Italy

Athens wants greater French hydrocarbon engagement

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The government wants France’s Total to play a more active role in Greek offshore hydrocarbon exploration, Prime Minister Kyriakos Mitsotakis made clear during a meeting in Paris yesterday with the French group’s chief executive Patrick Pouyanné.

The potential of Greece’s hydrocarbon market, including offshore licenses south and southwest of Crete held by a Total-led consortium – it also features Exxon Mobil and Hellenic Petroleum (ELPE) – was the main focus of yesterday’s meeting.

Processing of seismic data collected from the Cretan offshore blocks has provided strong evidence of a deposit sharing similar attributes to Egypt’s Zohr gas field. However, this needs to be proved in practice. French officials have remained cautiously optimistic as they await initial drilling operations for a clearer picture.

Total’s plans for exploration within the Cypriot Exclusive Economic Zone, specifically at Block 8, for which Total shares a license with Italy’s Eni, were also discussed yesterday.

Turkish drillship Yavuz has sought to engage in illegal exploration activities in this area. French officials do not intend to intercept any Turkish moves at this stage but are expected to do so if the exploratory rights of Total and Eni are disputed once the companies decide to start exploring the area.

 

Greece looks to build on Italian East Med interest at Cairo event

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Energy minister Costis Hatzidakis will be looking to build on yesterday’s interest expressed by Greek gas grid operator DESFA’s main shareholders – Snam, Enagas and Fluxys – in the planned East Med gas pipeline project, especially Italy’s Snam, when he meets with regional counterparts at the Eastern Mediterranean Gas Forum in Cairo, an event encouraging collaboration on gas trade in the region.

The energy ministers of Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority are scheduled to participate at the Cairo event.

Snam chief executive Marco Alvera expressed particular interest in the East Med gas pipeline at a meeting yesterday involving Greek Prime Minister Kyriakos Mitsotakis and the chiefs of the Italian company’s DESFA partners, Enagas and Fluxys.

Snam’s interest in the prospective East Med gas pipeline, to carry natural gas from Cypriot and Israeli fields to the EU via Italy, follows that of Energean and represents further investor confidence in the sustainability of the pipeline as it possesses commercial appeal for gas producers in the east Mediterranean as well as gas sales.

Participants at the Eastern Mediterranean Gas Forum are hoping the event is upgraded into a transboundary organization for gas cooperation. If an agreement on a forum charter is achieved, a signing ceremony will take place in Cairo tomorrow.

Besides participating at the forum, Hatzidakis, Greece’s energy minister, has also lined up meetings with his Cypriot, Israeli and Egyptian counterparts, Giorgos Lakkotrypis, Yuval Steinitz and Tarek el-Molla, respectively, for talks on the next steps needed to develop the East Med pipeline.

In addition, Hatzidakis will discuss prospective electricity grid interconnections between Greece and Egypt and also meet with Italy’s economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, who recently forwarded a letter of support for the East Med project to his Greek counterpart.

East Med pipeline to upgrade geostrategic role of participants

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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

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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.

 

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

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Three major energy projects of international dimension, the East Med and IGB natural gas pipelines, as well as the Alexandroupoli FSRU (Floating Storage Regasification Unit), all once seeming distant prospects, are now gradually turning into a close reality.

Their development promise to transform Greece into an energy hub and upgrade the country’s geopolitical standing in the fragile southeast Mediterranean and Balkan regions.

The leaders of Greece, Cyprus and Israel are set to sign a trilateral agreement for East Med, to carry natural gas to Europe via these countries and Italy, at a meeting in Athens on January 2. The transmission capacity of this project, measuring 2,000 km, will range between 10 to 20 billion cubic meters. Italy is also expected to eventually join the partnership for this project.

Its development prospects have been further propelled by a decision from Poseidon, a 50-50 joint venture involving Greek gas utility DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

The trilateral agreement promises to further bolster ties between Greece, Cyprus and Israel amid a period of heightened regional intensity. Turkish provocation has escalated. An 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 expand the alliance.

The Greek-Bulgarian IGB gas pipeline is expected to have begun operating far sooner, in July, 2021. DEPA holds a 25 percent stake in ICGB, the consortium overseeing the IGB project, whose initial capacity will be 3 bcm. Through this pipeline, DEPA plans to supply the Bulgarian market with Azeri gas hailing from the TAP route, and, as a result, break, for the first time, the existing Russian monopoly in the neighboring market.

The IGB will not only be fed by TAP, running westwards across northern Greece for Azeri supply to Europe. The Alexandroupoli FSRU to be anchored off coastal Alexandroupoli, northeastern Greece, will also feed the IGB, enabling an alternative gas supply source for Bulgaria, other east European countries, and Ukraine.

DEPA is also involved in this project. The gas utility has just decided to acquire a 20 percent stake in Gastrade, the company developing the FSRU project in Alexandroupoli.

Leading Washington officials have expressed their support for the East Med, IGB and Alexandroupoli FSRU projects. Prime Minister Kyriakos Mitsotakis will be seeking confirmation of this backing on an upcoming official trip to the US from President Donald Trump himself.

 

DEPA, Edison firm on East Med amid Turkish provocation

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Italy’s Edison, part of the Poseidon consortium formed with Greek gas utility DEPA for the development of the East Med gas pipeline – planned to transport natural gas from Israeli and Cypriot fields to the EU via Greece and Italy – has decided to accelerate pre-construction procedures following escalating provocation from Turkey, energypress has reported.

A decision was reached at a recent Poseidon meeting in Milan to assign all needed project studies, financially backed by the EU, within the next two months for swifter completion of preliminary procedures, and, by extension, the project itself, a 2,000-km pipeline.

Greece’s energy minister Costis Hatzidakis and his Israeli counterpart Yuval Steinitz reiterated their support for the project at a recent meeting.

Turkey, seeking to block the project, recently reached a maritime border agreement with Libya, which EU leaders are set to reject as invalid, insisting the pact interferes with the rights of other countries bordering the Mediterranean Sea.

Cypriot Foreign Minister Nikos Hristodoulidis has received reassurances from Israeli government officials that the country is not involved in talks with Ankara for the development of an alternative gas pipeline, according to a Cypriot newspaper report. Israel remains committed to the East Med plan, it added.

DEPA’s Poseidon stake will be transferred to the Greek gas utility’s division for international projects. DEPA is being split ahead of its upcoming privatization.

LNG bunkering network for key Greek ports discussed in Rome

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The development of an LNG bunkering network covering Greece’s main ports is one of the features included in a Greek-Italian Memorandum of Cooperation signed yesterday in Rome.

Italian officials, driven by increased LNG usage, internationally, proposed the development of LNG bunkering stations at major Greek ports during Prime Minister Kyriakos Mitsotakis’ visit to the neighboring country. The Greek leader was joined by energy deputy Gerassimos Thomas.

Discussion on the development of an LNG bunkering network in Greece goes back a number of years, steered by an EU directive from 2012 focused on the use of cleaner shipping fuel.

Unlike Italian ports, Greece’s ports have lagged behind in this department. In Italy, Edison has pushed ahead with many such investments, big and small-scale.

The objective, in Greece, is to develop a network to cover 15 percent of bunkering needs over the next decade and 25 percent by 2050. Italian know-how would provide valuable support.

Italgas, Italy’s biggest natural gas distributor, has displayed an interest in bidding for DEPA Infrastructure, one of two new gas utility DEPA entities emerging for the gas company’s upcoming privatization.

In a lesser-known development, Greece has received a proposal concerning the use of Italian gas storage facilities, for a fee, until an underground offshore facility south of Kavala is developed to bolster the country’s energy security, according to sources.

The Greek-Italian collaboration plan includes an upgrade of the existing submarine electricity grid interconnection linking the two countries. This line has been plagued by technical problems over recent years, often shutting down for repair work.

Italian energy firms eyeing array of local investments, PM in Italy

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Italian investors are displaying widespread interest for energy investments in the Greek market, including possible stakes in distribution network operator DEDDIE/HEDNO, power grid operator IPTO, gas utility DEPA’s two new entities DEPA Trade and DEPA Infrastructure, as well as joint ventures in wind energy stations, electric vehicle projects and smart grids.

Deputy energy minister Gerassimos Thomas, joining Prime Minister Kyriakos Mitsotakis on an official visit to Rome today, is expected to be informed of this Italian investment interest. Thomas is scheduled to meet with Italian economic development minister Stefano Patuanelli.

The Greek Prime Minister, to meet with his Italian counterpart Giuseppe Conte, can also expect to hear of this Italian investment interest during talks which, besides the refugee crisis, will also address cross-border energy projects such as TAP and East Med.

Snam maintains the most emblematic of Italian investments in the Greek market at present with a 66 percent stake in gas grid operator DESFA, including control of the country’s natural gas transmission and storage infrastructure.

Italian firms are regarded as pioneers in a number of green-energy domains, including smart grids, electric vehicle recharging station installations along highways, even wave power projects.

Just days ago, a consortium comprising Eni, Fincantieri and Terna announced it would commercially develop its pilot project Inertial Sea Wave Energy Converter (ISWEC) for wave energy generation, initially at small Italian islands, followed by projects abroad.

The Greek Prime Minister and his energy deputy will also meet with Italian entrepreneurs, including Eni gas e luce chief executive Alberto Chiarini.

Italy’s Terna, one of Europe’s biggest transmission system operators, is believed to be interested in acquiring a stake of IPTO and its Ariadne subsidiary, project promoter of the submarine Crete-Athens grid interconnection.

Enel is considering moves into networks, renewable energy investments and the electric vehicles sector.

Italgas, Italy’s biggest gas distributor and the continent’s third biggest, appears interested in DEPA Infrastructure. Italgas is believed to have reached a preliminary agreement to acquire fellow Italian company Eni gas e luce’s 49 percent stake and management rights in EDA Thess, covering the Thessaloniki and Thessaly areas.

Eni, increasing its involvement in pioneering projects, including wave energy, is believed to be looking to increase its Greek market presence, possibly through acquisitions.

 

 

Greek, Cypriot, Israeli officials seeking Italy’s East Med return

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Greek, Cypriot and Israeli officials are working on details of a plan aiming to win back Rome’s support for the East Med pipeline, an ambitious 1,900-km pipeline to carry southeast Mediterranean natural gas from Israel to Europe via  Italy.

Efforts by Washington and Brussels to lure back Italy, whose coalition government has withdrawn the country’s support for the project, are pivotal.

Part of the overall diplomatic effort may be unveiled at an Athens energy summit today.

The Greek, Cypriot and Israeli energy ministers, Costis Hatzidakis, Giorgos Lakkotrypis and Yuval Steinitz, respectively, as well as US Assistant Secretary Francis Fannon, are taking part in the summit.

Fannon held successive meetings in Athens yesterday with Greece’s energy minister and the deputy foreign minister Konstantinos Fragogiannis. The East Med project’s promotion was a key subject of these meetings, especially Fannon’s talks with Hatzidakis, Greece’s energy minister.

Last May, Italian Prime Minister Giuseppe Conte, heading Italy’s right-wing populist coalition, declared Rome does not want the East Med pipeline to land on Italian territory. Instead, he proposed the pipeline’s link to TAP, another gas pipeline project being developed to carry Azerbaijani natural gas to Europe, via Italy.

East Med is envisioned to primarily carry deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan” along a route stretching from Israel to Europe, also via Italy.

In response to Italy’s stance, Israel now appears to favor an alternate route for East Med that would avoid ending up on the Italian coast. Experts regard this prospect as difficult but not impossible as the pipeline project is still at the planning stage. Greece and Cyprus prefer Italy’s incorporation into the pipeline route.

 

 

New effort for East Med agreement at Athens energy summit

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Greek gas utility DEPA and Italian energy giant Edison, collaborating on a plan to develop the East Med pipeline, envisioned to link the Greek, Cypriot and Israeli natural gas systems, are looking to take a crucial technical step ahead of construction.

Their YAFA Poseidon joint venture – spearheading the ambitious project, a 1,900-km pipeline stretch with an investment cost of between 6 and 7 billion euros – is gearing up for the launch of FEED (Front-End Engineering Design), environmental and detailed underwater research studies.

The European Commission has approved 34.5 million euros from the EU’s Connecting Europe Facility (CEF), a funding instrument, for these studies. The CEF amount will cover half the cost of the aforementioned preliminary studies, which will push the plan ahead to a mature stage.

The pipeline project is planned to carry southeast Mediterranean natural gas, primarily deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan”, along a route stretching from Israel to Europe.

An agreement between Greece, Cyprus, Israel and Italy, where the pipeline is planned to conclude, is still needed.

East Med plans have been at a standstill ever since the current Italian government announced it was stalling the project.

According to sources, the Greek, Cypriot and Israeli energy ministers will seek to restart procedures and also send out a message of encouragement to the Italian government when they meet at an Athens energy summit tomorrow. US Assistant Secretary Francis Fannon will also participate.

East Med, still at a theoretical stage, promises geostrategic might for Greece, Cyprus and Israel, as well as the USA, on southeast Mediterranean energy matters, especially against Turkey’s opposition to hydrocarbon exploration within Cyprus’ Exclusive Economic Zone (EEZ).

The pipeline plan also promises to break Russia’s dominance of gas supply to the EU.

 

 

Greek-Cypriot-Israeli energy summit highlights US interest

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

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

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

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

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

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

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

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

Continuation of energy strategy minister’s guide at Cairo forum

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Recently appointed energy minister Costis Hatzidakis will formally commence work on promoting Greece’s international energy relations at his first meetings abroad, today and tomorrow, at the East Med Gas Forum in Cairo.

The minister, in recent speeches, has already made clear his interest in supporting a national strategy shaped to bolster the country’s energy security, elevate its geopolitical role and fuel economic growth.

Strategic partnerships with Cyprus, the USA, Israel and Egypt will play a pivotal role in this effort.

Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority will all be represented at the Cairo forum.

Hatzidakis, Greece’s energy minister, is also expected to discuss energy partnerships and regional security with US energy secretary Rick Perry, who is in the Egyptian capital as part of a tour of the east Mediterranean.

Development of the submarine East Med gas pipeline, a project promising security and stability for the wider region, is a leading priority  for Greece.

On a wider level, the minister can be expected to carry on supporting a national strategy pursued over the past decade to establish Greece as a pivotal energy player in the region and key problem solver of regional energy partnership issues.

As for other major energy infrastructure projects, the new Greek government will continue to provide national support for the swift completion of the Trans Adriatic Pipeline (TAP), planned to transport Caspian natural gas to Europe, and the Greek-Bulgarian IGB gas grid interconnector. Other investment plans such as the Alexandroupoli FSRU and the Kavala underground gas storage facility will also keep receiving the support of Greece’s administration.

EDEY to drum up Greek oil, gas hopes at Italy, Romania events

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Spurred by recent significant gas field discoveries at Cypriot and Egyptian offshore blocks and the favorable prospects these have generated for the wider region, top officials at EDEY, the Greek Hydrocarbon Management Company, will be looking to attract major foreign investors to new Greek blocks at two industry events in Italy and Romania.

EDEY chairman Yiannis Basias, who is in Ravenna, Italy today to attend the Offshore Mediterranean Conference & Exhibition, a leading industry event, will be exploring the potential interest of oil majors, including Italy’s ENI, for new offshore blocks in the Ionian Sea and off Crete to soon be licensed out.

EDEY chief’s deputy Spyros Bellas will follow up this effort in Bucharest at the Balkans & Black Sea Cooperation Forum, scheduled to take place April 4 and 5.

Tristan Aspray, ExxonMobil’s Vice President of Exploration for Europe, Russia, and the Caspian, hailed the wider region’s prospects at the recent Delphi Economic Forum in Greece. ExxonMobil is currently involved in exploration work being carried out in Romania.

Speaking earlier this month at London’s Global APPEX (Prospect & Property Expo), an event organized by the American Association of Petroleum Geologists (AAPG), Bellas, EDEY’s deputy, presented a road map of Greece’s hydrocarbon plans for 2019 to officials of foreign companies as well as latest and more detailed geological data on the Ionian Sea and Cretan regions. This data was processed by Norway’s PGS.

The strategy adopted at EDEY is to plan tenders for offshore blocks based on the interest expressed by foreign investors at this series of meetings.

Besides ENI and ExxonMobil, EDEY is seeking to convince Repsol, Shell and other US majors of Greece’s hydrocarbon prospects.

 

 

Three-way summit to support ambitious East Med project

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The leaders of Greece, Cyprus and Israel are expected to unite for a joint statement in support of the East Med natural gas pipeline’s development as well as the reinforcement of regional energy security at a summit in Jerusalem this Wednesday, where they will be joined by US Secretary of State Mike Pompeo.

The anticipated declaration by Greek Prime Minister Alexis Tsipras and his respective Cypriot and Israeli counterparts, Nicos Anastasiades and Benjamin Netanhyahu, will represent yet another step towards the development of East Med, promising a transportation route for regional natural gas to  EU markets.

Pompeo’s presence at the forthcoming three-way summit, combined with ExxonMobil’s recently declared intention to take part in a new round of Israeli tenders offering licenses, make clear Washington’s determination for a leading role in the Mediterranean.

Discoveries of major natural gas fields in the region and plans for EU-bound transportation routes have increased US interest.

However, many obstacles still lie ahead for the East Med pipeline. These include Italy’s step back as a result of objections expressed by Italy’s Five Star Movement, a member of the country’s far-right coalition. Italy’s environmental ministry has ordered a new environmental impact study for Italy’s Otranto seaside location, where East Med is planned to reach.

Greece, Cyprus and Israel now appear to be examining alternative East Med routes towards Europe, the most favorable option being North Macedonia.

Though Egypt expressed support for East Med last week, Cairo plans to utilize the country’s LNG terminals with the aim of exporting gas in liquefied form. This infrastructure would have an advantage over East Med.

East Med’s commercial feasibility is another concern. Quantities and customers still need to be assured.

 

 

Greek-Cypriot-Israeli deal for East Med pipeline likely this month

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A three-way agreement between Greece, Cyprus and Israel for the development of the East Med natural gas pipeline, planned to carry Cypriot and Israeli natural gas to the EU via Greece and Italy, appears increasingly likely to be signed by the leaders of the three countries at a Tel Aviv summit scheduled for March 20.

A draft of the planned agreement is currently being fine-tuned in Brussels.

Despite the emergence of a growing number of reports contending an agreement is near, objections expressed by Italy’s Five Star Movement, a member of the country’s far-right coalition, could turn into a problem for the East Med pipeline plan.

Italy’s environmental ministry has ordered a new environmental impact study for Italy’s Otranto seaside location, where East Med is planned to reach. Incidentally, the TAP project to carry gas from Azerbaijan to the EU is also planned to reach this spot. The Five Star Movement has also raised environmental concerns over this project.

Lebanon is another country in the region opposing East Med as a result of its ongoing EEZ dispute with Israel. Turkey, not on good terms with Israel and unsettled by the evolving Israeli-Cypriot cooperation, also opposes the project. Cyprus is continuing its hydrocarbon exploration activities, adding to Turkey’s concerns.

Meanwhile, Greek energy minister Giorgos Stathakis arrived in Houston, Texas yesterday to take part in Ceraweek 2019, an international energy conference running until Friday.

Stathakis is scheduled to take part in a panel discussion tomorrow on east Mediterranean developments following recent natural gas discoveries by Cyprus and Israel. His Cypriot, Israeli and Egyptian counterparts will also join this panel.

Sideline talks, by these officials, on regional energy matters are expected.

Finalized CAT agreement expected within fortnight

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Greece and the European Commission are no more than a fortnight’s time away from reaching a deal on the country’s CAT mechanism, reliable sources closely following ongoing negotiations on the matter between the energy ministry and Brussels officials have informed.

Once an agreement is finalized, Brussels will deliver its notification, in other words a finalized list of observations on the Greek CAT plan. Its finalized look, to emerge following any needed adjustments, could be announced by the end of March, barring unexpected developments.

A certain period of time, depending on the pace of bureaucratic procedures in Brussels, will then be needed for the plan’s approval by the European Commission. This will enable preparations for the first CAT auction, expected, without a doubt, within 2019.

The nucleus of the Greek CAT plan, based on an Italian model that has already been endorsed, complies with EU directives, the European Commission has already recognized. Brussels officials have apparently requested revisions from Greece that will result in a CAT mechanism version sharing an even greater amount of similarities with its Italian equivalent.

Greece’s new CAT plan mainly concerns private-sector thermal electricity producers and the main power utility PPC as it will greatly shape their operating conditions over the next decade.

Investors considering PPC’s Megalopoli and Meliti power stations included in an ongoing bailout-required disinvestment of lignite units are also monitoring developments as the resulting CAT plan will greatly determine the earning potential of these units.

The PPC’s Ptolemaida V power station, now under construction, is expected to be among the units to qualify for CAT remuneration.

DESFA, Snam also considering Greek-Italian pipeline crossing

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

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

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

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

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

 

Serbia discussed as Italy alternative for East Med project

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An alternative route, replacing Italy with Serbia, for the ambitious 5 billion-euro East Med natural gas pipeline, planned to carry southeast Mediterranean natural gas deposits to the EU via Greece, was discussed at a five-way meeting in Thessaloniki last Friday between leading energy-sector officials representing Greece, Israel, Bulgaria, Serbia and the US.

The meeting’s participants expressed concern over the new Italian coalition’s unfavorable view of such projects. In June, the Italian coalition described as “pointless” the Trans Adriatic Pipeline (TAP) project, the final stage of a bigger project – the Southern Gas Corridor – that will take Azeri gas to western Europe. Intended to diversify Europe’s natural gas sources and lessen the reliance on Russia, the TAP project represents the cornerstone of the EU’s energy security policy.

An extremely complex 1,900-km project whose greatest part would run underwater, East Med is planned to conclude in Italy. It is being supported by the EU as a PCI- status project.

Serbia’s mining and energy minister Aleksandar Antic, one of the five participants at the Thessaloniki meeting, held within the framework of the Thessaloniki International Trade Fair, is believed to have embraced the plan for an alternative East Med route that would include his country – should Italy not clarify its position.

 

Wholesale power prices rise, perilous times for suppliers

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Increased wholesale electricity prices in Europe, still only partially reflected in the Greek market, are increasing the challenges faced by local suppliers.

CO2 emission right costs have risen over the past three months, especially in May, while fuel and natural gas price levels have also climbed to remain at elevated levels.

These developments have sharply increased prices of electricity futures markets contracts both in Germany, guiding European developments, and in regional markets impacting Greece, namely Hungary, which shapes prices in Balkan countries interconnected with Greece, as well as Italy, a key market also interconnected with the Greek grid.

In Germany, wholesale electricity prices rose by approximately 10 euros per MWh in a month. In Italy, current electricity futures contracts concerning delivery in July are being established at levels of around 75 euros per MWh.

In Hungary, energy supply term contracts covering all of 2019 (CAL-19 contracts) rose by 6.3 percent in May, from 47.45 euros per MWh to 50.78 euros per MWh. Compared to price levels in March, the cost of CAL -19 contracts has increase by 22 percent, from 41.65 euros per MWh to 50.78 euros per MWh.

These regional price increases are already impacting the Greek market, where the System Marginal Price, or wholesale price, averaged 56.33 euros per MWh in May. June contracts are being established at 59 euros euros per MWh.

Worse still for independent suppliers, the starting price at the country’s next NOME auction, next month, will be significantly increased.

Higher price levels in regional markets have made electricity exports a more attractive prospect for local traders, resulting in further upward pressure on local prices.

Given the current market conditions, lofty price levels reached at previous NOME auctions no longer look as bad, officials at independent supply firms have told energypress. Elevated NOME auction prices of 45.2 euros per MWh reached at the end of 2017 are no longer regarded as lofty and will soon be reminisced, independent supply firm officials said.

NOME auctions were introduced in Greece nearly two years ago to offer independent suppliers access to the main power utility PPC’s lower-cost lignite and hydrocarbon sources.

It remains to be seen whether independent suppliers, especially smaller players, will be able to handle these wholesale price increases as they push to penetrate the retail market. Export and trading will offer suppliers some profit opportunities but, at current wholesale price levels, most firms, including PPC, are incurring losses in the local retail supply market.

Under normal market conditions, wholesale price increases lead to higher retail prices. But this is not so in the Greek electricity market, still distorted. State-controlled PPC, the dominant player, does not set its retail prices based on cost but political decisions taken at the energy ministry, keeping electricity price levels lower than they should be.

This market distortion is affecting the ability of independent suppliers to compete and gain more respectable retail market shares as they are forced to follow PPC and keep their price offers low.

An upcoming reduction of the RES-supporting supplier surcharge will offer independent suppliers some relief, but it does not appear to be enough to offset the higher wholesale prices, while CAT payments paid by suppliers are expected to be reintroduced.

 

 

 

 

Exporters turn north, Greece-Italy link closed for maintenance

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The Greece-Italy electricity interconnection, closed over the past week for maintenance work, has transformed market conditions for local traders as the Italian market, normally offering alluring prices for exports during considerable parts of the day, is currently not accessible.

Over the past year or so, electricity amounts acquired at Greek NOME auctions and left unabsorbed by the local market have been exported to Italy.

As a result of the temporary block towards the Italian market, Greek electricity exports can currently only be channeled through gateways in the country’s north, as has been highlighted by a sharp increase of exports through this region.

Prior to the commencement of maintenance work on the power cable interconnecting Greece and Italy, electricity exports to the north were usually limited to no more than 1,000 MW per day. Over the past week, this figure has risen sharply to levels exceeding 9,000 MW.

Under normal circumstances, Greece’s interconnections in the north are primarily used for electricity imports which are then either absorbed by the local grid or relayed to Italy, Greece serving as a transit zone.

Wholesale electricity prices in neighboring markets north of Greece are generally lower than those available in Greece and Italy.

The increased electricity export activity presently witnessed through the country’s north once again highlights that electricity amounts acquired at local NOME auctions are not being used to intensify domestic market competition, as was intended by authorities, but, instead, greatly exploited by traders for export opportunities.

Conditions in Italy, Balkans seen subduing NOME prices

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Electricity suppliers taking part in this Wednesday’s second NOME auction for the year believe that appropriate conditions exist for a subdued price in the 30-something euros per MWh range, but unusual factors that would drive the price level to at least 40 euros per MW, which the suppliers hope will be avoided, cannot be ruled out.

The price at the year’s first NOME session reached 41.45 euros per MWh, while the price at the closing sesson for 2017 rose to 45.2 euros per MWh.

Current market conditions in Italy, the Balkans and central Europe – regions to which local NOME participants expect to export some electricity amounts to, permitted by the current NOME rules – are expected to help subdue prices at this Wednesday’s auction.

Normally, electricity prices are not elevated during summer periods, as is reflected by futures contracts covering the next three months.

The large electricity amount to be offered at the April 18 NOME auction, totaling 400 MW/h, is also expected to help keep bidding prices lower. The same amount is also planned for the next session, scheduled for June 18.

In addition, certain suppliers currently hold leftover NOME-related electricity amounts that have remained untilized. Consequent expenses, such as mandatory deposit payments for unused amounts and fines if this non-utilization period exceeds two months, push suppliers to sell excess amounts in the secondary market, even at below-purchase prices.

On the other hand, demand and prices could be driven higher on Wednesday if participants fear limited NOME amounts at future sessions, assuming all proceeds smoothly with the main power utility PPC’s bailout-required disinvestment of lignite units and, as a result, the government reaches an agreement with the lenders for reduced NOME amounts at future auctions.

NOME auctions were introduced in Greece about a year and a half ago to offer independent players access to the state-controlled PPC’s lower-cost lignite and hydropower sources.

 

 

High hydropower, RES output, exports prompt SMP swings

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The Greek electricity wholesale market’s System Marginal Price (SMP) has fluctuated wildly over the past three days, ranging from zero to 75 euros per MWh, key driving factors being the need to lower overfilled water reservoirs at hydropower facilities, increased RES sector output, as well as elevated electricity prices in Italy, which has spurred exports to the neighboring market.

Hydropower facilities have steadily provided 30,000 MWh over the past three days, while, during this period, RES output has risen to as much as 41,000 MWh, meaning the two sources have covered over half the country’s daily electricity needs.

Electricity imports rose to levels ranging from approximately 10,000 to 16,000 MWh over the past three days, while high prices in Italy have prompted electricity exports of roughly 9,000 MWh per day. This export activity has impacted Greece’s SMP during certain hours.

Last Sunday, for nine hours in total, the SMP was down to zero, whch lowered the day’s average SMP to just 29.41 euros per MWh. The increased contributions to the system by the hydropower and RES sectors left no room for imports, leading to the day’s zero-level SMP.

A day later, on Monday, the SMP rose sharply to 53.7 euros per MWh, and, for two hours, climbed even higher to over 75 euros per MWh, a level shaped by high-priced electricity exports to Italy.

A similar picture has prevailed today with the average SMP level positioned at slightly below 51 euros per MWh, as well as high-priced exports to Italy, which took the SMP to 71 euros per MWh for an hour.

The higher average SMP registered yesterday and today led to an increase in thermal production, reaching 52,000 MWh.

East Med natural gas pipeline MoU to be signed in Nicosia today

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Greece’s energy minister Giorgos Stathakis is in Nicosia today for a four-way Greek, Cypriot, Israeli and Italian meeting, along with EU participation, at which a Memorandum of Understanding for the East Med natural gas pipeline project is expected to be signed.

The prospective pipeline project is planned to carry southeast Mediterranean natural gas deposits along a route stretching from Israel to Europe.

Rejuvenated interest expressed by Italian officials in East Med has bolstered the ambitious project’s development prospects and prompted European Commission support for the project.

Preliminary studies co-financed by the EU have determined the project is technically feasible, financially sustainable and commercially competitive.

Its annual transmission capacity is planned to measure 10 billion cubic meters. The pipeline will be designed to enable a capacity increase to 16 billion cubic meters if needed. The project’s cost is estimated at 6 billion euros. Studies conducted to date indicate the project could be completed by 2025.

Following up on today’s MoU, technical teams representing Greece, Cyprus, Israel and Italy are scheduled to meet on December 21 to sign a finalized agreement.

Then, the leaders of Greece, Cyprus and Israel plan to stage a three-way meeting in Nicosia on January 8.

An article published by the Jerusalem Post to coincide with today’s four-way meeting presented the Greek-Cypriot-Israeli energy collaboration as part of a “series strategic interests” as well as an effort by the three countries to “restrict the Russia-Iran-Hezbollah axis in the region.”

This description has raised eyebrows and further complicates any attempt to determine hydrocarbon trends in the southeast Mediterranean, highly significant both geopolitically and geoeconomically.

 

 

Commercial interest suspicions raised over Italy power link problem

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Frequent problems disenabling the Greek-Italian grid interconnection to function for extended periods have raised suspicions that commercial interests, besides technical issues, may also be at play.

The interconnection’s latest breakdown, occurring at a time when crossboundary electricity trade is set to rise, has once again brought the issue to the fore. In response, RAE, Greece’s Regulatory Authority for Energy, and its Italian counterpart, have begun investigating the matter in an attempt to identify the causes behind the regular breakdowns.

The interconnection stopped operating in early October and is not expected to become available again until at least the end of the year.

RAE and Italy’s Terna informed of a technical issue at the Greek-Italian grid interconnection on October 9.

Inspections of the interconnection’s overhead segment in Greece did not reveal any issues, prompting Terna to focus its check on the submarine section, where a technical problem was reportedly identified. A specialized vessel was then recruited for the repair effort. According to initial estimates, work is expected to be completed by mid-December while the interconnection is seen working again within the last yen days of the year.

As a result of the disruption, a mechanism was activated on November 25 requiring RAE and Terna to cover Physical Transmission Rights (PTRs) until the damage is repaired.

Italy’s interconnections with France, Switzerland, Austria and Slovenia also encountered operational problems in October and November.

Grid capacities in the wider region are expected to be tested by extreme weather conditions this coming winter. All these factors combined could prompt a domino effect that may lead to electricity capacity issues in various parts of Europe and increase prices. If so, the adequacy of precautionary measures taken by RAE will be put to the test.

Cyprus taking on East Med investment, operational costs

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Cyprus willl take on investment and operational costs that may arise for East Med, a prospective pipeline to carry southeast Mediterranean natural gas deposits along a route stretching from Israel to Europe, RAE, Greece’s Regulatory Authority for Energy, and RAEK, its Cypriot counterpart, have agreed.

Both authorities also agreed that the division of the project’s overall cost is substantiated, making conditions mature for the project’s development to commence.

IGI Poseidon, a 50-50 joint venture comprised of DEPA, Greece’s Public Gas Corporation, and Italy’s Edison, is promoting the East Med pipeline.

At present, preliminary deep-sea survey work is being planned around Cyprus and Crete to determine the pipeline’s route.

Then, the next step, scheduled for December, will entail a four-way meeting to bring together the energy ministers of Greece, Cyprus, Israel and Italy for the signing of a Memorandum of Understanding.

The East Med pipeline is planned to cover about 1,900 kilometers and connect east Mediterranean deposits with western Greece via Cyprus, Crete and the Peloponnese.

Its annual transmission capacity is planned to measure 10 billion cubic meters. The pipeline will be designed to enable a capacity increase to 16 billion cubic meters if needed. Studies conducted so far indicate the project’s construction cost could reach 6 billion euros.

Officials plan to utilize prospective interconnections towards Bulgaria (IGB), Albania (IAP) and Italy (ITGI).

East Med was classified as a Project of Common Interest (PCI) by the EU in 2013, a decision that facilitates EU funding, while an EU-financed feasibility study was completed last year.

 

 

 

 

Italy persisting with Poseidon plan despite US objections

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Despite US concerns, Italy, citing the support of Brussels, is persisting with a plan aiming for the development of the IGI Poseidon pipeline, an older plan envisaged to transport Russian natural gas through Greece to southern Italy via a submarine Adriatic Sea crossing. This project would also incorporate Greek Stream, a pipeline option planned to run from the Greek-Turkish border. It is also referred to as Turkish Stream for its Turkish segment.

Highlighting Italy’s interest, the IGI Poseidon pipeline was included in a Greek-Italian declaration of cooperation signed yesterday between Prime Minister Alexis Tsipras and his Italian counterpart Paolo Gentiloni at a meeting on Corfu.

Italy, which has reached a series of agreements in recent times in support of the Poseidon pipeline – beginning with a memorandum of understanding signed in March between Eni and Gazprom for Russian gas supply via the Southern Corridor – contends that the project will not increase Russian gas supply to Europe. The objective, Italian officials support, is to relocate the delivery point of Russian natural gas from Italy’s north, via Austria, to the country’s south, seen as a lower-cost route.

The US may not favor this Russia-linked option but Italian officials are adamant as they believe that the TAP pipeline – currently being constructed to transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe via Greece’s north, Albania and across the Adriatic Sea to Italy – cannot satisfy Italy’s energy needs, both in terms of quantity and cost. In addition, the submarine IGI Poseidon plan is already fully licensed from the past.

Just days ago, the US Ambassador to Greece, Geoffrey R. Pyatt, speaking at a conference in Alexandroupoli, northeastern Greece, criticized Russia for increased meddling in the Balkans. The US is increasingly viewing Greece as crucial in its effort to counter Moscow’s dominance in southeast Europe.

 

Greek-Italian cooperation deal for energy lacking weight

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Prime Minister Alexis Tsipras and his Italian counterpart Paolo Gentiloni are expected to sign a declaration of cooperation in support of the East Med, Greek Stream and IGB projects at a meeting in Corfu today.

The Greek government, seeking to present an image of strong investment interest in Greece at present, would have preferred more content in this package. No Italian company managers are planned to join Gentiloni and his team on this trip.

The Italian head of state’s delegation will not include any Italian energy-sector officials representing Eni, Edison or Enel, all active in the Greek market, to a varying degree.

Besides the aforementioned pipeline projects, today’s declaration pales in comparison to the commitments made between Greece and France during French President Emmanuel Macron’s official two-day visit to Athens last week.

The pipeline projects declaration of cooperation between Greece and Italy to be signed today was prepared in Rome last week by the Greek energy ministry’s secretary general Mihalis Veriopoulos and Carlo Calenda, Italy’s minister of economic development.

The development of East Med, a 6.2 billion-euro project planned to transmit natural gas along a route stretching from Israel to Europe, will hold a key place in the bilateral declaration of cooperation to be signed on Corfu today.

An East Med agreement between Greece, Cyprus, Israel and Italy is expected to be signed in Cyprus towards the end of this year.

Italian officials are also especially interested in the Greek Stream project – also referred to as Turkish Stream for its Turkish section. A memorandum of understanding (MoU) signed by Russia’s Gazprom and Italy’s Eni last March for natural gas supply through the Southern Corridor has added momentum to the Greek Stream prospect.

For quite some time now, Italian authorities have sought to relocate the delivery point of Russian natural gas from Italy’s north – at the border with Austria – to the country’s south, a prospect that has bought the development of Greek Stream back into the wider picture. This pipeline option would involve a Greek-Turkish border connection with the prospective Poseidon pipeline, an older plan envisaged to run through Greece and reach southern Italy via a submarine Adriatic Sea crossing. Its capacity could reach 15 to 20 billion cubic meters annually.

Also at today’s Corfu meeting, Greek energy minister Giorgos Stathakis is expected to discuss issues concerning the neighboring country’s existing energy-sector investements in Greece with Calenda, Italy’s economic development minister.

Eni’s role in the EPA Thessaloniki and EPA Thessaly gas supply companies, Enel’s place in the RES sector, Greek hydrocarbon developments – Edison is involved – and opportunities offered by the Greek electricity market’s ongoing liberalization effort will all be on the agenda.

Stathakis may even seek Italian support for a market test concerning the main power utility PPC’s upcoming sale package of lignite units, despite the absence of France’s EdF, Edison’s parent company, from Macron’s delegation in Athens last week.

 

Four-way East Med agreement set to be signed tomorrow

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Greek, Italian, Cypriot and Israeli officials are scheduled to sign a Memorandum of Cooperation in Rome tomorrow as a further step in the long road leading to the development of East Med, a 6.2 billion-euro project designed to transmit natural gas along a route stretching from Israel to Europe.

Greece will be represented by the energy ministry’s secretary general Mihalis Veriopoulos at the meeting, to be staged as a prelude to an Intergovernmental Agreement for the pipeline project expected to be signed in Cyprus at the end of this year. The Cyprus agreement, which will also include Italian representation, will be a crucial step for the project’s investment prospects.

In the lead up to tomorrow’s  memorandum, Greece Cyprus and Israel had signed a joint declaration on June 15 in recognition of the significant progress made with preliminary technical and financial plans concerning the East Med project.

The energy ministers of Greece, Cyprus and Israel signed the declaration in June as part of a summit meeting at which the heads of state of all three countries made commitments to develop the project.

The East Med pipeline is planned to cover 1,900 kilometers underwater at a depth of as much as three kilometers and transfer approximately 10 billion cubic meters of natural gas, annually, from deposits in the southeast Mediterranean towards Europe.

The project is receiving full support from the European Commission as it represents a new natural gas supply source that promises to reduce Europe’s major energy reliance on Russia.

East Med pipeline will meet all prerequisites, Canete supports

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European governments and the Israeli administration today pledged full support for the development of the East Med project, designed to transmit natural gas along a route stretching from Israel to Europe.

An objective has been set for the pipeline infrastructure project to be ready by 2025. The East Med project is planned to measure some 2,000 km and connect Israeli and Cypriot natural gas deposits with Greece and possibly Italy. The project’s budget could reach as much as 6 billion euros.

“This is an ambitious project that is clearly supported by the European Commission as it carries tremendous value with regards to supply security and the objective for diversification,” noted the European Commissioner for Climate Action and Energy Miguel Arias Canete.

Following a meeting with the energy ministers of Israel, Cyprus, Greece and Italy, Canete told reporters he believes the East Med project will meet all prerequisites to enable financial commitment.

Israel’s energy minister Yuval Steinitz noted that the pipeline project could be ready by 2025. “But we will try to speed up and shorten this timeline,” Steinitz informed. Asked about Israel’s energy plans, Steinitz responded: “I will develop both pipelines,” referring to East Med and an Israeli-Turkish pipeline.

Elio Ruggeri, CEO of IGI Poseidon, the owner of the East Med project, told Reuters that, according to the current budget, the project is estimated to cost 5 billion euros to reach Greece’s gas network and 6 billion euros to reach the Italian system.

IGI Poseidon is a joint venture formed by DEPA, Greece’s Public Gas Corporation, and Italian energy group Edison.

The energy ministers of all East Med project participants said they plan to meet in Cyprus six months from now to discuss the pipeline’s further development.