DEPA sales down by €210m in 2019, LNG, competition factors

Gas utility DEPA’s sales, down by approximately 210 million euros in 2019, a year in which gas consumption and import records were broken, highlight the domestic gas market’s intensified competition and impact on the corporation, which has just posted its annual results for last year on the company website.

Gas consumption in the Greek market last year reached 57.4 TWh, up from 52.4 TWh in 2018, while gas imports in 2019 totaled 57.7 TWh, the majority, 54.5 percent, in the form of LNG and the remaining 45.5 percent as pipeline gas.

Intensified competition and lower LNG prices were cited as key reasons behind DEPA’s reduces sales, from 970.9 million euros in 2018 to 760 million euros last year.

“International gas market conditions during 2019 were characterized by significant price reductions at international hubs and an LNG oversupply, which led to a corresponding reduction of LNG prices in spot markets,” DEPA noted.

These conditions encouraged opportunistic imports by major consumers in Greece who generally cover a great part of their needs through DEPA long-term supply contracts, the gas utility noted.

Besides lower LNG prices, DEPA’s long-term contracts for pipeline gas supply were another factor behind DEPA’s reduced sales figures in 2019.

DEPA’s administration successfully negotiated a supply contract revision with Russia’s Gazprom, effective as of the second half of 2019, enabling greater LNG indexing on pipeline gas prices. This revision will help bring about a rebound, the company anticipates.

Bulgaria gas pipeline explosion highlights need for local projects

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.

 

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.

 

DEPA, DESFA, Port of Patras sign MoU for LNG bunkering

Gas utility DEPA, gas grid operator DESFA and the Port Authority of Patras (PPA) have signed a memorandum of understanding, its objective being to promote the use of LNG as marine fuel, given the new opportunities and development prospects for the Port of Patras and the wider region, the three partners have announced in a joint statement.

In particular, the memorandum provisions to jointly explore the LNG market growth capacity in terms of the use of LNG as a marine fuel in Patras, as well as to study all the required actions and the business cooperation framework for the construction of small-scale LNG facilities, as stipulated in the Port of Patras’ master plan, the statement noted.

Furthermore, the three parties agreed to promptly establish a joint task force for the implementation of the MoU and the completion of the required studies so as to:

  1. a) explore the feasibility and the conditions for the construction of small-scale LNG facilities
  2. b) the formulation and submission of the proposal regarding the facilities’ construction financing by European or national resources and
  3. c) the determination of the terms and scheme of a potential cooperation of the companies from a legal and business standpoint, for the promotion of the project.

For its part, PPA will train the Port’s personnel that will support LNG supply procedures and will adapt the Port Regulation so as to include the supply of ships with LNG.

The signing of the MoU is the first step towards the implementation of LNG bunkering at the Port of Patras, expecting to add value to the Port, as it will enhance its competitiveness in the wider Adriatic and Ionian region. At the same time, it will have a positive impact on the environment through the use of LNG as marine fuel.

The use of LNG as a marine fuel has multiple social, economic and environmental benefits, such as the creation of new employment opportunities, reduced public health damage – caused by ship emissions in urban centers near ports and coastal areas – the upgrade of the natural environment by reducing emissions and noise pollution, as well as further development of local economies through the dynamics resulting from using LNG.

Compared to conventional marine fuels, LNG contributes to the reduction of carbon dioxide (CO2) emissions, sulfur oxide (SOx) emissions, nitrogen oxide (NOx) emissions and suspended particulate matter (PM).

It is noted that the Port’s master plan was updated in terms of small-scale LNG facilities under the co-financed by the European Union program Poseidon Μed ΙΙ (PMII), which is a practical roadmap towards the wide adoption of LNG as a safe, environmentally efficient and viable alternative fuel for shipping,  helping East Mediterranean marine transportation propel towards a low-carbon future. DEPA is the coordinator of the Poseidon Med II program, DESFA is the technical coordinator and Patras Port Authority  one of the main partners.

On the occasion of the signing of the Memorandum of Understanding, the CEO of DEPA, Konstantinos Xifaras, stated:

“DEPA is one of the key LNG suppliers in Greece, with great experience in related activities. In addition, as the coordinator of the European programs POSEIDON MED II and BlueHUBS, our company decisively contributes to the development of a comprehensive LNG supply chain for shipping and ports in the Eastern Mediterranean. In this context, DEPA is proceeding with the construction of a new LNG bunkering vessel for maritime use and the acquisition of two LNG Tanker Trucks that will serve the port of Piraeus. With this MoU, we join forces with DESFA and PPA to develop LNG facilities in the port of Patras, supplying the ships of the wider area with an environmentally friendly and, at the same time, competitive fuel as required by the EU’s and International Maritime Organization’s latest directives”.

For his part, the CEO of DESFA, Nicola Battilana, stated:

“Infrastructure is a key condition for the development of the regional and national economy. DESFA, as the Operator of the National Natural Gas System, is a strong supporter of any cooperation that contributes to the sustainable development of energy infrastructure. This MoU paves the way for examining the feasibility and the conditions for the construction of small-scale LNG facilities in one of the country’s main ports, while bringing Greece one step closer to developing a core LNG refueling network in maritime and inland ports by the end of 2025 and 2030, respectively, as defined by the DAFI Directive. Having as an ally sustainable development, the port of Patras strengthens its competitiveness to other ports in the Adriatic and Ionian region, while boosting local job openings and improving the environmental conditions of the city of Patras”.

The CEO of PPA Panagiotis Tsonis stated:

“Today is a great day for the Port of Patras. With the signing of the Memorandum of Understanding, we are taking an important step towards making our Port more modern and more competitive domestically and internationally. I want to thank the Management of DEPA and DESFA for the cooperation and I am confident that we will enter the implementation stage”.

Photo (left to right): Nicola Battilana – CEO DESFA, Konstantinos XifarasCEO DEPA, Panagiotis Tsonis- CEO PPA

Six Greek heavyweights among DEPA Commercial contenders

Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

Authorities, market players to discuss LNG terminal’s slot reservation rules

The latest developments of a plan aiming to revise slot reservation rules at gas grid operator DESFA’s LNG terminal on the islet Revythoussa just off Athens will be discussed between authorities and market players at a one-day conference planned by RAE, the Regulatory Authority for Energy, for this Thursday.

A latest proposal delivered by DESFA to RAE as part of consultation will serve as the basis of the discussion.

The new slot-reservation formula being worked on for the Revythoussa terminal will aim to maximize LNG shipments to the facility while also restricting time slots registrations made by traders purely for the sake of protecting gas market shares.

Power utility PPC and Motor Oil were both left off the Revythoussa facility’s unloading plan for 2020 after failing to secure slots amid conditions of heightened demand.

Authorities want to avoid a repeat of such a situation. PPC and Motor Oil had used the LNG terminal a year earlier.

Participants at this Thursday’s event will be offered the opportunity to present observations before Revythoussa rules are revised and implemented for next winter.

The event should offer LNG importers a clearer indication of the terminal’s new rules before ordering plans for 2021 are pursued. As has been the case this year, LNG demand is also expected to be elevated in 2021.

Gas imports up 17% in first four months, LNG at the forefront

Gas imports for both large and small-scale consumers increased by 17 percent in the year’s first four-month period, defying unprecedented market conditions brought about by the pandemic, especially during March and April, the peak of the lockdown.

Gas imports totaled 21,393 GWh between January and April this year compared to 18,211 GWh during the equivalent period a year earlier, according to data provided by DESFA, the gas grid operator.

During the four-month period, gas imports at DESFA’s LNG terminal on the islet Revythoussa just off Athens rose to 11,679 GWh, a 45 percent increase compared to a year earlier. This terminal was the national gas grid’s biggest entry point.

Sidirokastro, at the Greek-Bulgarian border, followed with a pipeline-gas quantity of 7,952 GWh, an 8 percent drop compared to the equivalent four-month period a year earlier. Even so, Sidirokastro remains an important entry point.

The country’s other pipeline-gas entry point, Kipoi, in the Evros region, northeastern Greece, registered a 13 percent year-on-year increase of natural gas imports to reach 1,762 GWh.

The aforementioned data reconfirms a market overturn that emerged last year to show LNG imports exceed incoming pipeline gas amounts via the grid’s Sidirokastro and Kipoi entry points.

This trend highlights the fact that major Greek energy market players have been able to secure competitively priced LNG and favorable delivery solutions.

Wholesale electricity prices rising, up to €47.30/MWh today

Wholesale electricity prices, determined by the System Marginal Price, are rebounding following a significant drop over the past few weeks.

The rise is being fueled by an anticipated increase in demand. A sidelined 600-MW line linking Greece with Bulgaria, depriving the system of electricity imports via this route, as well as a disruption in operations at an Elpedison power plant in Thessaloniki are two other contributing factors.

In addition, the Revythoussa LNG terminal just off Athens is not under any pressure, a factor subduing gas-fired unit bids and subsequently lowering the SMP.

Based on grid orders placed for today, the SMP has climbed to 47.30 euros per MWh, up from a level of around 30 euros per MWh five days earlier and 14.20 euros per MWh on May 1. Bidding by units has gradually risen since early May.

Demand, today, for domestic consumption and exports is estimated to reach 127 GWh, 40 percent of which is planned to be covered by natural gas-fired power stations, 30 percent by RES and hydropower plants, 23 percent by electricity imports, and 7 percent by lignite-fired power stations.

The SMP level will be determined by gas-fired power stations for 22 hours today, lignite-based generation will shape the price for one hour and imports for the remaining hour.

Mid-voltage battle toughens, reflecting lower wholesale cost

Competition between electricity suppliers has intensified in the mid-voltage category, where lower prices currently reflect a sharp drop in the cost of wholesale electricity and, subsequently, wider profit margins available to suppliers.

Competition has yet to intensify in the household and business markets despite discount packages offered by most electricity suppliers, including the power utility PPC, from the beginning of the coronavirus crisis.

This lack of competition has been attributed to a cautious stance adopted by independent suppliers as they wait to see how much profit margin leeway will be shed by a drop in electricity demand and electricity bill payment delays.

It is a different picture in the mid-voltage category, where suppliers are bombarding both existing and prospective customers with price offers.

Suppliers are spreading the risk of wholesale price fluctuations by diversifying their price offers. They are keeping a close watch on the System Marginal Price, determining wholesale prices.

The course of the SMP in coming days remains unclear. Signs of a possible rebound in wholesale electricity prices have emerged as the SMP is now clearly higher than levels registered last week.

Wholesale electricity prices have mainly fallen as a result of increased contributions to the grid by natural gas-fueled power stations, supplied low-cost LNG, as well as RES units.

 

Revythoussa at full capacity in May, 10 LNG orders scheduled

A total of nine LNG shipments are scheduled to be delivered to the Revythoussa islet terminal just off Athens in May, taking the facility to full capacity for yet another month, data provided by gas grid operator DESFA has shown.

Three LNG tankers are scheduled to bring in three big orders for a total of ten recipients in May.

The inflow has already begun. Last week, the Maran Gas Ulysses, a tanker belonging to the Aggelikousis group, imported 149,254 cubic meters for four buyers, Motor Oil, Heron, gas utility DEPA and Mytilineos, whose share, 74,627 cubic meters, was the biggest.

The next shipment, scheduled to be delivered to the Revythoussa terminal on May 20 by the Gaslog tanker belonging to the Livanos group, will deliver 147,710 cubic meters of LNG for Elpedison and power utility PPC, taking the bigger share of the two buyers, 127,031 cubic meters.

A third and final LNG shipment for the month is scheduled to arrive May 31 on the British Saphire tanker, owned by BP. This vessel will bring in 121,123 cubic meters of LNG for DEPA and Elpedison, the bigger of the two buyers with a 64,993 cubic-meter order.

A total of five big LNG shipments are expected in June for orders placed by Mytilineos, Elpedison and DEPA.

Wholesale prices slide, demand subdued, LNG abundant

Extremely low wholesale electricity prices are being registered at the energy exchange as a result of lower demand and an incentive for producers to place their units on the Day Ahead Schedule because of an oversupply of low-cost LNG they have needed to use by specific dates.

On May 1, the System Marginal Price, or wholesale electricity price, fell to 14.2 euros per MWh while overall demand was limited to 91.5 GWh.

On the same day, RES units and hydropower facilities covered 43 percent of demand, electricity imports covered 27 percent, and gas-fired units 25.8 percent.

SMP levels were also low in the lead-up to May 1. On April 23, the SMP was 29.5 euros per MWh with demand at 103.5 GWh. On April 25, the SMP slid to 26.5 euros per MWh and demand dropped to 101.5 GWh. On April 30, the SMP rose to 32.1 euros per MWh and demand reached 104.8 GWh.

Yesterday, the SMP was at 31.7 euros per MWh and demand registered at 109 GWh.

The SMP level for today has been forecast to drop to 29.3 euros per MWh with demand unchanged at 109 GWh.

Gas distributor DEDA’s 5-year development plan minus 8 cities

Gas distribution network projects in eight provincial cities have been removed from gas distributor DEDA’s five-year development plan approved by RAE, the Regulatory Authority for Energy, as their estimated completion dates exceeded deadlines by more than 18 months.

Projects in a total of six Peloponnesian cities as well as northern Greece’s Veria and Giannitsa had been included in the previous version of the DEDA development plan, covering 2020 to 2024.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, distributes to Greece’s areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

According to DEDA’s initial five-year plan, Tripoli, Corinth, Argos and Nafplio, all in the Peloponnese, were planned to gain network infrastructure enabling gas supply via a high-pressure pipeline operated by gas grid operator DESFA.

The plan also entailed the development of infrastructure for LNG supply from DESFA’s Revythoussa terminal, close to Athens, to the Peloponnesian cities Kalamata and Sparti.

Projects for CNG supply to Veria and Giannitsa in the country’s north were also excluded by RAE from the five-year DEDA plan it approved.

 

DESFA 10-year plan approved, virtual pipelines not included

Gas grid operator DESFA’s ten-year development plan has been approved by RAE, the Regulatory Authority for Energy, following a lengthy procedure, including consultation, that lasted several months.

A virtual pipeline proposal envisioning LNG supply to Crete, the north Aegean islands and the Dodecanese via tankers from the operator’s Revythoussa terminal just off Athens was left out of the approved plan. This is the ten-year plan’s only notable change compared to the draft forwarded for consultation.

LNG virtual pipelines serve as a substitute for conventional gas pipelines to enable the transport of LNG to points of use by sea, road or a combination of these.

The virtual pipeline proposal was removed from the DESFA ten-year plan following concerns expressed by consultation participants over higher surcharge costs for consumers that could have been imposed as part of the project’s cost recovery procedure.

The gas grid operator’s ten-year plan includes, for the first time, a natural gas outlet along the TAP route for the west Macedonia region in Greece’s north.

This TAP outlet, a project budgeted at 3 million euros and expected to be launched late in 2022, is intended to supply natural gas to the area’s provincial cities of Kozani, Ptolemaida, Florina and Amynteo for use at telethermal facilities as well as other energy needs in the post-lignite era.

The area’s telethermal system currently relies on energy produced by power utility PPC’s lignite-fired power stations, soon set for withdrawal as part of the country’s decarbonization effort.

 

Argentina oil, gas energy online summit planned for May 12

IN-VR is organizing the ​Argentina Oil, Gas & Energy Summit under the Endorsement of the British Argentine Chamber of Commerce, taking place completely online on May 12, 2020.

The event, gathering key authorities and investors, will focus on Argentina’s plans in the current oil price landscape, the COVID-19 impact on the market, Vaca Muerta, one of the largest shale formations in the world, and Argentina’s LNG plans.

The summit will gather government officials, key IOCs, investors and service providers that will discuss these topics and network with attendees online in sessions and private B2B meeting rooms.

All profits from tickets will be donated to ​NGOs and charities that support doctors combating the coronavirus and groups most affected in Argentina​.

Key topics on the agenda: 

● How will the current oil price landscape affect Argentina?
● How will the coronavirus affect Argentina?
● Argentina’s shale oil government policies
● Identifying E&P opportunities in Vaca Muerta
● Service provider opportunities in Vaca Muerta
● Argentina’s future plans for LNG
● What are the best companies to partner with in Argentina?
● Q&A: How do foreign investors view Argentina’s oil & gas industry?
● Human resources needs in Vaca Muerta and Argentina.

Presenters:

● Daniel Dreizzen, ​Former Secretary of Energy Planning, Argentina
● Jimena Blanco, Head of Americas, ​Maplecroft
● Gabriela Aguilar, General Manager, ​Excelerate
● Diego Garcia, Partner, ​Bain
● Claudio Spurkel, Global Sales Business Development Manager, ​Agira
● Mark LaCour, Oil & Gas Expert & Editor in Chief, ​Oil and Gas Global Network

For further information visit:
https://www.in-vr.co/argentina-online

Or contact:
felix@in-vr.co

 

 

 

Continual flow of LNG imports reshaping gas market

LNG is continuing to enter the Greek market through gas grid operator DESFA’s Revythoussa terminal just off Athens at a continual and elevated flow that is reshaping the overall gas market.

The Mytilineos group was the market leader in the first quarter, capturing a market share of more than 40 percent of gas imported into Greece either via the Revythoussa LNG terminal or pipeline infrastructure.

Gas utility DEPA, a more subdued LNG player in the first quarter as a result of take-or-pay costs linked to the company’s pipeline gas orders with Russia’s Gazprom and Turkey’s Botas, registered a first-quarter market share of approximately 30 percent.

Elpedison, propelled by the increased use of its gas-fueled power stations, captured a higher share of 15 percent.

The Greek gas market’s remaining 15 percent was shared by Prometheus Gas, power utility PPC and Heron.

PPC’s gas market share is expected to increase over the coming months as it has placed LNG orders via the Revythoussa terminal.

 

Gazprom gas supply clauses now a major burden for DEPA

Gas utility DEPA, whose long-term pipeline gas supply agreements with Gazprom have developed into a heavy burden amid a changing market of sharply reduced gas prices, is seeking more favorable terms.

Talks between the two sides have commenced but Gazprom officials do not appear willing to reexamine details at any great depth, sourced informed.

DEPA’s agreements with Gazprom, which include take-or-pay clauses, are no longer competitive. The Greek utility, on one of its unfavorable fronts, is pushing for a favorable revision to its take-or-pay clause concerning supply in 2019.

DEPA absorbed approximately 500 million cubic meters less than it had agreed last year, a shortage expected to cost about 100 million euros, based on the current supply terms agreed with Gazprom.

It is believed DEPA may escape with a smaller payment for 2019 and have leftover quantities transferred to future years.

Even so, the gas utility still faces a major problem for 2020. DEPA recently had its Gazprom supply contract for the year revised so that 40 percent of supply is indexed to the Dutch gas trading platform TTF, one of Europe’s biggest hubs. The other 60 percent has remained oil-indexed.

DEPA’s oil-indexed 60 percent of Gazprom supply for 2020 is far more expensive than LNG prices currently available in the market, meaning the gas utility will not be able to sell this proportion to  customers.

Essentially, DEPA’s ability to sell its Gazprom supply of gas in 2020 will be restricted to the TTF-indexed 40 percent proportion.

DEPA’s first-quarter results are not impressive and the situation seems set to deteriorate as international LNG prices keep sliding amid the global financial impact of the coronavirus pandemic. It is feared DEPA’s take-or-pay clause cost for 2020 will exceed the 500 million amount estimated for 2019.

Grid entry adjustment for PPC telethermal-linked lignite units

The energy ministry is set to satisfy a power utility PPC request prioritizing the grid entry of its lignite-based production for telethermal support without factoring in this input to calculations determining the system marginal price, or wholesale price.

This requested procedure already applies for PPC’s compulsory hydropower input and RES units.

Under the current system, state-controlled PPC is incurring losses when entering into the grid lignite-fired units for telethermal needs in the west Macedonia and Megalopoli regions. More specifically, the utility is being forced to not operate its gas-fueled power stations, despite their lower operating costs, prompted by the large reduction in gas prices.

PPC’s LNG purchases, as a result, are not being utilized.

The ministry is now preparing a legislative act for the adjustment. It could apply for a limited amount of time to cover remaining telethermal needs in the post-winter season.

Independent producers have reacted against the plan. Some producers appear determined to take the issue to the EU competition authority, noting priority rule exemptions can only be made for RES, Combined Cooling, Heat and Power (CCHP) and hydropower units.

 

Alexandroupoli FSRU market test offers total 2.6 bcm, viability assured

Binding capacity reservations for the prospective Alexandroupoli FSRU in northeastern Greece, whose second-round market test expired on Tuesday afternoon, amounted to 2.6 bcm, a tally that secures the project’s sustainability and paves the way for a finalized investment decision, energypress sources have informed.

Two Greek utilities, gas company DEPA and power company PPC, are among the participants who have reserved capacities, for long-term periods, the sources noted.

Bulgaria’s Bulgartransgaz and a Serbian company also confirmed earlier requests for capacity reservations.

Romania’s Romgaz did not turn up for the market test’s second round after expressing interest for a considerable capacity covering a lengthy period in the first round. Instead, two private-sector Romanian trading companies ended up submitting binding offers for Alexandroupoli FSRU capacities.

The Bulgarian, Serbian and Romanian interest highlights the potential of the Alexandroupoli FSRU to serve as a new natural gas gateway for southeast European markets, via the Greek-Bulgarian IGB pipeline, now under construction, as well as other existing and planned gas pipelines in the region.

Lower-cost oil, gas an obstacle for RES growth, electric cars

Lower-cost oil and gas, as well as solar module supply chain irregularities caused by the coronovarirus spread in China, the world’s dominant supplier of solar energy systems, have emerged as obstacles for RES sector growth and investments.

Numerous solar energy projects around the world are being delayed or postponed as a result of the solar module supply problems in China.

The recent plunge of oil and gas prices, prompted by the impact of the coronavirus spread on economies and a simultaneous oil-price war between Russia and Saudi Arabia, has suddenly made RES investments less competitive against conventional technologies in terms of electricity generation, energy efficiency or electrification of sectors such as transportation or shipping.

The duration of lower oil prices remains unknown.

Natural gas prices have fallen as a result of idle LNG shipments in China and forecasts for weaker demand worldwide.

Under the current conditions, market forces will turn against green energy technologies, which had just begun establishing themselves as competitive options against conventional technologies.

Questions are also being raised about the growth prospects of the electric vehicle market, still at an embryonic stage.

 

Natural gas, LNG, CO2 right, wholesale power prices down

Besides lower oil prices in international markets over the past few days as a result of the coronavirus spread and price war between Saudi Arabia and Russia, energy commodities across the board are under great pressure, which has led to price reductions for natural gas, CO2 emission rights and electricity.

Lower oil and gas prices are offering relief for the economy and enterprises. However, there are two sides to this story, positive and negative. On the one hand, the price drops are creating opportunities for suppliers and consumers, while, on the other, natural gas futures indicate a decline until the end of the third quarter this year, meaning markets anticipate a downward trajectory in Chinese consumption and no sign of an economic rebound until at least September.

Prices at the Dutch trading platform TTF, a key index for LNG, slid to a three-month low on Monday, registering 8.627 dollars per MMBTU, before edging up to 8.993 dollars per MMBTU yesterday. This index has fallen 39.4 percent since the end of December’s three-month peak of 14.2 dollars per MMBTU.

Besides shaping LNG prices, according to new pricing formulas adopted at Gazprom, the TTF also greatly influences the rise of Russian pipeline gas.

CO2 emission right prices have fallen by 13.6 percent between December and early February, from 26.74 euros per ton to 23.11 euros per ton. A slight rise has been registered this week, to 23.25 euros per ton on Monday and 24.07 euros per ton on Tuesday. Lower prices on this front are favorable for lignite-fired power stations as well as energy-intensive industries.

Prices have also fallen in Greece’s wholesale electricity market. In the day-ahead market, the System Marginal Price (SMP) fell from 49.2 euros per MWh on Friday to 41.42 euros per MWh on Monday before edging up to 43.12 euros per MWh yesterday. A rise to 50.44 euros per MWh is expected today.

 

Market slump a worry for DEPA Trade sale, gov’t holds firm

Privatization fund TAIPED and the energy ministry, already into the early stages of a sale offering the Greek State’s 65 percent of DEPA Trade, a new entity formed by gas utility DEPA for its privatization, are keeping a close watch on international markets, battered amid fears prompted by the coronavirus spread around the world.

The DEPA Trade sale, an emblematic energy-sector privatization, had already been given a first-round deadline extension for non-binding bids, until March 23, prior to the latest coronavirus-related market concerns. But the worsening international conditions, which prompted markets to plunge on Monday, have made the DEPA Trade sale’s officials far more vigilant.

Though an improvement of market conditions by the DEPA Trade privatization’s March 23 non-binding deadline cannot be ruled out, authorities are certainly  concerned for a number of reasons.

DEPA Trade does not offer investors secured WACC levels, as is the case with networks and infrastructure, including DEPA Infrastructure, power grid operator IPTO and distribution network operator DEDDIE/HEDNO. This absence of a fixed yield makes DEPA Trade’s value susceptible to international and domestic market turmoil.

Also, far lower LNG prices at present represent an unfavorable development for DEPA Trade as the company is committed to pipeline natural gas import agreements with take-or-pay clauses. This restricts the firm’s ability to choose.

In addition, investors, local and foreign, inevitably revise investment plans, or, at best, wait, when faced by overwhelming situations such as the coronavirus outbreak.

Furthermore, any market-slump period is not a good time to sell assets. Should markets remain unsettled for an extended period, the market value of DEPA Trade will be impacted.

The government plan remains unchanged, the DEPA Trade privatization still being at an early stage, energy ministry officials told energypress.

 

Alexandroupoli FSRU tender draws 3 bids, all by key players

A tender staged by Gastrade for the construction of a pipeline and related projects needed to link the prospective Alexandroupoli FSRU, in Greece’s northeast, with the national gas grid, attracted bids from three companies, all major players at an international level, on the deadline day last Friday.

Experienced Italian firm Saipem teamed up with Greece’s Terna for one of the three bids, while two Dutch bidders, Boskalis and Van Oord, submitted the other two offers.

Gastrade officials will appraise the technical aspects of the offers before moving on to the financial side.

Meanwhile, the second round of a tender for the project’s FSRU is expected to be announced within the next few days, inviting first-round participants to submit binding offers. Over ten bidders, experienced players from Greece and abroad, submitted first-round bids for the FSRU.

The deadline of an ongoing market test for binding offers concerning the FSRU’s capacity reservations, crucial for the project’s final investment decision, expires in a few days’ time.

Besides the LNG quantities involved, the duration of capacity reservation requests will also be a pivotal factor for the project’s sustainability.

Gastrade officials, basing their judgement on the procedure’s developments until now, are confident of a favorable market test outcome that will lead to the project’s actualization.

RAE renews call for ministry’s help on Crete sufficiency plan

RAE, the Regulatory Authority for Energy, has reiterated a request for energy ministry support needed for the execution of a plan that is expected to resolve energy sufficiency concerns on Crete until the island’s major-scale interconnection with Athens is completed.

The authority, which has resent a package of Crete-sufficiency proposals to the energy ministry, is essentially seeking permission from the ministry to recruit consultants so that it can proceed with necessary tenders.

The RAE plan, comprised of four basic actions, is based on a related study conducted by the National Technical University of Athens. Besides ensuring energy sufficiency for the island, the proposals also meet environmental standards.

The conversion of a diesel-fueled power station into a 100-MW natural gas-fueled facility is one of the four RAE proposals.

Another entails the installation of a new 100-MW power station, preferably natural gas-fueled.

A third action involves a RES capacity addition of roughly 200 MW, evenly split between wind and solar facilities.

RAE’s fourth proposal concerns the installation – and introduction to the Greek grid – of energy storage systems, or high-tech batteries, representing a capacity of between 30 and 40 MW.

The first and second proposals depend on LNG supply to Crete. Subsequently, a tender will need to be staged for the installation of an FSRU as well as a 100-MW power station.

The additional RES capacity will also require tenders. In addition, RAE proposes a tender for the energy storage systems it envisions for the island.

These batteries could also be used on other Greek islands in the future if they are eventually no longer needed on Crete.

 

DESFA wants stricter slot reservation rules for LNG terminal

Gas grid operator DESFA aims to significantly revise slot reservation rules for its LNG terminal on the islet Revythoussa, just off Athens, the operator’s objective being to prevent reservations of expediency made by traders purely interested in protecting their market shares by fending off other users from the facility.

A related proposal of new regulations, already forwarded by DESFA to RAE, the Regulatory Authority for Energy, will instead aim to support use of the LNG facility for actual market needs.

RAE will need to stage a public consultation procedure before the plan is finalized. DESFA hopes it will be ready and implemented by summer, giving companies enough time to assess the new rules for the LNG terminal before they make business plans for 2021.

Recent congestion problems at the Revythoussa LNG terminal left a number of companies without slots for 2020.

Slot reservation applications submitted by companies last year for 2020 represented a total capacity three to four times the size of Greece’s overall annual gas consumption.

Under the new rules, slot reservations are expected to be legally binding, committing applicants to all related costs.

Lawmakers behind the facility’s existing set of rules, shaped nearly a decade ago, viewed LNG as a supplementary fuel, but it has taken on a far more significant role in the Greek energy market over the past few years.

 

Alexandroupoli FSRU market test extension until March 10

A second-round market test offering capacity reservations for the prospective Alexandroupoli FSRU has been granted a deadline extension until March 10 to give newly emerged bidders more time to prepare for binding bids.

The Copelouzos group’s Gastrade, heading this LNG venture for Greece’s northeast, is determined to maximize the participation level of bidders and  capacity reservations in order to secure the project’s sustainability.

Besides the capacity reservation total, the duration of reservations is the other crucial factor determining the project’s sustainability. Gastrade would like to see reservations lasting 10 to 15 years instead of shorter periods.

Gastrade officials are confident the market test will produce a favorable outcome and soon propel the project towards construction.

The line-up of the Gastrade-initiated consortium for the Alexandroupoli FSRU appears to have been completed as a five-member team following a decision by Romania’s state-controlled gas company Romgaz to enter with a 20 percent stake. A related contract is expected to be signed within the next few days.

If the Romgaz entry is confirmed, the consortium’s line-up will consist of the Copelouzos group (20%), GasLog (20%), Greek gas utility DEPA (20%), Bulgartransgaz (20%) and Romgaz (20%).

 

 

France’s Total wins intensely fought tender for 3 LNG orders

France’s Total has emerged as the winning bidder in an intensely contested tender staged by Greek power utility PPC for three LNG shipments between March and May, sources from abroad have informed.

The French company outbid rivals for all three shipments, totaling 2.66 million MWh, but price levels were driven to particularly low levels as a result of intense bidding, the same sources noted.

Over the past few weeks, LNG prices in Asia have slumped to record lows, including yesterday, battered by the negative impact of the coronavirus on trade. Many Chinese factories have been forced to interrupt operations. Meanwhile, US LNG is flooding markets.

Given the combined effect of these market conditions, many of twelve bidders said to have participated in PPC’s tender were prepared to submit offers as low as one percent below the Dutch TTF index, which has tumbled to a level of approximately 10 euros per MWh over the past few days.

Of the twelve participants in the PPC tender, whose deadline expired on Wednesday, the five most competitive candidates were asked to make their best and final offers yesterday.

PPC wants a first LNG shipment of 900,000 MWh on March 24, a second delivery of 815,000 MWh on April 21 and a third of 950,000 MWh on May 20.

This tender confirms a change of strategy by PPC, searching markets around the world, from Asia to Qatar and the USA to Russia, for low-priced LNG.

DEPA, rebounding in wholesale market, looks to capture 40%

Gas utility DEPA appears set to regain lost ground in the wholesale market as a result of reduced gas prices negotiated over the past few months with international suppliers.

Talks for new deals between the company’s administration and customers, primarily electricity producers and retail gas firms, have indicated DEPA’s market share will increase this year.

DEPA expects a market share rise to a level of approximately 40 percent, up from 33 percent at the end of 2019.

The Greek gas utility recently renegotiated improved supply deals with Russia’s Gazprom and Algeria’s Sonatrach, while a favorable verdict by the ICC (International Court of Arbitration) in an overcharging case against Botas, Turkey’s state-run crude oil and gas company, came as an added boost. DEPA should receive a retroactive amount of around 200 million euros, according to an initial estimate.

DEPA’s revised Gazprom supply deal limits oil-indexed gas pricing to 60 percent of the total order. The other 40 percent will be priced in accordance with the Dutch gas trading platform TTF, one of Europe’s biggest hubs, where prices are significantly lower.

In mid-January, TTF price levels for LNG shipments in February were 14 euros per MW/h, including Greek gas grid entry costs, compared to over 20.5 euros per MW/h for pipeline gas, a 45 percent difference.

DEPA is currently also renegotiating the terms of its take-or-pay clause with Gazprom, requiring the Greek utility to absorb at least 80 percent of its annual contracted amount of 2 billion cubic meters, or 1.6 bcm.

As for Sonatrach, supplying LNG to DEPA, the Greek utility is believed to have reduced amounts and also achieved a discount.

DEPA’s contract with Gazprom, the utility’s biggest in terms of volume, runs until the end of 2026 with an option for a 10-year extension. ICC

The Greek gas utility’s second-biggest contract is with Azerbaijan’s Socar, running until 2040 for one bcm per year and a minimum level of 0.9 bcm. The Turkish Botas contact is DEPA’s third biggest, securing 0.75 bcm, annually, until 2021.

PPC expects major LNG tender turnout for 2.7 million MWh

Gas suppliers are expected to turn up in numbers for a power utility PPC tender expiring today with offers to provide three LNG shipments needed by the utility between March and May. PPC plans to purchase a total of 2.66 million MWh through this tender.

Between nine and ten gas suppliers, including major Greek and foreign LNG players, will submit offers, PPC has been informed, according to energypress sources.

Besides leading Greek gas traders, the procedure is expected to attract companies such as Rosneft, Eni Trading, Gunvor, Glencore, Shell, Cheniere and Tellurian.

All participants were required to sign Master Sale Agreements, committing them to their offers without any revisions.

PPC wants a first LNG shipment of 900,000 MWh on March 24, a second delivery of 815,000 MWh on April 21 and a third of 950,000 MWh on May 20.

Today’s tender confirms a change of strategy by PPC, searching markets around the world, from Asia to Qatar and the USA to Russia, for low-priced LNG.

The continual drop in LNG prices promises major cost savings for a company the size of PPC, requiring 1.35 bcm per year.

 

Motor Oil wants Corinth FSRU included in DESFA 10-year plan

Petroleum group Motor Oil wants a prospective FSRU project for Corinth, west of Athens, included in gas grid operator DESFA’s ten-year plan, it has noted in a letter forwarded to RAE, the Regulatory Authority for Energy, as part of a related public consultation procedure.

A floating LNG terminal at Corinth would offer multiple benefits for the natural gas markets of Greece and the wider southeast European region and, therefore, must be included in DESFA’s ten-year plan, Motor Oil supported in its letter.

RAE has already awarded a license for the project but a decision concerning a future capacity commitment at this new national grid entry point has remained pending since last June.

The project is strategically important as a very large proportion of Greece’s current – and near-future – gas imports enter via Turkish territory, Motor Oil pointed out. The Corinth FSRU would further diversify Greece’s supply sources, without geopolitical risks or restrictions, as the facility will be able to absorb supply from anywhere in the world, the petroleum group added.

This FSRU would ease congestion at the existing Revythoussa unit off Athens and contribute to energy supply security, Motor Oil, operating a major refining facility in Corinth, also noted among other factors.

ESAI/HAIPP, the Hellenic Association of Independent Power Producers, has also expressed support for the Corinth FSRU, noting, in its letter, the facility would offer a new gas grid entry point, desaturate Revythoussa and help offer more competitively priced natural gas to the Greek market.

Rising LNG imports reshaping gas market, led by Mytilineos

The drastic reduction of LNG price levels in recent times has not only boosted the amount of LNG imports into Greece but also reshaped market shares held by domestic gas traders.

Last year, natural gas consumption rose to a new record level of more than 60 TWh, up from 52.4 TWh in 2018 and 53.7 TWh in 2017.

LNG imports rose sharply to 30.92 TWh in 2019 from 11.59 TWh in 2018 and 15.54 TWh in 2017.

Overall gas consumption increased by approximately 15 percent last year while LNG import levels nearly tripled compared to two years earlier.

For the first time ever, LNG represented half of the country’s total gas consumption in 2019.

In 2019, a total of six traders imported LNG to the Revythoussa terminal, close to Athens, some of these for the first time.

Mytilineos made the most LNG shipments for a 50.2 percent share. Gas utility DEPA followed with a 26.1 percent. Elpedison was next with a 12.4 percent market share, trailed by power utility PPC (7.6%), Heron (2.4%) and Motor Oil (0.4%).

Market leader Mytilineos imported a total of ten LNG shipments to the Revythoussa terminal in 2019, some of these originating from the US, via Shell and BP, managing US shale gas exports.

A total of six LNG shipments to Greece in 2019 carried American shale gas. This trend is continuing this year. A 140,000 cubic-meter shipment of American LNG arrived at the Revythoussa terminal on January 25.

Mytilineos also chartered large-scale Q Flex tankers to Revythoussa in 2019, a development enabled by the completion of upgrade work at the LNG facility.

The Q Flex tankers, built in Qatar and offering a 201,000 cubic-meter capacity, were previously unable to approach the Greek terminal.