kavala underground gas storage

Three bidders express first-round interest in South Kavala UGS tender

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Τhree interested parties have submitted expressions of interest to a tender offering use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece, The Hellenic Republic Asset Development Fund (HRADF S.A.) has announced in a statement.

Expressions of Interest were submitted by the following parties, in alphabetical order:

  • CHINA MACHINERY ENGINEERING CO. LTD. (CMEC) – MAISON GROUP
  • DESFA – GEK TERNA
  • ENERGEAN OIL & GAS

HRADF’s advisors will evaluate the aforementioned expressions of interest and submit to the fund’s Board of Directors their recommendation regarding the candidates that qualify for the next phase of the tender (binding offers phase).

The almost depleted natural gas field “South Kavala” is located in the southwestern part of the Prinos-Kavala basin, in 52 meters of water depth in the North Aegean Sea, about 6 km off the west coast of Thassos.

The duration of the concession agreement will be up to 50 years following the licensing of the UGS in South Kavala. The conversion of the natural gas field “South Kavala” into a UGS will be carried out by the concessionaire within a binding period to be determined in the concession agreement.

The UGS South Kavala is intended to serve as energy infrastructure that will enhance the security of supply in the Greek market as well as in Southeastern Europe, ensuring gas supply to end users and facilitating security-of-supply obligations of power producers and natural gas suppliers.

Storengy’s Kavala UGS tender exit prompts formation changes

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A decision by France’s Storengy (Engie) to not participate in a forthcoming tender offering an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north has prompted a domino effect of formation changes by groups of investors planning to bid.

GEK TERNA appears to have formed an association with gas grid operator DESFA for the tender after having previously agreed to join forces with Energean Oil & Gas and Storengy.

Energean Oil & Gas, holding a license for the virtually depleted South Kavala field, has not remained an onlooker. The company has also found a partner, believed to be domestic, from the construction sector, according to sources.

To date, Energean Oil & Gas has held talks with three major groups, Mytilineos, AVAX and Aktor, the same sources added.

A Chinese investor is also believed to be interested in the South Kavala UGS tender, staged by privatization fund TAIPED, but will not link up with any partners.

The tender is offering rights for the use, development and exploitation of the virtually depleted offshore natural gas field south of Kavala as a UGS facility for a period of up to 50 years.

Participants must submit first-round, non-binding offers by October 19 following three deadline extensions.

South Kavala UGS bidders talk formations as deadline nears

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Prospective bidders of an upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north are deliberating over possible partnerships as the October 19 deadline for official expressions of interest approaches.

Greek gas grid operator DESFA, Energean Oil & Gas and GEK TERNA will participate in the tender, according to enegypress sources, while some market officials believe a Chinese company, not yet revealed, is also interested.

All three Greek companies have remained tight-lipped on possible partnership formations for the tender. GEK TERNA and Energean Oil & Gas are believed to be discussing the prospect of teaming up, while DESFA and the Chinese company will most likely enter the tender alone, energypress sources informed.

The tender, staged by privatization fund TAIPED, will offer rights for the use, development and exploitation of the virtually depleted offshore natural gas field south of Kavala as a UGS facility for a period of up to 50 years.

Investments needed for the project’s development are estimated between 300 and 400 million euros.

The field is located approximately 6 kilometers from the west coast of the island Thasos, in the North Aegean Sea, at a depth of 52 meters.

Its development into a UGS facility promises to contribute to Greece’s energy security and that of southeast Europe.

Storengy exits UGS tender, partners seek new operator

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France’s Storengy appears to have stepped back from an upcoming tender for the privatization of an underground natural gas storage facility (UGS) at an almost depleted South Kavala offshore natural gas field in the country’s north, energypress understands.

Storengy, a subsidiary of the Engie group, had formed a three-member consortium with Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna for this tender.

Storengy’s apparent decision to withdraw from the South Kavala tender may be linked to a decision reached two years earlier by Engie for a revision of its international interests and investment plans.

Energean Oil & Gas and GEK-Terna, Storengy’s two partners for the South Kavala tender, remain interested in expressing first-round interest by a September 30 deadline, but to do so, they must find a new partner, a certified gas grid operator, as required by the tender’s regulations.

The two players have subsequently moved closer to gas grid operator DESFA, already eyeing this tender. According to sources, talks between the two sides have commenced. DESFA will need to hold a stake of at least 20 percent in any partnership formed.

Both sides are also believed to be considering other partnership options. Storengy’s withdrawal could also bring in unanticipated European operators.

Investments of approximately 300 to 400 million euros will be needed to develop the South Kavala UGS.

Two, possibly three, bidders for South Kavala UGS license

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An upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north is expected to attract the interest of two, or possibly three, bidding teams.

Interested parties have been given an extension to express non-binding first-round interest. Prospective participants are busy preparing.

The participation of Storengy – a three-member consortium formed by France’s Engie, Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna – is considered a certainty as this consortium was established in anticipation of this tender.

Greek gas grid operator DESFA, increasingly active, since its privatization, in various projects, including some beyond its more customary operator-related bounds, is seen as another certain bidder for the South Kavala UGS license.

Senfluga, the consortium of companies that acquired a 66 percent stake of DESFA, appears very interested in the South Kavala UGS tender. This consortium’s current line-up is comprised of: Snam (54%), Enagas (18%), Fluxys (18%) and Copelouzos group member Damco (10%).

Though Senfluga’s three foreign partners – Snam, Enagas and Fluxys – are examining the prospect of joining DESFA to express joint interest, separate bids from the two sides are considered likeliest. The main reason for this has to do with certain tender rules that restrict the ability of consortiums participating in the first round to then reshuffle, if needed.

Pricing policy regulations expected from RAE, the Regulatory Authority for Energy, ahead of binding offers, will be crucial to how the tender plays out as these rules will determine the project’s earnings potential and level of bids.

Bulgaria gas pipeline explosion highlights need for local projects

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Yesterday’s Bulgarian gas pipeline explosion in Bulgaria, prompting a supply cut into Greece from a northern route, yet again highlights how vital it is for Greece to develop two gas infrastructure project plans in Alexandroupoli, northeastern Greece, and Kavala, in the north.

The explosion of this pipeline, carrying Russian gas into Greece via Bulgaria, has not affected Greece’s energy security as supply from the alternate Kipoi route remains uninterrupted, while the contribution of high LNG reserves at the Revythoussa terminal, just off Athens, has also been crucially important.

However, a Greek energy crisis could have resulted if this accident were more serious, or if the Revythoussa facility did not exist, or, worse still, the accident coincided with even greater Greek-Turkish tensions than at present, which could have meant a cut in gas supply from Turkey, hosting one of Greece’s key gas import corridors.

The intensifying geopolitical instability of the wider region, which includes Turkey, an extremely troubling neighbor, makes imperative the existence of sufficient gas storage facilities to safeguard Greece’s energy security. Despite the precarious conditions in the region, Greece remains one of the European countries without sufficient energy storage infrastructure.

In addition to the existing Revythoussa LNG terminal, Greece’s infrastructure definitely needs to be reinforced by projects such as the Alexandroupoli FSRU and an underground gas storage facility at a virtually depleted offshore deposit south of Kavala.

 

US backs Greece’s east Mediterranean activities, major projects

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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.

Hydrogen factor needed for financing of South Kavala UGS

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Development of an underground natural gas storage facility (UGS) in the almost depleted South Kavala offshore natural gas field will require a solution incorporating hydrogen into the investment, estimated between 300 and 400 million euros, which would categorize the project as eco-friendly and facilitate European Investment Bank financing.

As has been made clear by the energy ministry, Greek privatization fund TAIPED, currently conducting a cost-benefit analysis, will need to consider this prospect and plan for a storage facility holding hydrogen or a mix of this fuel with natural gas. Installation of carbon-capture and storage technology may also be helpful.

The EIB will stop financing conventional natural gas projects as of 2022. The bank may exempt from this rule projects limiting their emissions to 250 grams per KWh of energy produced.

This emission limit can only be achieved if natural gas is mixed with hydrogen, a prospect requiring higher-cost technologies but aligning the UGS with EU policies for full decarbonization in Europe by 2050.

The privatization fund has just launched an international tender for the South Kavala UGS in an effort to achieve EU funding for the project before a crucial EU funding deadline expires.

As a Project of Common Interest, this UGS is eligible for funding through the EU’s Connecting Europe Facility, vital for the investment’s sustainability. However, investors behind the project will need to submit their CEF application by the end of 2020.

The UGS South Kavala is intended to serve as energy infrastructure that will enhance supply security in the Greek market as well as  southeastern Europe.

 

Tender launched for South Kavala underground gas storage facility

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The Hellenic Republic Asset Development Fund (HRADF), following the decision of its Board of Directors, has launched an international public tender process for the concession of the use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”, it has announced in a statement.

The almost depleted natural gas field “South Kavala” is located in the southwestern part of the Prinos-Kavala basin, in 52 meters of water depth in the North Aegean Sea, about 6 km off the west coast of Thassos.

The duration of the concession agreement will be up to 50 years following the licensing of the UGS in South Kavala. The conversion of the natural gas field “South Kavala” into a UGS will be carried out by the concessionaire within a binding period to be determined in the concession agreement.

The UGS South Kavala is intended to serve as an energy infrastructure that will enhance the security of supply in the Greek market as well as in southeastern Europe ensuring gas supply to end users and facilitating the security-of-supply obligations of power producers and natural gas suppliers.

Tender process

The tender process for the award of a concession agreement for the use, development and operation of the UGS South Kavala will be held in two phases: a) submission of expressions of interest and pre-qualification of interested parties and b) submission of binding offers and selection of concessionaire.

The details of the tender process are described in the Invitation to submit an Expression of Interest which is available on HRADF’s website. Interested parties are invited to submit their expression of interest by no later than August 31st, 2020, 14:00 (GR time).

PriceWaterhouseCoopers Business Solutions S.A. (Financial), ROKAS Law Firm (Legal) and Seal Energy Pty Ltd (Technical) act as advisors to the Fund regarding the tender process.

Gov’t committed to Prinos oil field sustainability, deputy tells

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The government is committed to supporting the sustainability of the offshore Prinos oil field in the country’s north, Greece’s only producing unit, heavily impacted by the coronavirus pandemic’s effects on the global economy, including record-low oil prices, deputy energy minister Gerasimos Thomas pledged last night in response to questions raised by MPs of the leftist Syriza party and KKE, the Greek Communist Party.

“We are committed to the oil field’s uninterrupted production, an effort through which jobs will be protected,” Thomas stated.

The government is currently negotiating with Energean Oil & Gas, license holder and operator of the offshore field, south of Kavala, for a solid solution, the deputy minister also informed.

A detailed announcement will be made once these talks have been completed and the government has shaped its proposals, the deputy minister told parliament after Syriza MP Soultana Eleftheriadou criticized him for being too vague with his remarks.

Thomas made note of the European Commission’s new framework for state aid as one of the solutions being worked on by the government. This framework provides flexibility, he pointed out.

The deputy minister also made reference to a government support plan for the Kavala region that includes the development of an underground gas storage facility at a virtually depleted offshore gas field south of Kavala, and an upgrade of the city’s port.

DEPA Trade, Infrastructure sales delayed for after summer

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The final rounds of privatization procedures for DEPA Infrastructure and DEPA Trade, two new entities formed by gas utility DEPA to facilitate its sale, will be postponed until after summer as a result of the pandemic’s impact on global economic activity and investments, pressuring asset values, sources have informed.

Investors are being offered the Greek State’s 65 percent stake and Hellenic Petroleum ELPE’s 35 percent share of DEPA Infrastructure and DEPA Trade.

However, the privatization fund TAIPED, combining its efforts with the energy ministry and RAE, the Regulatory Authority for Energy, intends to press ahead with a June launch of a privatization procedure for a depleted offshore gas field south of Kavala planned to be developed as an underground gas storage facility.

An appraisal of first-round offers submitted by nine investment teams for DEPA Infrastructure and that many more for DEPA Trade is expected to be completed within June.

Barring unexpected developments, TAIPED should announce its list of finalists for both sales next month. This will be followed by the opening of a virtual data room facilitating due diligence procedures for both companies.

Kavala gas storage unit cost-benefit study nearing completion

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A cost-benefit analysis being prepared by the privatization fund TAIPED for the development of a gas storage facility at a virtually depleted offshore gas field south of Kavala is nearing completion.

This analysis is needed for the facility’s privatization procedure, whose first-round tender will most likely be launched early in the second half of this year, energypress sources have informed.

TAIPED and RAE, the Regulatory Authority for Energy, are currently exchanging information on project details ahead of the tender.

A joint ministerial decision – another privatization prerequisite – issued last month offers terms and conditions.

Once the cost-benefit analysis has been completed, RAE, according to the ministerial decision, will have four months to determine a pricing policy formula for the south Kavala facility.

Besides private-sector investors, gas grid operator DESFA operator and its shareholders will also be able to participate in the tender on equal terms. The project will operate independently, even if DESFA emerges as the winning bidder.

 

Ministry seeking to reignite stalled energy sector initiatives

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The energy ministry is seeking to resume coronavirus-interrupted actions on a number of fronts, which, prior to the crisis, were expected to lead to major energy sector changes in 2020. These include the decarbonization effort, privatizations, green-energy infrastructure investments and a launch of the energy exchange.

The ministry’s strategic plan aiming to inject new impetus into these initiatives includes market liquidity protection through support mechanisms and bank loans for operators and key market players such as power utility PPC.

Efforts will also be made to accelerate decarbonization initiatives and keep alive pending energy sector privatizations, including those of gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade; the prospective sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; as well as an underground gas storage facility at a depleted offshore gas field south of Kavala.

Green energy investments, a key party of Greece’s revised and more ambitious National Energy Climate Plan, are expected to regain dynamic momentum as of 2021, following this year’s pandemic-induced disruption.

This is also the case for major infrastructure projects such as power grid operator IPTO’s grid interconnections for Crete, the south, west and north Cyclades and other areas. These interconnection projects require investments totaling more than 4 billion euros. These are expected to be completed by 2030.

Grid interconnection projects are also being worked on for the gas sector. Gas grid operator DESFA is looking to expand its network to cover 39 cities.

Kavala gas storage unit an independent grid project

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A prospective underground gas storage facility at a depleted offshore gas field in the south Kavala region will operate as an independent grid project, the energy ministry has decided, sooner than expected, through a joint ministerial decision reached following a favorable opinion offered by the Legal Advisor of the State.

Just weeks ago, the ministry had indicated it would soon launch a tender for the project’s development but defer a decision on whether the storage facility would operate as an independent or national grid project. However, a deferral may have led to ambiguity, unsettling investors.

As a next step, RAE, the Regulatory Authority for Energy, will head an effort for the preparation of a cost-benefit analysis in cooperation with the privatization fund TAIPED, the objective being to complete this study as quickly as possible.

Concurrently, TAIPED intends to begin preparations for an international tender offering the project’s development, usage and exploitation rights for a period of up to fifty years.

TAIPED will most likely stage the tender in June, energypress sources informed.

Besides private-sector investors, the tender will also be open, under equal terms, to Greek gas grid operator DESFA and its stake holders.

Local authorities are pushing to make up for lost time and secure financing for this PCI-categorized project through the EU’s Connecting Europe Facility.

 

DESFA wants key role in country’s infrastructure projects

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Gas grid operator DESFA, controlled by Senfluga, a consortium formed by Snam, Enagas and Fluxys for their acquisition of a 66 percent stake of the operator in 2018, is determined to play a leading role in all the country’s infrastructure projects as well as Greece’s wider natural gas-related developments.

“We see our role as being that of the leader in Greece’s gas sector and the wider region. We are interested in every gas project and want to be able to claim it. We also have the know-how and strong shareholders to play such a role,” a DESFA official told energypress.

According to sources, DESFA’s emergence as a prospective buyer of DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization procedure, prompted officials to slightly extend the sale deadline.

More specifically, Snam, the Senfluga consortium’s chief member with a 54 percent stake, requested a deadline extension for the DEPA Infrastructure as it has yet to decide on its partners for this bidding quest. Enagas and Fluxys each hold 18 percent stakes in Senfluga. The Copelouzos group’s Damco recently joined this consortium, buying a 10 percent stake.

DESFA’s influence is also believed to have persuaded officials to delay a decision on whether to classify the development of a natural gas storage facility at a depleted offshore gas field in the south Kavala region as a national or independent grid project.

Snam, Enagas and Fluxys are part of the six-member Trans Adriatic Pipeline (TAP) consortium.

DESFA, which has signed a Memorandum of Understanding for the Alexandroupoli FSRU, is now seriously considering to acquire a 20 percent stake in this venture, headed by Gastrade.

Other projects being considered by DESFA include a 175 million-euro Cretan LNG terminal that promises to resolve the island’s energy sufficiency concerns, as well as a 57.3-km gas pipeline connection linking the Thessaloniki area with North Macedonia, already included in the operator’s ten-year strategic plan.

 

Operating status decision on Kavala gas storage unit later

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The energy ministry is considering to soon launch a tender for the development of an underground gas storage facility at a depleted offshore gas field in the south Kavala region and defer a crucial decision on whether the facility will operate as an independent or national grid project for a latter date, energypress sources have informed.

The ministry wants to move ahead as fast as possible to meet EU funding deadlines for this project, on Brussels’ PCI list.

Prospective investors should not be concerned about the impact of this decision on their investment plans as the project’s status, whether independent or part of the national grid, will not affect the tender’s participation terms and conditions, energy ministry sources contended.

However, this element of ambiguity could unsettle investors and cause further delays, pundits have warned.

The pending decision on whether to classify the facility as an independent or national grid project appears to be the reason why the energy ministry has delayed issuing a related ministerial decision.

A ministerial decision is needed to clarify legal matters concerning the project as well as its pricing policy, regulated earnings and minimum yield. Privatization fund TAIPED needs this information to launch the tender.

RAE given 5 months to set Kavala underground gas storage charges

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RAE, the Regulatory Authority for Energy, has been given five months to determine the pricing policy, regulated earnings and WACC for a planned underground gas storage facility at a depleted offshore gas field in the south Kavala region, according to an imminent joint ministerial decision, energypress understands.

The launch date of the project’s tender will depend on funding for project studies through the EU’s Connecting Europe Facility (CEF) program. This essentially means that the privatization fund TAIPED will need to officially launch the project within the first half of this year to avoid missing out on CEF funds.

The project’s investment cost is estimated at between 300 and 400 million euros.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

The project, promising gas storage capacity of 360 million cubic meters, is considered vital for Greece as it will be able to maintain strategic reserves for considerable time periods.

Its development will help boost the performance level and strategic role of the Revythoussa LNG terminal just off Athens, and the prospective Alexandroupoli FSRU in the country’s northeast, as these will be able to supply the wider region greater gas quantities via the IGB and TAP gas pipelines.

The south Kavala project has been classified as a PCI project, offering EU funding opportunities, seen as crucial for the investment’s sustainability, according to some analysts.

South Kavala gas storage facility facing tough PCI schedule

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Despite being regarded as pivotal infrastructure for the country’s energy sector, a prospective underground gas storage facility at a depleted offshore gas field south of Kavala has remained stagnant in recent months, prompting fears that the required momentum needed for utilizing related wider developments could be lost.

The project’s inclusion on the EU’s PCI list offers financing opportunities, which, according to certain analysts, are crucial for the investment’s sustainability. However, this privilege comes with a strict schedule that must be maintained.

If the underground gas storage project is to qualify for funding offered by the EU’s Connecting Europe Facility (CEF) program, then authorities must submit a related application within 2020.

This essentially means a project promoter must be selected to prepare a business plan and apply for financing, all within the second half of this year.

Also, a tender for the storage facility’s privatization will need to be staged by privatization fund TAIPED by the end of the first half, experienced officials have pointed out.

A joint ministerial decision establishing a legal framework for the facility’s operation will need to precede the sale procedure. In addition, RAE, the Regulatory Authority for Energy, must, prior to the privatization, establish general guidelines determining pricing policy, regulated earnings, WACC, and a minimum capacity vacancy level that investors will need to maintain for national security reasons.

The chances of CEF financing are now starting to tighten up as the month of January is just about gone and there is no sign of a joint ministerial decision. When delivered, it should serve as a catalyst for ensuing initiatives.

 

 

 

 

 

Gas project financing limited by Brussels green energy policy

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The government faces a major struggle to secure EU funding for prospective natural gas projects as a result of the European Commission’s green energy policy, seeking to restrict, even end, support for investments concerning fossil fuels.

The energy and environment ministry’s secretary-general Alexandra Sdoukou, speaking last Friday at a National Conference on Growth, warned that the EU Partnership Agreement for 2021 to 2027 excludes, to a great extent, natural gas infrastructure from European Structural and Investment Funds.

Greece has planned a series of major gas infrastructure projects, including the Alexandroupoli FSRU, or floating LNG terminal in the northeast, as well as an underground gas storage facility at a depleted gas field in offshore South Kavala.

As for the transboundary East Med gas pipeline, energy minister Costis Hatzidakis, in a newspaper article published yesterday, noted that the project’s EU funding prospects would be improved if the pipeline acquired a greener profile by carrying  hydrogen mixed with natural gas from Egypt and Israel to Europe.

A recent European Investment Bank decision ending financing for all fossil fuel-related projects, including natural gas projects, as of 2021, was eventually revised to offer limited financing access to projects included on the European Commission’s latest PCI list.

 

Operator DESFA seeks role in Greek infrastructure projects

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Greek gas grid operator DESFA, driven by the three-member consortium of Snam, Enagas and Fluxys now controlling the company with a 66 percent stake, appears determined to stretch beyond its operator role and become one of the biggest and most pivotal players in the domestic energy market, judging by its interest in major Greek-related natural gas projects now in progress.

According to energypress sources, DESFA’s administration is looking to acquire stakes in three key energy infrastructure projects: the prospective floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece; the planned underground gas storage facility at a depleted natural gas field in the offshore south Kavala region; and DEPA Infrastructure, one of gas utility DEPA’s two new corporate entities heading for privatization.

The chief executives of Snam, Enagas and Fluxys, major European operators also holding respective stakes in the TAP project, met yesterday with Greek Prime Minister Kyriakos Mitsotakis.

The officials requested first-hand information on the government’s energy market decisions following the delivery of a new and more ambitious National Energy and Climate Plan and the signing of a trilateral agreement between Greece, Cyprus and Israel for the East Med gas pipeline.

The Greek operator’s controlling consortium also presented investment plans supporting the country’s decarbonization strategy and aspirations to become a regional energy hub.

EIB funding extension for PCI gas projects crucial for Greece

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The energy ministry’s leadership is hastening efforts to shape financing models for Greek PCI-classified natural gas projects as the European Investment Bank is expected to stop funding fossil-fuel projects beyond 2021.

The EIB had initially decided to stop funding all fossil fuel projects, including gas projects, as of 2020 before deciding to extend the period.

Greece, preparing major gas projects, had opposed the EIB decision. As part of this challenge, deputy energy minister Gerassimos Thomas held talks with the financial institution’s board of directors.

The revision now enables EIB funding for certain PCI-classified fossil fuel projects until the end of 2021. Thereafter, criteria will be applied to determine whether financial support can continue to be provided for projects on an individual basis.

Significant Greek natural gas projects are expected to be mature for financing and development around or beyond 2021.

The country is preparing to co-develop the East Med pipeline with Cyprus and Israel and also develop an FSRU in Alexandroupoli, northeastern Greece and an underground gas storage facility at a depleted natural gas field in the offshore South Kavala region.

The availability of EIB financing promises to prove crucial in determining the commercial viability of these projects.

 

 

Drastic changes to reshape energy sector by end of 2020

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Major developments in Greece’s energy sector, from lignite to natural gas, renewable energy, energy efficiency, as well as the geopolitical effects, promise a drastic reshape of the sector over the next year.

A first batch of power utility PPC’s existing lignite-fired power stations will have ceased operating as part of a plan for a full withdrawal by the end of 2023. PPC will have a reduced number of employees on its payroll. This will have positively impacted the utility’s profit figures.

Also, a first round of major renewable energy projects expected to be launched by PPC subsidiary PPC Renewables through partnerships, as part of the parent company’s wider turn to green energy, will intensify competition in the renewable energy market.

Furthermore, this time next year, assets currently belonging to gas utility DEPA, both in trade and infrastructure, may have been transferred to new owners. This development promises to reshape the entrepreneurial map as the private sector’s dominance will be absolute.

In the retail market, the number of players is expected to have diminished as a result of a new round of takeovers and mergers, amid heightened competition, as was also the case in telecommunications in the recent past.

In addition, Greece’s energy exchange will have clocked up several months of operations by the end of the year. Its arrival will intensify competition, remove market distortions and allow dormant potential to be realized through coupling with neighboring markets.

By the end of 2020, the TAP gas pipeline will have begun delivering its first orders of Azeri gas to Europe, the Greek-Bulgarian IGB gas pipeline will be nearing completion, while procedures leading to the development of the Alexandroupoli FSRU and an underground gas storage facility in the offshore area south of Kavala will have made progress.

Without a doubt, Greece’s energy sector appears to be waking up to the new reality, leaving behind anachronistic perceptions and embracing the green energy revolution. The country is now adopting new ways implemented by the overwhelming majority of European territories two decades earlier.

 

DEPA, ELPE, south Kavala gas storage privatizations in 2020

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The privatizations of gas utility DEPA – through two separate tenders offering the utility’s trade and infrastructure divisions that have resulted from a split designed for the sale – as well as the Greek State’s 35.48 percent stake in Hellenic Petroleum (ELPE), stand as the major sales planned by privatization fund TAIPED in 2020.

TAIPED also plans to push ahead with a tender for the conversion of a depleted natural gas field in the offshore South Kavala region into an underground gas storage facility in the New Year.

The DEPA and ELPE privatizations are expected to raise one billion euros from a target of 2.4 billion euros set for 2020. If achieved, this amount will represent a new privatization revenue record for TAIPED.

The DEPA Infrastructure tender is already in progress. Participants are due to express non-binding interest by February 14. The DEPA Trade tender is expected to be launched within January. TAIPED is confident both these sales can be completed in 2020.

A planned privatization to offer a 30 percent stake in Athens International Airport ranks as TAIPED’s other major sale plan for 2020. The Greek State currently holds a 55 percent stake in Athens International Airport S.A. or AIA, the airport authority that owns and manages Athens International Airport.

Kavala underground gas storage tender in first half of 2020, TAIPED announces

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A tender for the conversion of a depleted natural gas field in the offshore South Kavala region into an underground gas storage facility will be announced in the first half of 2020, according to privatization fund TAIPED.

The project, estimated to cost between 300 and 400 million euros, is needed for storage of strategic gas reserves.

Steps that will need to be taken in the lead-up to the tender have just been presented by the privatization fund’s administration, confirming that previous legal complexities have now been resolved.

Two steps are needed. A joint ministerial decision must be issued. Also, RAE, the Regulatory Authority for Energy, needs to prepare a regulatory framework offering prospective investors a reliable estimate on earnings they should anticipate, necessary before any binding bids can be submitted.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

Kavala gas storage framework revision to unblock project

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An article unblocking a tender for an underground gas storage facility in the offshore South Kavala region, to be developed through the utilization of a depleted natural gas field, has been attached to a multi-bill submitted to parliament by the ministry of health.

The article empowers RAE, the Regulatory Authority for Energy, to recover part of the gas storage facility’s required revenue from the domestic market.

The proposed amendment clarifies and supplements the existing framework concerning the underground gas storage and regulatory, according to a report supporting this specific article.

The new regulation is considered appropriate and necessary as, unlike LNG facilities, there is no provision for the possibility of total or partial recovery of the required revenue, the report added.

Greece is the only EU member state without an underground gas storage facility despite the country’s considerable gas-fueled electricity generation, the report notes.

EU member states store at least 20 percent of annual gas consumption at underground gas storage facilities.

This amendment was needed by privatization fund TAIPED for its launch of the asset’s privatization procedure as investors want to know the framework details concerning pricing and revenue recovery ahead of bidding.

Ministry amendment to unblock Kavala storage legal complexity

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The energy ministry has prepared a legislative amendment needed to overcome a legal complexity that has emerged concerning the development of an underground gas storage facility in the offshore South Kavala region through the utilization of a depleted natural gas field.

The amendment, which could be submitted to parliament today, will not lead to any fundamental changes concerning the project but purely focuses on resolving the legal obstacles obstructing its development, sources informed.

Once ratified, this amendment will pave the way for the publication of a related joint ministerial decision in the government gazette ahead of the asset’s eventual privatization.

Meanwhile, RAE, the Regulatory Authority for Energy, needs to prepare general guidelines determining the project’s pricing policy, regulated earnings, WACC level, as well as a minimum capacity level that will need to be kept vacant by the project’s investor for national energy security reasons.

RAE will have three months to prepare the guidelines once the joint ministerial decision has been published in the government gazette.

TAIPED, the privatization fund, has received an amount worth 1.6 million euros from the European Commission’s Connecting Europe Facility (CEF) to finance engineering studies required for the underground gas storage facility ahead of the privatization tender. This financial development was included in a updated Asset Development Plan (ADP) presented by TAIPED a fortnight ago. The investment’s cost is estimated between 300 and 400 million euros.

France’s Engie, Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

Legal details delay ministerial decision for gas storage facility

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A joint ministerial decision concerning the operating regulatory framework for a prospective underground gas storage facility in the offshore South Kavala region has been held back by a latest administrative obstacle.

The decision, prepared by the energy ministry, has been put on hold until legal details are resolved, sources noted.

Despite the emergence of this latest hurdle, the ministry will soon be in a position to clear it, energy minister Costis Hatzidakis announced yesterday.

Meanwhile, RAE, the Regulatory Authority for Energy, has begun preparing general guidelines to determine pricing policy, adjustable earnings, minimum WACC levels, as well as compulsory vacancy levels that will need to be maintained by the project’s developer as support for national energy security.

Once the joint ministerial decision has been published, RAE will have three months to complete the  framework so that bidders will have its details when the time comes to submit binding offers.

TAIPED, the privatization fund, plans to stage a tender offering the underground gas storage facility within the first six months of 2020.

To be developed at a depleted natural gas field, the underground gas storage facility will offer a storage capacity of at least 360 million cubic meters.

The investment’s cost is estimated between 300 and 400 million euros. France’s Engie, Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender.

DESFA, the gas grid operator, is also expected to participate in the tender.

A total of 642 underground gas storage facilities offering an overall capacity of 333 bcm, approximately 11 percent of global gas consumption, operate around the world. In the EU, 126 such facilities offer a total gas storage capacity of about 80 bcm.

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.

Elpedison makes dynamic gas market move for 2020, Balkans also eyed

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Elpedison’s strong turnout for gas grid operator DESFA’s annual reservation of LNG slots at the Revythoussa terminal just off Athens highlights the company’s strategic decision aiming for a leading role in the wholesale gas market, which it entered last year.

Elpedison has reserved 22 slots, roughly one-third of a total of 65 slots offered by DESFA for the terminal in 2020.

Mytilineos, the country’s biggest LNG importer, also booked 22 slots. Gas utility DEPA reserved 14 slots, while Heron booked seven slots.

Elpedison considers its involvement in the wholesale and retail gas markets just as important as its activities in the electricity market, chief executive Nikos Zahariadis underlined in comments to energypress. Elpedison will bolster its gas market presence in 2020, he added.

Storage and gasification capacity increases at the Revythoussa LNG terminal have played an instrumental role in helping liberalize Greece’s gas market. This development, along with lower-priced LNG, compared to pipeline gas, has created market prospects and opportunities. Elpedison operates two gas-fueled power plants.

Besides the Greek market, Elpedison, just like all other corporate groups importing and trading gas, also sees opportunities in Balkan markets. The company already sells modest gas quantities in Bulgaria and Romania but is aiming for a significant increase in 2020.

Greece is developing into a gas hub for supply to the wider southeast European region, Zahariadis, Elpedison’s chief executive, noted. Major international gas infrastructure projects such as the TAP, IGB, Alexandroupoli FSRU and underground gas storage facility in the offshore South Kavala region are expected to be completed within the next few years, he stressed.

 

Ministerial decision signed for Kavala underground storage

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The environment and energy ministry has signed a long-awaited ministerial decision for the development of an underground gas storage facility in the offshore South Kavala region through the transformation of a depleted natural gas field, an unprecedented venture in Greece.

The country, as a result of this project, situated 30km south of Kavala, will join the list of EU member states contributing to the continent’s underground gas storage capacity and energy security.

Deputy energy minister Gerassimos Thomas and the ministry’s secretary-general Alexandra Sdoukou have completed all preparations needed for the project’s operating framework.

The ministerial decision essentially outlines the legal terms concerning the facility’s operation, including licensing requirements for development and exploitation, sources informed.

RAE, the Regulatory Authority for Energy, needs to decide on the project’s WACC level, or minimum acceptable rate of return for investors, the sources added.

A total of 126 underground gas storage facilities operate in the EU, offering an overall capacity of approximately 80 billion cubic meters, recent data showed.

Internationally, a total of 642 underground gas storage facilities have been developed for an overall capacity of 333 billion cubic meters, approximately 11 percent of global gas consumption.