kavala underground gas storage

Ministry closing in on Kavala underground gas storage model

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The energy ministry is close to deciding on a business model for a prospective underground gas storage facility in the offshore South Kavala region, the objective being to ensure the investment’s sustainability without overburdening consumers.

Numerous alternatives have been examined so far but a model applied in France and Italy appears to be the most favored, energypress sources informed.

The content of an upcoming joint ministerial decision is now at a mature stage following efforts that have now lasted nearly two years, energy ministry officials noted.

The ministerial decision will determine the licensing, development and exploitation terms for the project, 30km south of Kavala, where a depleted natural gas field is planned to be converted into an underground gas storage facility.

Swift progress is needed as Greece will need to request EU financing for the project, on the PCI list, in 2020. If the request is delayed until 2021 then the available funds could be severely diminished and absorbed by other European PCI-status projects.

The underground gas storage facility is vital for Greece’s electricity grid given the anticipated increase of gas consumption to be prompted by the planned development of combined cycle power plants. Five market players, Mytilineos, Elpedison, GEK TERNA, Elval Halkor and Karatzis, have expressed interest to develop such units.

Privatization fund TAIPED will take over proceedings for a tender once the project’s business model has been decided. The investment is expected to reach between 300 and 400 million euros. Its storage capacity is estimated at between 360 and 720 cubic meters.

Greece is the only EU member without an underground gas storage facility. All other member states maintain facilities covering at least 20 percent of their annual gas consumption needs. Many more similar facilities are currently being planned around Europe.

Slight delay, to early 2020, likely for Kavala gas storage tender

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A tender for the utilization of a depleted natural gas field in the offshore South Kavala region as an underground gas storage facility appears headed for a slight delay and could be launched in early 2020, instead of late 2019, as a result of a deadline extension, from August 28 to September 9, granted to participants of a preceding tender looking to appoint a technical consultant for the project.

Besides the preliminary tender’s deadline extension, granted by the privatization fund TAIPED, a still-undelivered co-ministerial decision to determine the operating regulations of the storage facility is another matter that has increased the likelihood of a delay in the project’s competitive procedure. Even so, a launch by late 2019 has not been entirely ruled out.

The technical consultant will be tasked with preparing the tender’s details and offering TAIPED advice on the level of appropriateness of the plan to convert the depleted natural gas field into a gas storage facility, its equipment and interconnection needs, and other matters.

France’s Engie, Energean Oil & Gas and GEK-Terna have formed a consortium named Storengy in anticipation of the project’s tender.

 

Copelouzos’ DESFA 6.6% buy inspection ready by September

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RAE, the Regulatory Authority for Energy, expects to complete its inspection of the Copelouzos group’s entry into gas grid operator DESFA early in September, enabling the agreement’s completion.

Earlier this month, the Copelouzos group’s Damco agreed to buy a 10 percent stake of Senfluga, a consortium formed by Snam, Enagas and Fluxys for the acquisition of a 66 percent stake of DESFA last year. This promises to offer Damco a 6.6 percent share of DESFA.

RAE’s endorsement could be delayed beyond early September if the authority requests further details on the agreement, some sources warned.

Damco’s decision to acquire a 6.6 percent stake of DESFA, officially announced on August 5, signals the Copelouzos group’s interest for a wider association with Snam, Enagas and Fluxys in international infrastructure projects.

The Senfluga consortium was established with Snam as its main shareholder, holding a 60 percent stake, joined by Enagas and Fluxys, each with 20 percent stakes.

The Copelouzos group, in association with Gaslog, an international LNG carrier run by Panagiotis Livanos, has launched an effort for the development of an FSRU in Alexandroupoli, northeastern Greece. Greek gas utility DEPA, its Bulgarian peer Bulgartransgaz, and private investors are also expected to become involved in this project.

Highlighting the domestic natural gas market’s growing potential, DESFA is also eyeing an imminent tender for the development of an underground gas storage facility at a depleted natural gas field in the offshore South Kavala region.

 

Kavala underground gas storage tender later this year

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A tender concerning the utilization of a depleted natural gas field in the offshore South Kavala region as an underground gas storage facility is expected to be launched by the privatization fund TAIPED towards the end of the year.

The privatization fund has informed the energy ministry on the progress of preparations, energypress sources informed.

A month ago, on July 12, TAIPED launched a tender seeking specialized preliminary services for the project.

The winning bidder of this initial procedure, expiring August 28, will need to prepare the technical details of the project’s eventual tender and offer consultancy to the privatization fund on the prospective underground gas storage facility’s feasibility and demands.

The recently appointed energy minister Costis Hatzidakis has made clear his intent to utilize the depleted natural gas field.

France’s Engie, GEK-Terna and Energean have formed a consortium, named Storengy, in anticipation of the project’s tender.

Greek gas grid operator DESFA is also believed to be eyeing the project, included in the EU’s list of PCI projects.

The project’s budget is estimated at between 300 and 400 million euros, while its storage capacity could end up being anywhere between 360 and 720 million cubic meters, as much as 10 percent of the country’s annual natural gas consumption.

The prospective underground gas storage facility is regarded as infrastructure that will complement – rather than compete against – the country’s existing LNG terminal on Revythoussa, an islet just off Athens, as well as a prospective FSRU in Alexandroupoli, northeastern Greece, helping establish Greece as an energy hub.

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.

PCI hopes for underground gas storage boosted by late effort

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NEWS UPDATE: 

Greek energy ministry officials have made a successful last-ditch effort ahead of this Sunday’s elections that boosts the country’s chances of keeping on the EU’s PCI list an underground gas storage facility in the offshore South Kavala region, planned through the development of a depleted natural gas field, energypress sources have informed.

An FSRU in Alexandroupoli, northeastern Greece, will also be on the PCI list, enabling favorable funding terms, the sources added.

Prior to this latest development, energy ministry officials assured that problems concerning the South Kavala project’s place on the PCI list would be overcome, while admitting the project had been negatively appraised by Brussels.

Earlier today, energypress reported: 

A project entailing the development of a depleted natural gas field in northern Greece’s offshore South Kavala region as an underground gas storage facility appears likely to be removed from the European Union’s PCI list, a status enabling favorable funding.

Delays and the country’s early elections appear to have taken their toll and are believed to be key reasons behind the project’s likely removal from the PCI list.

The underground gas storage facility has been negatively reviewed by EU authorities amid procedures leading to the determination of a new and revised PCI catalogue for 2020-2021, energypress sources have informed.

Not all hope has been lost. Final decisions by EU authorities will be reached in October, which gives Greek officials some time to present their case in favor of the project’s PCI-list inclusion.

The asset’s ownership, along with the responsibility for its utilization, have been transferred to the privatization fund TAIPED, which has significantly delayed related initiatives as it obviously does not consider the project to be a top-priority issue.

The project’s budget is estimated at between 300 and 400 million euros, while its storage capacity could end up being anywhere between 360 and 720 million cubic meters, as much as 10 percent of the country’s annual natural gas consumption.

France’s Engie, as well as Terna and Energean, have formed a consortium to bid for the project whenever a tender is staged.

Engie, Terna, Energean join for underground gas storage facility

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Three major firms, each specializing in its own respective field, have formed a consortium to seek a contract to develop and operate a depleted natural gas field in northern’s Greece’s offshore South Kavala region as an underground gas storage facility, energypress sources have informed.

Storengy, belonging to France’s Engie group, Energean Oil & Gas, holder of a license for the South Kavala field, and technical firm Gek Terna are the three players joining forces for this contract, to be offered through a tender being prepared by the privatization fund TAIPED.

Greece remains the only country European country without an underground gas storage facility. All others maintain storage facilities covering over 20 percent of their annual natural gas consumption needs. At present, many countries in Europe are planning to develop additional such projects over the next five years.

Underground gas storage facilities play a key role in subduing carbon emissions as a result of the flexibility they offer to renewable energy sources.

Consortium member Storengy is Europe’s biggest developer and operator of underground gas storage facilities. It currently operates 21 such facilities of all types on the continent.

Offering a capacity of between 360 and 720 million cubic meters, or 10 percent of annual natural gas consumption in Greece, the South Kavala underground gas storage facility will require an investment of between 300 and 400 million euros to develop. The project has been granted PCI status by the European Commission, enabling EU funding support.

 

Kavala UGS project to cost €240m, RAE official estimates

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An underground gas storage facility planned to be developed from a depleted natural gas field in northern’s Greece’s offshore South Kavala region will cost approximately 240 million euros and offer a transmission capacity of 360 million Nm3 per year, with a potential to be doubled, according to RAE (Regulatory Authority for Energy) official Nektaria Karakatsani, who discussed the project at a recent conference.

However, details concerning the investment cost’s recovery remain unclear, it was noted.

The UGS project has already secured a place on the European Commission’s PCI list, offering EU financing support and favorable terms. The inclusion highlights the underground gas storage facility’s significance for Europe’s strategy aiming to unify energy markets.

The UGS will greatly reduce the threat of energy crises for Greece should inflowing gas supply happen to be irregular, she underlined.

Greece launched a balancing platform for natural gas on July 1 and is currently planning its development into an organized gas market envisioning the country’s establishment as a regional commercial gas hub.

New gas entry points, besides the TAP route, which is scheduled to be launched early in 2020, will be needed to secure sufficient gas quantities and flexibility during this transition, the RAE official pointed out, adding the role to be played by the Kavala UGS during this stage will be vital.

TAIPED planning South Kavala UGS privatization for 2019

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State privatization fund TAIPED intends to commence a sale procedure in 2019 for a depleted natural gas field in northern’s Greece’s offshore South Kavala region to be utilized as an underground gas storage facility, according to fund sources, who view the asset as pivotal infrastructure for the country’s development into a regional energy hub.

Regulatory and technical matters concerning the asset’s prospective utilization still need to be worked on before the privatization fund stages a tender for this UGS next year.

Also, the energy ministry is preparing a necessary ministerial decision to classify the asset as an independent natural gas system.

This depleted natural gas field belongs to Greek State, while the Energean Oil & Gas company holds South Kavala’s exploration and production rights. These been extended over the past few years as a result of the Greek State’s indecisiveness on how to go about utilizing the depleted Kavala gas field. A further one-year extension, with an option for an additional year, is expected.

About a year ago, an energy ministry committee advised energy minister Giorgos Stathakis to pursue converting the depleted field into a UGS, a common practice in other EU member states, where a total of 162 such facilities with an overall storage capacity of 100 billion cubic meters have been developed.

The South Kavala asset could offer storage capacity of 950 million cubic meters following a needed investment estimated at between 250 and 280 million euros.

The asset had lost its PCI status before regaining it as a result of its potential.

Consulting firm PwC and the Rokas Law Firm have been hired for the privatization procedure.

Tender seen for subterranean gas storage unit in the north

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The energy ministry and TAIPED, the state privatization fund, are making preliminary  moves leading to an international tender for the development of a subterranean natural gas storage facility in the south Kavala offshore area through utilization of a virtually depleted gas deposit.

The ministry is preparing a ministerial decision that will officially brand the project as an independent natural gas system (ASFA), or private storage facility, a necessary step ahead of the tender. TAIPED is preparing official texts for the tender, which, according to energypress sources, will be announced in the second half of this year and most definitely within the year.

An exploitation license held by Energean Oil – following a series of mandatory extensions provided to keep the facility operational – is due to expire in November.

The project is not only seen as useful but necessary for bolstering the country’s supply security and chances of becoming a regional energy hub.

Details concerning the project’s development and exact role remain undetermined.

Besides moving to declare the depleted deposit as an independent natural gas system, which would lead to the staging of an international tender, authorities have also considered two other options. One entails offering the development rights to Energean Oil, holder of the deposit’s existing operational license. Passing on the subterranean storage facility’s  investment and utilization rights to DESFA, the natural gas grid operator, has also been considered.

The south Kavala gas deposit is still producing small amounts being exploited by Energean Oil. The company had proposed converting the virtually depleted deposit into a natural gas storage facility back in 2010. A related application was submitted by the firm the following year, shortly before control of the facility was passed on to TAIPED for appraisal. A period of indeciveness by the Greek State followed, which led to the project’s removal from the EU’s Projects of Common Interest list. The facility regained its PCI status this year as it is regarded pivotal for energy security in Greece and the western Balkans, while also having potential to support the TAP gas pipeline, now being developed and planned to cross northern Greece.

The south Kavala project’s cost is estimated between 250 and 300 million euros.

French energy group Engie, a successor of GDF Suez, Europe’s oldest energy firm, has expressed an interest in the south Kavala project. Company officials who were part of French president Emmanuel Macron’s delegation for an official visit to Athens last September singled out the south Kavala project. Engie is already present in the Greek market with a 25 percent stake in electricity supplier Heron.

 

 

France’s Engie interested in Kavala gas storage project

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French energy group Engie, a successor of Europe’s oldest energy company GdF Suez, has expressed an interest in the depleted south Kavala gas deposit in Greece’s north, expected to be developed as an underground natural gas storage facility.

Company officials were part of a delegation accompanying president Emmanuel Macron on his official visit in September.

Engie officials have already gained an understanding of the Greek energy market as the company maintains interests in independent energy firm Heron, active in electricity generation and supply as well as trade in the natural gas market.

The Engie team apparently singled out the prospective underground natural gas storage facility, sought additional information and, more recently, reiterated their interest.

The Greek government, especially its energy ministry, appears determined to utilize the depleted south Kavala gas deposit in the country’s north as an underground natural gas storage facility.

Its feasibility is strengthened by the prospective Greek-Bulgarian IGB gas system interconnector and extensions to Serbia and Romania.

Engie, a leading player in Europe’s natural gas market, is obviously interested in increasing its role in southeast Europe’s gas market. The French firm controls Europe’s biggest natural gas distribution network, is the continent’s biggest importer, owns Europe’s biggest storage facilities, and supplies 105 billion cubic meters of natural gas per year.

The south Kavala project is seen as essential in Greece’s overall effort to reinforce energy supply security. It would also take further an ambitious plan to establish the country as a regional energy hub.

At present, the government is examining three options. The first is to grant the underground natural gas storage facility’s development to Energean Oil & Gas, holder of the deposit’s exploitation rights, renewed just days ago.

The second option being looked at is to incorporate the underground facility into the national natural gas system with DESFA, the natural gas grid operator, as operator of the investment and its utilization.

The third alternative being considered is to classify the prospective natural gas storage facility as an independent unit and stage an international tender offering its development and exploitation rights.

TAIPED, the state privatization fund, now in control of this specific asset, the energy ministry and RAE, the Regulatory Authority for Energy, are expected to reach a decision within the next few weeks, according to the energy ministry’s secretary general Mihalis Veriopoulos.

The project has been reincluded on the EU’s Projects of Common Interest (PCI) list after being removed two years ago, indicating a wider European interest in the project.

 

 

 

 

 

 

License extension of south Kavala gas deposit signals storage utilization

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The government appears to be moving ahead with a plan to develop a depleted south Kavala gas deposit in the country’s north as an underground natural gas storage facility.

Last Friday, in the latest development, energy minister Giorgos Stathakis signed an agreement to extend the project’s license until November 23, 2018.

Early this month EDEY, the Greek Hydrocarbon Management Company, expressed its support for the project’s development in a statement forwarded to the energy ministry.

The Kavala project has been placed under the jurisdiction of TAIPED, the state privatization fund, since 2011. However, the fund has yet to make any serious moves on this front. Instead, the government believes the depleted gas deposit possesses major utilization potential.

Last February, the energy ministry assembled a working group headed by secretary general Mihalis Veriopoulos to examine natural gas storage solutions following problems encountered in Greece last winter. The depleted gas deposit in south Kavala is one solution under consideration.

This project’s development has also received backing from Energean Oil & Gas, which along with its subsidiary Kavala Oil, holds an exploitation license for the depleted south Kavala deposit.

On numerous occasions, Energean has requested to utilize the former deposit as a storage facility through a conversion of its current exploitation license into a natural gas storage license.

Kavala Oil’s managing director Dimitris Gontikas, speaking at a recent Capital Vision conference, noted that the conversion plan represents a key part of Greece’s natural gas supply security plan and would also reinforce the country’s geopolitical role, as is intended by the government.

The project has been reincluded on the EU’s Projects of Common Interest (PCI) list after being removed two years ago, indicating a wider European interest in the project. Subsequently, new feasibility studies are expected.

Older studies had estimated the project would cost approximately 400 million euros to develop, but this figure is expected to be considerably lower as a result of progress made in this domain.

 

 

 

Kavala gas storage facility to reenter PCI list, decisions today

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The development of an underground natural gas storage facility at a depleted deposit in south Kavala, removed from the EU’s list of Projects of Common Interest (PCIs) two years ago, is expected to be reincluded, which would provide the project with access to EU funding, while the Alexandroupoli FSRU, also in the country’s north, stands a decent chance of being added to the list, when regional working groups gather for a Brussels meeting today to make final decisions on the content of the 3rd PCI list. This finalized list will then need to be endorsed by the European Commission.

A first list of PCIs was published in 2013 and a second in 2015.

Energy projects are selected for PCI inclusion based on a number of criteria, including their impact on at least two EU countries, as well as their ability to enhance EU market integration, increase competition and security of supply.

The Alexandroupoli FSRU, whose development would facilitate LNG supply, especially American, to the wider Balkan region and help reduce Russia’s dominance, was not included on a provisional PCI list prepared on June 30 as a lead-up to the latest gathering of regional working groups.

The Greek government, maneuvering in search of political support for PCI inclusion of the Alexandroupoli LNG terminal, has received considerable European and US backing for the project, seen as one of strategic importance.

Kavala gas storage facility and Alexandroupoli LNG terminal aside, all other PCIs of Greek interest, five in total, should maintain their places on the updated list, energypress sources informed.

The Poseidon submarine gas pipeline linking Greece and Italy is one of these. This pipeline is planned to be incorporated with two other prospective projects, Turkish Stream, to transmit Russian natural gas to the region, and East Med, to carry southeast Mediterranean natural gas deposits along a route stretching from Israel to Europe.

East Med is also expected to keep its place on the PCI list.

So, too, is the submarine Euro Asia Interconnector, to link the Greek, Cypriot and Israeli electricity networks.

The Greek-Bulgarian IGB Interconnector, promising a cross-border gas pipeline link, and the Tesla natural gas pipeline, planned to connect with Turkish Stream for a vertical crossing through Greece, the Former Yugoslav Republic of Macedonia (Fyrom), Serbia and Hungary, make up the other two projects seen holding on to their PCI list places.

Kavala gas storage unit back on PCI list, FSRU in north ejected

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A plan to transform a depleted natural gas deposit in south Kavala, northern Greece, into an underground gas storage facility has been re-included on an unfinalized list of EU Projects of Common Interest (PCI), while the development of a new floating storage regasification unit (FSRU) in Alexandroupoli, northeastern Greece, to be developed by Gastrade, has been removed from the list.

Latest revisions to the list, still unfinalized, were made during a session on June 30. EU officials are expected to meet in mid-July to finalize the PCI list before it is endorsed by the European Commission.

Over the past few days, the Greek government has intensified efforts to also have the Alexandroupoli FSRU included on the PCI list, which would facilitate EU funding.

The south Kavala underground gas storage facility, now back on the PCI list, had been removed during a revision made two years ago.

Its construction cost has been slashed to about half of an initial estimate of 400 million euros, which makes the project’s sustainability less demanding.

Energean Oil & Gas, the Greek firm exploiting deposits in the wider Kavala region, holds the rights to the depleted south Kavala deposit. The company has made repeated requests for a conversion of its existing south Kavala deposit license into a gas storage license, which is permittted by current law.

All other infrastructure projects of Greek interest have retained their places on the PCI list, energypress sources have informed.

These include the Poseidon gas pipeline, planned to run from Greece to Italy, indicating that this project is a serious contender for a role in a prospective new route to carry Russian gas to Europe (Turkish Stream) as well as another major project to bring gas to Europe from the eastern Mediterranean (East Med).

The Euro Asia Interconnector, a submarine cable project to link the Greek, Cypriot and Israeli electricity networks, as well as East Med, a prospective gas pipeline to transmit gas from Cyprus’s Exclusive Economic Zone (EEZ) to mainland Greece via Crete, have also retained their places on the PCI list.

So, too, has the IGB, the Greek-Bulgarian Interconnector, for which a final investment decision is expected imminently.

Tesla, a prospective natural gas pipeline to offer a link from Greece to Austria, is also on the updated PCI list.

 

 

Energy crisis renews interest in Kavala gas storage project

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Spurred by the recent energy supply crisis in the wider region, the country’s energy ministry has formed a far more favorable opinion for the development of a depleted gas deposit in the Gulf of Kavala as an underground natural gas storage facility.

The energy crisis, prompted by the temporary closure of nuclear power stations in France, has, amongst other things, highlighted the need to be able to store natural gas, a fuel expected to stand as a key component in the country’s future energy mix, even if coal continues playing a vital role.

“Revythoussa [an LNG terminal on the islet of this name, just off Athens] is valuable but not enough,” a sector authority, retiterated by others, told energypress ahead of a new effort by Greece to shape an overall energy market strategy.

These officials said inititiaves will be taken that will seek to end the resistance of TAIPED, the state privatization fund, to the gas storage facility’s development. TAIPED, which controls the depleted Gulf of Kavala deposit, has seemed particularly reserved about its development.

Last summer, the recently replaced energy minister Panos Skourletis, while still at the ministry’s helm, openly criticized TAIPED for its handling of the Gulf of Kavala asset, noting that, since assuming its control, the privatization fund had shown no interest towards its development, despite the major importance of gas storage throughout Europe and the scarcity of such facilities.

According to energypress sources, a working group established by the energy ministry to explore the Gulf of Kavala deposit’s gas storage prospects intends to make moves that will enable the asset’s utilization, even if this means making an effort to have the depleted deposit’s control returned to the government.

Energy security and the role that an underground gas storage facility could play in reinforcing Greece’s geopolitical role on the energy map as well as the country’s effort to become an energy hub will stand as key arguments in the working group’s effort.

The Gulf of Kavala storage plan was initially categorized as a Project of Common Interest (PCI), enabling EU support, but this favorable status was retracted as a result of the lack of progress.