italian market coupling launch has been successfully completed. An ongoing dry-run procedure involving simulated trading will continue until December 12.

The market coupling launch, three days later, is on schedule, the Greek energy exchange has informed RAE, the Regulatory Authority for Energy.

Market coupling of Greece and Italy’s balancing markets will take place at a latter date, while Greek-Bulgarian market coupling is planned for early in 2021.

Greece climbs up to 12th place in EU electricity tariff cost rankings

Greece has climbed seven places, to 12th from 19th, in the EU rankings for retail electricity cost, pushed higher by a government decision reached last year to increase tariffs at state-owned power utility PPC, according to latest Eurostat data.

These tariff hikes at PPC were imposed by the government in August, 2019 to protect the utility from falling into bankruptcy.

The EU rankings concern electricity price levels for household consumption levels between 2,500 to 5,000 kWh, annually.

Electricity tariff increases for households in Greece rose by an average of 8.6 percent in the first half of 2020, compared to the previous half, when the country was ranked 19th.

The first-half tariff price for households averaged € 0.129 per KWh, not including taxes and surcharges, up from €0.1189 per KWh in the second half of 2019.

PPC remains Greece’s dominant supplier, representing 63 percent of electricity consumption.

The PPC tariff increase has made electricity more expensive in Greece than in countries with higher income per capita levels. Electricity is now more expensive in Greece than in France (€ 0.1247 per KWh), Finland (€ 0.1178 per KWh), Spain (€ 0.1178 per KWh) and Sweden (€ 0.1130 per KWh), all with higher income levels. Electricity is also more expensive in Greece than in Portugal (€0.1139 per KWh).

Despite the country’s rankings rise, electricity prices in Greece remain below the EU average (€0.1327 per MWh), a result of the competition generated by independent suppliers, subduing prices.

The biggest electricity tariff decreases in the first half of 2020, compared to the previous six-month period, were recorded by the Netherlands (-31%), Latvia (-12.8%), Slovenia (-11.4%), Sweden (-10%) and Estonia (-8.9%), the Eurostat data showed.

TAP’s commercial launch now on the final stretch

The Trans Adriatic Pipeline (TAP) project, to enable the delivery of Caspian gas to destinations throughout southeastern, central and western Europe, is almost ready for its commercial launch, four years after construction began and 17 years after its first feasibility study was conducted.

The project, running from the Shah Deniz gas field in Azerbaijan, will represent the EU’s main alternative route for natural gas, greatly contributing to the end of the continent’s dependence on Russian gas, supply security and intensified competition.

The TAP project will begin operating at a capacity of 10 billion cubic meters, annually.

Greece was the first of the project’s host countries to complete its segment of construction work, a 550-km stretch across northern Greece, from Evros’ Kipoi area in the northeast to Ieropigi in the Kastoria province, at the Greek-Albanian border.

Just days ago, Greece’s energy ministry approved the operation of the project’s Greek segment, running from Evros to Rodopi, Xanthi, Kavala, Drama, Serres, Thessaloniki, Kilkis, Pella, Imathia, Florina, Kozani and Kastroria.

Authorities of the project’s two other host nations, Albania and Italy, will soon grant their respective operating permits, sources informed.

The project’s commercial launch is expected to take place close to the final quarter this year, the energy ministry has announced.

The Greek and Italian gas grid operators, DESFA and Snam, respectively, will need to prepare their national grids so that natural gas quantities can reach consumers via TAP, sources added.

 

‘Target model tο improve markets, local peculiarities need to go soon’

The target model – the wholesale electricity market model being implemented by virtually all European countries with an aim to gradually harmonize markets, through coupling, for a unified EU electricity market, a key EU objective – promises to improve the operating ability of markets, Sotiris Hatzimichael, power utility PPC’s General Manager of Strategy & Transformation, has noted in an article published as part of an energypress target model special ahead of Greece’s forthcoming launch of new market systems.

Electricity companies will, as a result of the target model, not only have access to national markets but also bigger regional markets, initially, before eventually also gaining access to a European market, the PPC official noted, explaining that this extroversion promises benefits such as broadened customer bases and revenue and profit boost opportunities.

This extroversion will also subject electricity companies to greater competition, forcing optimization, cost minimization and performance maximization, all of which will ultimately benefit energy consumers and the economy, Hatzimichael pointed out.

The results of this effort to restructure wholesale markets will become apparent over time, while, for the Greek market, the target model’s implementation of four market systems – forward, day-ahead, intraday and balancing – will offer benefits to producers, suppliers and consumers and also present a series of challenges, the PPC official noted.

The target model’s four new markets will require new infrastructure, software and hardware, new risk management procedures, as well as many specialized individuals qualified to take on jobs demanded by the target model, Hatzimichael noted.

The transition will be crucial and needs to be handled with great care to avoid market turmoil and instability, he added.

However, true convergence of the Greek market with those of other EU member states will require the swift removal of any local peculiarities that have been incorporated into the Greek version of the target model, such as forward market participation limitations, Hatzimichael stressed.

EU solar generation up 15% in first half, Greece also on upward trajectory

EU solar generation, resisting pandemic-related impact, increased by more than 15 percent in the first half of 2020 to reach 68 TWh, from 59 TWh during the equivalent period a year earlier, according to a new study by EnAppSys, an energy market specialist.

The study, which examined data from 2015 to 2020, found that solar generation in the EU increased by 70 percent over the five-year period.

Developments in the Greek solar market reflect the EU’s upward trajectory, attributed to the global trend for a reduced ecological footprint and continual technological developments that have slashed RES equipment and generation costs.

New solar energy projects with a total capacity of approximately 130 MW were connected to the Greek network during the first half of 2020, while the bulk of new additions is expected in the second half. Though a precise figure is difficult to forecast, some market officials expect a second-half tally of over 200 MW in Greece.

The country has set an ambitious solar energy capacity target of 6.9 GW by 2030.

 

 

 

Greece is ‘hydrocarbon-promising, strategically located’

By Mr. Tassos Vlassopoulos

CEO of Hellenic Petroleum (ELPE) Upstream

Greece has an old connection with hydrocarbons. More than 2,500 years ago, Herodotus mentioned the famous oil seep in Keri Zakynthos that still brings oil to the surface.

However, this connection is not only ancient. Besides the still producing Prinos Oil field and the verified West Katakolo Oil and Gas field, recent exploration activity has generated interest in the Greek hydrocarbons sector.

Oil and gas exploration began prior to the 2nd World War and intensified in late 70s to late 90s. A new turn was taken after 2015, as the collection of some new data was completed, prompting the proposal of new ideas.  International oil companies (e.g. TOTAL, ExxonMobil, Repsol, Edison), proceeded in several ventures in Greece and ELPE Upstream became an attractive partner.

Greece’s west, both onshore and offshore, seems to share many similarities with well-established Albanian and Italian hydrocarbon areas. In addition, following recent discoveries in our broader region, blocks around Crete were carved out. Total, Exxon and Hellenic Petroleum will be exploring their deep waters.

Greece is still considered an under-explored area despite the fact that more than 70,000 km of 2D and 2,000 km2 of 3D seismic lines have been acquired in addition to about 100 wells that have been drilled. However, recent technological developments enable feasible exploration of deeper waters, assuming the prospects are promising.

Greece, apart from being a hydrocarbons-promising area, is also strategically located in the middle of Mediterranean. The country is situated at the crossroads for transporting gas, from the current or future producing fields in the Caspian and the Eastern Mediterranean, to Western Europe. IGB (Gas Interconnector to link Greece with Bulgaria), Poseidon, TAP and East-Med are at different stages of development, They will link Greece and Europe’s west with all producing regions in proximity and provide potential leverage for potential developments in the regions of western Greece and Crete.

Oil and gas remains a key element of the energy mix, though the discussion on climate change continues and renewable energy solution costs have been declining. Natural gas is the transitional fuel, as we move away from coal and trend towards renewables. Electric vehicles are penetrating selected markets but not yet on a large scale, globally. Oil remains the main fuel for all other modes of transportation and petrochemicals have no real alternatives in the foreseeable future.

Going solar boosts UK house prices by average of £32,000

The installation of roof-mounted solar energy systems is boosting property values as prospective buyers appreciate energy self-sufficiency and reduced energy bills in the long run.

In the UK, the market value of houses with roof-mounted PV systems increases by an average of 32,459 pounds, or 36,000 euros, according to a study conducted by energy solutions company EffectiveHome.co.uk in ten major cities.

The impact of roof-mounted PV installations on property value was biggest in London, prompting price increases in excess of 90,000 pounds for properties worth the city’s average housing price level of 686,321 pounds, according to the EffectiveHome.co.uk study.

Bristol followed with a property price boost of 45,142 pounds for properties worth the city’s average property level of 322,444 pounds. In Edinburgh, the boost measured 40,095 pounds for the average housing price of 286,397 pounds. Leicester followed with a 31,577-pound price boost for the average housing price level of 225,552 pounds. In Manchester, the increase is 29,278 pounds for the city’s average housing price level of 209,134 pounds.

PV systems offer potential electricity bill savings of at least 27,500 pounds over a 30-year period, the study determined.

“With house prices currently experiencing a mini boom, it’s interesting to see what impact solar energy and benefits such as reduced energy bills and lowering carbon emissions is having,” noted Dan Graby, director at EffectiveHome.

The value of properties equipped with PV systems is expected to be particularly boosted in countries with abundant sunshine, such as Greece, as the world increasingly turns its attention to green energy solutions.

A third round of a subsidy program – worth 850 million euros – supporting energy efficiency upgrades of properties in Greece is expected to be open for applications in October.

US investments in Greek RES sector rising, LNG imports up

New US investments in Greece’s RES sector are on the rise, the energy ministry has stressed following a meeting yesterday between Greek energy minister Costis Hatzidakis and the U.S. Ambassador to Greece, Geoffrey Pyatt, for a discussion on major energy project plans in the wider region and the related American investment activity.

U.S. companies such as ONEX, Black Summit, with support from DFC (International Development Finance Corporation), Quantum Energy Partners, National Energy, General Electric, Fortress Investment Group, Blink and Tesla are all currently pursuing investments in the Greek market.

Hatzidakis, the energy minister, expressed satisfaction over the level of foreign investments in Greece, noting U.S. participation has significantly increased, especially in the energy sector.

Last month, 547 Energy, an American renewable energy venture backed by Quantum Energy Partners, participated for a third time in a row in a RES auction staged by RAE, the Regulatory Authority for Energy, adding 107 MW in wind energy capacity to its Greek portfolio for a current tally of eight RES projects and 390 MW, the energy ministry noted.

National Energy is drawing American funds to develop wind and solar energy projects in Greece with a total capacity of 270 MW, the statement added.

Also, the energy ministry noted, General Electric has supplied equipment for a wind energy farm in Fokida, west of Athens, a project being partially financed by the Fortress Investment Group; Blink recently began an investment plan in the electromobility sector, for rechargers and other equipment; while Tesla, a producer, amongst other things, of electric vehicles, recently announced a plan to expand its operations into Greece.

During their meeting, Hatzidakis and Pyatt also discussed the partnership between Greece, Cyprus and Israel, plus the U.S.

The progress of work at the Greek-Bulgarian IGB gas pipeline, whose geostrategic importance was stressed by the Greek minister, was also addressed. A closer association with Bulgarian contractors is being sought for the project’s punctual delivery.

Work on the Alexandroupoli FSRU in northeastern Greece is progressing at a satisfactory pace, the two officials agreed, noting the project will have a positive impact on geostrategic and energy matters.

The U.S. supplied nearly half of the 2,651,903 cubic meters of LNG imported into Greece in the first half of 2020, almost quadruple the amount supplied by America to Greece during the equivalent period a year earlier.

Tension rises as Turkish vessel enters Greek continental shelf

The situation concerning the Turkish research vessel Oruc Reis, which entered the easternmost point of the Greek continental shelf yesterday, is unchanged today, the Athens-Macedonian News Agency has reported.

Oruc Reis is accompanied by Turkish naval units, while the situation is being monitored by the Greek Armed Forces, the Greek news agency has reported.

Tension has re-escalated in the east Mediterranean since yesterday afternoon, with Turkey disputing, in practice, the Greek-Egyptian EEZ agreement through the presence and maneuvering of its Oruc Reis research vessel and Turkish warships.

Turkish survey systems are believed to be ready for application, but, according to Greek estimates, research work cannot proceed as a result of noise being generated by nearby ships, both Greek and Turkish.

Greek navy units, lined up opposite the Turkish ships, are seeking to prompt a Turkish withdrawal. The Greek Air Force and Army are also on standby.

Posting on Twitter, Cagatay Erciyes, a senior Turkish Foreign Ministry official, noted that Greece has created problems because of a 10-square-kilometer Greek island named Kastellorizo, which lies 2 kilometers away from the Turkish mainland and 580 kilometers from the Greek mainland.

“Greece is claiming 40,000 km2 of maritime jurisdiction area due to this tiny island and attempting to stop the Oruc Reis and block Turkey in the eastern Mediterranean.

“This maximalist claim is not compatible with international law. It is against the principle of equality. Yet Greece is asking the EU and US to support this claim and put pressure on Turkey to cease its legitimate offshore activities. This is not acceptable and reasonable,” he said.

Cyprus has responded by issuing a Navtex of its own, effective from today until August 23, through which it notifies that the Turkish research vessel Oruc Reis and accompanying vessels are conducting illegal operations within Cyprus’ EEZ.

Turkey tensions will not be escalated, ‘aim achieved’

Turkey will not continue intensifying its provocations in the East Mediterranean as the neighboring country has already achieved its main goal, a State Department declaration noting that the country is performing hydrocarbon exploration activities in disputed territory, Dr Konstantinos Nikolaou, a seasoned petroleum geologist and energy economist, supports.

Turkey’s provocations over the past few days – the country sent a seismic survey vessel into Greek EEZ waters for further exploration work following such initiatives in the past – represent part of a carefully planned strategy whose aim is to end Turkey’s East Mediterranean isolation of recent years and put the country back in the frame of the region’s hydrocarbon developments, experts believe.

Turkey has refused to sign the UN’s International Law of the Sea treaty, strongly disagreeing with Article 121, giving EEZ and continental shelf rights to island areas.

Instead, the country has followed its own rules, adjusting them as it pleases, to avoid giving any rights to island areas.

Besides seeking to reinforce the country’s position that rejects any EEZ rights for islands, the latest Turkish moves also aim to cancel EEZ agreements signed by Cyprus with Egypt, Israel and Lebanon.

Turkey has unsuccessfully sought to sign an EEZ agreement with Egypt, during Muslim Brotherhood times.

Dr. Nikolaou predicts that there will be no Turkish movement south of Crete as the transfer of an area by Libya, Turkey’s regional partner, would be required. The area of Benghazi is not controlled by Fayez al-Sarraj, the head of Libya’s UN-recognized government, but by renegade commander Khalifa Haftar.

Ultimately, the Turkish strategy in the wider region is aiming for co-exploitation of hydrocarbon deposits that may be discovered.

Chevron buys Noble Energy, US striving for regional control

Energy corporation Chevron has become the latest American giant, following ExxonMobil, to establish itself in the east Mediterranean upstream market following a five billion-dollar acquisition of Noble Energy, a deal that adds the gigantic Leviathan gas field in Israel’s EEZ to the California-based buyer’s portfolio and elevates the petroleum group into a dominant regional player.

This latest development highlights America’s strategy for the region, aiming to establish US control of production at new gas fields as well as supply to Europe, analysts noted.

Chevron’s acquisition of Noble Energy, highlighting the upstream industry’s elevated interest in the east Mediterranean, comes amid increased regional tension prompted by Turkish provocation. Greece’s neighbor has just sent a seismic survey vessel into Greek waters for hydrocarbon exploration activities.

Besides the Leviathan gas field’s recoverable reserves, estimated at 22 trillion cubic feet, the Chevron portfolio now also takes on Israel’s Tamar field, whose gas reserves are estimated at 7.1 trillion cubic feet.

Noble has proved reserves of 2.05 billion barrels of oil and gas to add to Chevron’s reported 11.4 billion.

Chevron, whose earnings in 2019 reached 139.9 billion euros, also adds to its assets, totaling 237.4 billion dollars, the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet. Noble Energy is among this field’s operators.

Chevron’s control of the Leviathan gas field also secures American influence over the EastMed gas pipeline planned by Israel, Cyprus and Greece.

Fellow American petroleum giant ExxonMobil recently discovered, within the Cypriot EEZ, the Glafkos gas field, estimated to carry between 5 and 8 trillion cubic feet of gas. ExxonMobil has also taken on major licenses in Egypt and is also a member of a consortium formed with France’s Total and Hellenic Petroleum (ELPE) for licenses at offshore blocks west and southwest of Crete.

 

US wants Greece as partner for pumped storage projects

Recognizing the importance of pumped storage hydropower technology as a means for energy storage, the US is promoting the establishment of a related international forum to bring together countries and companies for co-development of such projects.

According to sources, Greek deputy energy minister Gerassimos Thomas has received an invitation from the US department of energy and the International Hydropower Association requesting Greece’s participation in a US-headed multidisciplinary platform that will seek to reinforce the role of pumped-storage technology in current and future energy systems.

Pumped storage hydropower supply during the pandemic has provided vital energy support for US households, hospitals and schools, American experts have determined.

Washington believes pumped storage hydropower projects are capable of enhancing the reliability of grids and supporting further renewable energy penetration. This technology, regarded as tried and tested, can be further developed in the energy transition era, US experts support.

Pumped storage hydropower currently represents about 94 percent of global energy storage capacity, latest data has shown.

A pumped storage hydropower project planned by Greece’s GEK TERNA in Amfilohia, western Greece, is regarded as a pioneering initiative in Europe.

The country’s energy ministry has approached the European Commission for special funding support for this project, budgeted at over 500 million euros.

 

US backs Greece’s east Mediterranean activities, major projects

All countries in the east Mediterranean region must carry out their activities in accordance with international law, including the International Law of the Sea as stipulated by the 1982 United Nations Convention on the Law of the Sea, the Greek and US governments have jointly announced following a high-level virtual conference held yesterday on energy issues.

This statement clearly offers US support for the positions of Greece, facing Turkish provocation.

The working group’s participating Greek and US officials reiterated the commitment of the two countries to cooperate on the effort to diversify energy sources in southeast Europe, collaborate with regional partners for energy source development, and promote regional energy security.

The latest energy working group builds on steadily growing bilateral cooperation following Greek-US strategic dialogue meetings in December, 2018 and October, 2019, the joint announcement added.

The Greek team was represented by the Ministry of Foreign Affairs’ Deputy Minister for Economic Diplomacy and Openness Kostas Frangogiannis and Deputy Environment and Energy Minister Gerassimos Thomas (photo). The US team was represented by Assistant Secretary of State for Energy Resources Francis Fannon and Under Secretary of Energy Mark Menezes.

Fannon, the Assistant Secretary of State, expressed satisfaction on the completion of the Greek segment of the TAP gas pipeline project, to carry Azeri gas to Europe.

The US official also offered support for the ongoing construction of the Greek-Bulgarian IGB gas pipeline interconnection and the progress achieved in plans for an FSRU in Alexandroupoli, northeastern Greece, a South Kavala underground gas storage facility, and Greek-North Macedonian connection.

Poseidon overland section plan kept alive, PCI status sought

IGI Poseidon, a 50-50 joint venture between Greek gas utility DEPA and Italian energy operator Edison, is keeping alive the development prospects of an overland Greek segment, across northern Greece, for its Poseidon pipeline, to cross the Ionian Sea for a Greek-Italian link.

DEPA and Edison have submitted an application to the European Commission for PCI status concerning the overland section of Poseidon, enabling EU funding support, sources informed.

The Poseidon pipeline’s onshore segment, planned to stretch 760 km across northern Greece, from Kipous in the northeast, to Florovouni-Thesprotia, in the country’s northwest, before crossing the Ionian Sea all the way to Otranto, on Italy’s east coast, is considered an extension of the EastMed gas pipeline plan to link Greece, Cyprus and Israel.

Poseidon’s onshore segment could be used to transport natural gas from east Mediterranean gas reserves to Balkan markets.

The Poseidon pipeline’s overland section can also be expected to be linked to the Greek-Bulgarian IGB gas pipeline, another project involving IGI Poseidon.

The Greek-Italian Poseidon pipeline has been incorporated into a trilateral agreement signed by Greece, Cyprus and Israel for the EastMed pipeline. This pact was ratified in Greek Parliament last month.

Greece, Cyprus and Israel recognize the overland section of the Poseidon pipeline as a project of national significance.

Capacity of the Poseidon pipeline has been increased to 15 bcm from an original capacity of 8 bcm, while a further capacity boost to 20 bcm is planned.

 

Turkish-Libyan MoU ‘ignores’ International Law of the Sea

A Turkish-Libyan Memorandum of Understanding emphatically ignores article 121 of the International Law of the Sea (UNCLOS 1982), which recognizes Exclusive Economic Zone and continental shelf rights for island areas, and overlooks the existence of Crete, Karpathos, Kasos, Rhodes and Kastellorizo to carve out approximately 39,000 square kilometers of Greek territory south of Crete for Libya, petroleum geologist and energy economist Dr. Konstantinos Nikolaou, a former member of the board at the Cyprus Hydrocarbons Company, has pointed out in an analysis, spelling out the dangers of Turkey’s provocative behavior in the region.

Turkey misappropriates the continental shelf and EEZ associated with Crete, Karpathos, Kasos, Rhodes and Kastellorizo in the east Mediterranean, he noted on the MoU, submitted by Turkey to the UN in an effort to make gains at Greece’s expense.

Hydrocarbon licenses for plots south and southwest of Crete that have been awarded by the Greek State to Total, ExxonMobil and ELPE (Hellenic Petroleum) and published in the Official Journal of the European Union, set a precedent that backs the positions of Greece, whose division of the area is based on International Law of the Sea guidelines, Nikolaou highlighted.

Turkey is using its state-run petroleum corporation TPAO as a tool to exercise foreign policy for territorial gains, Nikolaou added.

Natural gas discoveries in the east Mediterranean serve as a major driving force behind the actions of Turkey, whose energy sector is import-dependent, he pointed out.

Electric vehicles bill to include production line incentives

A draft bill being prepared by the government to promote growth for Greece’s embryonic electric vehicle sector will not only include incentives for buyers and users but also producers, energypress has been informed.

Producers establishing production lines for electric vehicle parts, including batteries, transformers and recharging units, will be offered incentives in the form of lower tax rates and reduced social security system contributions for employees, the sources said.

However, eligibility for these incentives will be conditional and require producers to establish their production facilities in either northern Greece’s west Macedonia region or Megalopoli in the Peloponnese, both lignite-dependent local economies headed for decarbonization.

The incentives are expected to include subsidies of between 4,500 and 5,000 euros for purchases of zero or low-emission electric cars, approximately 1,000 euros for electric scooters and 800 euros for electric bicycles.

Government officials plan to submit the draft bill on electric vehicles to Parliament in June.

Besides seeking to promote industrial development in current lignite areas, the master plan will also aim to make the most of early interest expressed by foreign investors.

One of these, Tesla, has, for months now, expressed interest to the Greek government for development of a fast-recharge network at Greece’s highways, a project budgeted at 10 million euros. This project is envisioned as part of a wider plan stretching from Portugal to Spain, France, Italy, Greece and Turkey.

Greece, Cyprus, Israel, with US, plan for EastMed meeting next month

The energy ministers of Greece, Cyprus and Israel plan to stage a trilateral meeting next month, with US involvement, for talks on the prospective EastMed gas pipeline, to transport gas from Israeli and Cypriot fields to Europe via Greece and Italy.

It remains uknown if Francis Fanon, the US Assistant Secretary of State and head of the country’s energy portfolio, will participate at this meeting.

It also remains unclear if participants will stage a virtual conference as a result of pandemic measures or meet in person.

The Greek, Cypriot and US governments were waiting for the new Israeli government to be sworn in before shaping plans for the EastMed meeting, to also serve as a second energy conference between the four nations following an inaugural session in Athens last August.

Yuval Steinitz has been reappointed at Israel’s top energy post, meaning the line-up of last year’s session between the Greek, Cypriot and Israeli energy ministers can be repeated at the next meeting. Greece’s Costis Hatzidakis and Cyprus’ Giorgos Lakkotrypis are still at their posts.

The Greek, Cypriot and Israeli government officials are expected to reaffirm the commitment of their respective countries to the EastMed gas pipeline, as well as commitment to cooperation for regional peace and prosperity, sources said.

Also, the energy ministers of Greece, Cyprus and Israel, along with the session’s US representative, will seek to send Turkey a unified message on its provocative actions against Greece as well as increased aggression in the wider southeast Mediterranean region.

A trilateral EastMed gas pipeline agreement was approved in Greek Parliament last January.

Israel could soon reach a decision on the financing of some of the studies needed for the international pipeline’s link to the national grid.

Also, IGI Poseidon, a consortium comprising Greek gas utility DEPA and Italy’s Edison, is moving ahead with studies for the pipeline’s underwater and overland route between Greece and Italy. IGI Poseidon wants to make an investment decision on this project within the next two years. Meanwhile, Cyprus is making progress on licensing matters.

Oil drilling plans on hold, forced by price collapse, pandemic

Preliminary hydrocarbon exploration work planned by oil companies at licenses in the Ionian Sea and south of Crete is being postponed for an indefinite period that could last as much as a year, possibly more.

Upstream players are revising plans as a result of the collapse in oil prices and the coronavirus pandemic, a double setback for the sector.

Worse still, investment conditions for the Ionian Sea and Crete areas are made even more challenging by the fact that neither has yet to reveal sustainable fields.

In addition, both Greek zones are deep-sea areas of depths ranging from 2,500 to 3,000 meters, making exploration a high-cost venture.

Global oil majors are reducing investments and expenses by the billions in response to the unfavorable market conditions that have emerged over the past couple of months.

Fields with proven reserves have not been spared, which pushes untested fields such as those in Greece even further down the priority list.

The resumption of drilling ventures still at preliminary stages is not likely until oil prices rebound, energy minister Costis Hatzidakis noted in an interview with Greek daily To Ethnos.

It is a similar picture for Cyprus. The Eni-Total consortium yesterday announced it is postponing oil drilling activities in Cyprus’ Exclusive Economic Zone until March or April next year.

DEPA signs EIB loan agreement to build LNG supply tanker

Gas utility DEPA has signed a loan agreement with the European Investment Bank for the construction of an LNG supply tanker with a 3,000 cubic-meter capacity, sources have informed.

This loan agreement follows a funding agreement reached between DEPA and the Innovation and Networks Executive Agency (INEA) for EU co-financing – through the new BlueHUBS program – of the LNG tanker to be built by the utility.

Planned to adopt new environmentally friendly shipping fuels,  the LNG tanker promises to be the first of its kind in Greece and the east Mediterranean. It will be designed to meet LNG supply needs at Piraeus port and also transport LNG to other major ports around the country.

DEPA, a wide supporter of LNG usage in shipping, is coordinating the BlueHUBS program (2019-2022), aiming for the development of LNG supply carriers.

Jointly supported by Greece and Cyprus, BlueHUBS represents the continuation of the Poseidon Med II program and has a total budget of approximately 66 million euros, of which 30 percent is being provided by the EU.

Colossal task ahead for decarbonization goal

Greece faces a colossal task – in terms of money needed, level of complexity and coordination – to reach ambitious post-lignite objectives set by the government.

The effort could require as much as 4.4 billion euros in EU funds, deputy energy minister Gerassimos Thomas noted yesterday, plus many more billions from the private sector.

Greece is entitled to a considerable sum in EU funds for the country’s decarbonization effort but, as a first step, a cohesive master plan will need to be submitted to Brussels. It will then need to be executed. The plan’s rate of execution will depend on the country’s ability to absorb EU funds made available.

An inter-ministerial committee involving seven ministers and deputies and established to oversee the entire effort will stage its inaugural meeting today.

A collective effort will need to be made involving teamwork of at least five ministries (finance, environment & energy, development, interior and agricultural development), two regional authorities (west Macedonia and Peloponnese), and no less than four municipalities (Florina, Kozani, Amynteo and Megalopoli). The local economies of these regions are lignite-dependent at present.

A national action plan must now be swiftly prepared. Its specific project proposals will then need to be tabled to the European Commission for approval before any investment activity can commence.

Personnel retraining, heightened research activity and development of new technologies are other necessities.

 

East Med pipeline to upgrade geostrategic role of participants

The EastMed Pipeline Agreement, a trilateral deal signed by the energy ministers of Greece, Cyprus and Israel in Athens yesterday with the leaders of all three countries in attendance, includes provisions for measures to protect and safeguard the pipeline project, sources have informed.

Other details in the agreement, fundamental to the region’s energy developments, include a regulatory and licensing framework facilitating the project’s development, common tax rules, as well as terms enabling the entry of new members and transmission of additional natural gas quantities from existing or new gas fields, including south of Crete, should any new deposits be discovered in the region.

The agreement upgrades the geostrategic roles of Greece and Cyprus and is a crowning achievement for the three-way cooperation established between the two countries and Israel, noted Greek Prime Minister Kyriakos Mitsotakis.

The 2,000-km pipeline is planned to carry between 10 to 20 billion cubic meters of natural gas to Europe via the three countries and Italy.

Addressing the heightened Turkish provocation of late, the Greek leader noted that the pipeline does not pose a threat for any side, adding regional cooperation is open for all provided rules of good neighborliness and international law are respected.

Following up on the recent commencement of production at the Leviathan gas field off the coast of Israel, the EastMed Pipeline Agreement establishes Israel as a key energy player in the region, stressed Israeli Prime Minister Benjamin Netanyahu.

The project promises to offer major collective benefit for the three countries involved as well as the wider region, noted Cypriot President Nicos Anastasiades.

Earlier yesterday, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, signed a Letter of Intent at the energy ministry through which DEPA will be able to purchase natural gas quantities from Energean, extracting at Israeli gas field licenses.

DEPA, in a company announcement, described the Letter of Intent as a major first step for the East Med project’s commercial viability.

Trilateral East Med agreement set to be signed in Athens today

The energy ministers of Greece, Cyprus and Israel are set to sign a trilateral agreement in Athens this afternoon for the development of East Med, a natural gas pipeline to carry gas to Europe via the three countries and Italy.

The pipeline, planned to measure 2,000 km and offer a capacity ranging between 10 to 20 billion cubic meters, promises to reinforce the Greek-Cypriot-Israeli alliance amid times of heightened Turkish provocation in the region.

Italian economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, has forwarded a letter of support for the project to Greek energy minister Costis Hatzidakis.

The Greek minister will sign the East Med agreement today with Giorgos Lakkotrypis and Yuval Steinitz, his Cypriot and Israeli counterparts, respectively. Italy is also expected to eventually join the partnership for this project.

Just hours before this signing ceremony, planned for 15:45, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, will sign a Letter of Intent at the energy ministry.

Importantly, this agreement promises to pave the way for a first commercial agreement reserving natural gas quantities ahead of the East Med pipeline’s construction, as DEPA will commit to purchasing natural gas quantities from Energean, extracting at Israeli gas field licenses. These quantities will represent approximately 20 percent of the East Med pipeline’s initial capacity.

The development prospects of East Med were recently propelled by a decision from IGI Poseidon, a 50-50 joint venture involving DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

An upcoming East Med Gas Forum, to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority, should help add further dimension to the alliance.

The East Med pipeline, planned as a complementary route to other projects in the wider region, stands as the most mature component of an EU plan entailing the development of an energy corridor to connect new energy sources in the east Mediterranean with European markets, including the southeast European market.