DEPA, pivotal for Greek energy plan, pushing ahead internationally

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

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

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

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

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

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

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

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

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

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

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

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

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

Offers soon for IGB gas pipeline project tenders, nearing completion

Three tenders offering contracts for Greek-Bulgarian IGB gas grid interconnector’s project manager, pipeline procurement and construction are approaching completion.

Offers for the tender to appoint a project manager, to monitor development on behalf of shareholders, are expected this month.

Greece is well represented in the tender concerning the construction of the IGB pipeline, planned to cover a 182-km stretch and budgeted at 145 million euros. A total of five consortiums with three Greek firms on board have advanced to this tender’s second round.

Germany’s Max Streicher has teamed up with Greece’s Terna; China Petroleum Pipeline Engineering has joined forces with Aktor; and J&P Avax is the third local qualifier. Their bids are expected next week.

ICGB, the IGB project’s consortium, a joint venture involving YAFA Poseidon – a Greek gas utility DEPA half-owned subsidiary – and the state-controlled Bulgarian Energy Holding (BEH), plans to have appraised these offers within a month before announcing a preferred bidder at the end of April.

The IGB is planned to be linked with the TAP route, offering Bulgaria and the wider southeast European region access to Caspian gas as well as LNG.

 

Rush needed to overcome IGB hurdles, stick to time frame

Greek and Bulgarian officials have admitted the prospective IGB gas grid interconnector, already well behind schedule, is facing new delays and issues. A rush will be needed to overcome various hurdles and stick to the project’s time frame.

Troubling news initially emerged from Bulgaria, when it was recently reported that  tenders for sub-contractors have been bogged down by legal action taken by firms not associated with the project’s development, including a winery.

ICGB, the IGB project’s consortium – involving the state-controlled Bulgarian Energy Holding (BEH) with a 50 percent stake, as well as DEPA, Greece’s public gas corporation, and Italy’s Edison with 25 percent stakes – has confirmed this news.

Despite noting that it expects this obstacle to be cleared within weeks, the consortium expressed concern of the emergence of similar issues in the future.

Earlier this month, the consortium announced the resignation of its chief executive Elio Ruggeri, who is now in charge of the LNG division at Italy’s Snam.

In comments offered this week, Bulgaria’s energy minister Temenuzhka Petkova insisted that the project’s current schedule remains valid. She also noted that EU funding worth 37 million euros and initially intended to finance a Bulgarian-Serbian interconnection could be redirected towards the IGB. The minister did not elaborate and offered no explanations as to how such a change of plan could impact the Greek-Bulgarian interconnection’s development and time frame. Petkova also informed that the IGB consortium could secure a more favorable financing agreement.

Her Greek counterpart Giorgos Stathakis, speaking at an Athens Energy Forum event yesterday, made reference to the IGB, noting its construction is expected to commence “within 2018”. Given the consortium’s most recent time frame, scheduling work to begin by this coming June, the project, it appears, is headed for a further delay.

Dimitris Tzortzis, the recently appointed chief executive officer at DEPA, Greece’s public gas corporation, believes work on the IGB will start in the third quarter this year. He described the project’s existing schedule as demanding. “We are depending considerably on continued full support from both the Greek and Bulgarian governments for the timely completion of related host government agreements,” Tzortzis commented.

The DEPA official added that he expects the IGB pipeline to begin operating in the second half of 2020.

The IGB interconnector, a project to measure 180 kilomteres in length and offer a 4.3 bcm capacity with upgrade options, is budgeted at approximately 220 million euros.

Plenty of preliminary work is still needed before the project’s development commences.

The IGB is receiving full political support from Greece, Bulgaria the EU and US. Combined with the TAP pipeline, to run horizontally across northern Greece, the IGB promises to serve as a vertical route for the wider region. TAP and IGB officials are currently engaged in advanced talks for an agreement to interconnect the two pipelines.

 

IGB’s final market test to take place in autumn, officials agree

A final market test for the prospective IGB (Greek-Bulgarian Interconnector), entailing the submission of binding bids by gas traders for the allocation of pipeline capacity, will take place this coming autumn, officials agreed at a meeting in Sofia today involving the participation of energy minister Giorgos Stathakis and his Bulgarian counterpart Temenuzhka Petkova.

EU funding for the IGB project has been ensured through respective National Strategic Reference Framework (NSRF) programs, Teodora Georgieva and Konstantinos Karayannakos, the executive officers of ICGB, the consortium established to develop the IGB project, informed the meeting’s participants while also stressing that major progress has been made over the past two years.

The project’s licensing procedure is at an advanced stage and awaiting pending regulatory decisions, the ICGB officials informed.

Stathakis and Petkova also discussed the prospective floating storage regasification unit (FSRU) in Alexandroupoli, northeastern Greece.

The IGB and Alexandroupoli FSRU will be designed to complement each other while the development of these two projects promises to create a competitive market that will have a positive impact on regional natural gas price levels, the Greek energy ministry noted in a statement.

The productive cooperation achieved between Greece and Bulgaria in the energy sector promises to ensure natural gas supply diversification in southeast Europe, the ministry’s announcement stressed.

The two ministers pledged to further enhance the mutually beneficial Greek-Bulgarian cooperation in the energy sector.

Officials at the meeting agreed that the Alexandroupoli FSRU’s completion will need to coincide with the commercial launch of the IGB project, scheduled for early 2020.

Vertical Corridor preliminary work progressing, new MoU to be signed

DESFA, Greece’s natural gas grid operator, is expected to sign a new Memorandum of Understanding within the next few days with its counterpart operators in Bulgaria (Bulgartransgaz), Hungary (FGSZ) and Romania, (Transgaz) as well as ICGB, the consortium established to develop the prospective IGB (Greek-Bulgarian Interconnector) pipeline project. The new MoU’s aim will be to explore the possibility of interconnections beyond Bulgaria, with Romania and Hungary, a stretch that would represent a big part of the Vertical Corridor.

Activities to be carried out by authoriities as part of this process will include an examination of which projects need to be developed, as well as the technical requirements of interconnections and  compressor stations.

The anticipated MoU will come as the next step following a Joint Statement signed by the four operators and ICGB last September in Budapest, on the sidelines of a Central and South Eastern European Gas Connectivity (CESEC) meeting chaired by the European Commission.

For that statement, the signees declared an intention to bolster their efforts, at technical and regulatory levels, for the development of the Vertical Corridor, expected to be comprised of a network of short pipelines to transmit natural gas from Greece all the way to Ukraine, and vice versa. This project promises to increase the diversification of supply sources in the intermediate countries – Bulgaria, Romania and Hungary.

The IGB will carry Azerbaijaini natural gas stemming from the Shah Deniz 2 field and is expected to be linked with the TAP project, currently under construction and planned to cross northern Greece, Albania and the Adriatic Sea, all the way to southern Italy.

Construction of the IGB project is expected to begin in 2018 and completed early in 2020.

Authorities are scheduled to meet again in Sofia on July 10 and 11.

IGB launch date reset for first quarter of 2020 in revised project plan

Construction work on the prospective IGB (Greek-Bulgarian Interconnector) has been rescheduled to start within 2018 and the commercial launch set for the first quarter of 2020, according to the project’s latest timeline revision, presented by its contractor, ICGB, to European Commission officials in Brussels late last month.

ICGB presented its revised IGB plan as part of the effort to seek PCI (Projects of Common Interest) classification, which would ensure EU funds. Other European PCI candidate projects were also presented by their developers.

The IGB, whose length and diameter are planned to measure 182 km and 32 inches, respectively, will link Komotini in Greece’s northeast with Stara Zagora in Bulgaria.

Its development schedule has been pushed forward in time on a number of occasions, the latest shift caused by recent elections in Bulgaria.

As a result, a crucial third market test, during which prospective IGB users will need to submit binding offers for capacity reservations, will be rescheduled. Authorities had planned to stage the test in May or early summer.

Temenuzhka Petkova’s return, last week, to the helm of Bulgaria’s energy ministry has been viewed favorably. Regarded as being a staunch supporter of the IGB project, Petkova is expected to move fast in an effort to make up for lost time.

Officials keeping a close watch on the project’s developments believe the IGB will be developed with or without the third market test.

Concurrent progress is also being made on the floating LNG terminal in Alexandroupoli, another prospective gas project in Greece’s north. Gastrade, supporting the project’s development, plans to have completed its FEED (Front-End Engineering and Design) study by late June. Contractors and shipyards are then expected to be commissioned to construct the project’s various segments.

Gastrade is currently also exploring financing options for the project, whose total budget is estimated between 350 million to 370 million euros. Roughly half of this amount is expected to be provided by the company itself. Loans by Greek and foreign banks as well as EU funding will be sought for the remainder.