Low temperatures in Europe pushing gas prices higher, LNG tankers returning

Lower-than-usual temperatures for this time of year have greatly increased the pressure on natural gas prices, driving prices higher.

Gas prices have also increased in other European markets, including Belgium, the Netherlands and Germany.

In some markets, such as that of the UK, the strong demand for gas has also been attributed to factors other than the low temperatures, such as reduced wind energy production.

The current price for gas at Dutch gas trading platform TTF is 17.66 €/MWh, 17.233 €/MWh at the PEG exchange, 18.17 €/MWh at the NCG, 18.304 €/MWh at Gaspool, 18.529 €/MWh at the VTP,  and 18.575 €/MWh at the PSV, according to ICIS Heren, an established information provider for the gas, power and carbon markets.

The higher gas demand has prompted an increase in LNG tanker deliveries to European destinations. A total of 10.2 billion cubic meters were added to European terminals in March, the highest level recorded since April, 2020, and almost double the 5 bcm figure registered in January, according to latest data.

Low gas prices at European hubs earlier this year resulted in LNG tanker routes to Asian markets, where prices and profit margins were greater. Higher prices in Europe are now bringing back tankers to the continent.

As for the Greek market, two LNG tankers are scheduled to arrive at the Revythoussa terminal, on the islet just off Athens, in April, beginning, early in the month, with a joint order placed by the Heron and Mytilineos companies for 73,855 cubic meters each. It will be followed by a second order, scheduled for late in April, by Elpedison (118,168 cubic meters) and Motor Oil Hellas (33,235 cubic meters).

Two further shipments are expected at the Revythoussa terminal in May, according to the current schedule, one for Mytilineos, the other for Elpedison.

Motor Oil ‘Dioryga Gas’ FSRU on DESFA 10-yr plan, set to roll

Approval by RAE, the Regulatory Authority for Energy, of gas grid operator DESFA’s ten-year grid development plan, covering 2021 to 2030, with the inclusion of petroleum group Motor Oil’s “Dioryga Gas” FSRU project, 1.5 km southwest of the company’s refinery in Korinthos, west of Athens, paves the way for this unit’s actualization.

Motor Oil anticipates the FSRU, promising to offer yet another natural gas entry point to the domestic system, can be launched by the end of 2023.

To accept LNG via sea routes, the floating storage regasification unit’s capacity is estimated at 2-3 bcm per year.

The “Dioryga Gas” FSRU project was incorporated into DESFA’s ten-year development plan following amendments to a preliminary plan, made once an agreement had been reached between the gas grid operator and Motor Oil.

This agreement ended a dispute between the two sides over the project’s absence from the operator’s ten-year plan. Motor Oil protested against the FSRU’s exclusion, expressing its disapproval to DESFA as well as RAE.

The project’s inclusion on DESFA’s ten-year plan will enable Motor Oil to take investment decisions needed for its development.

The petroleum group is currently also examining the regulatory and commercial frameworks concerning the project with the aim of offering optimal services to users. Motor Oil intends to stage a market test in 2021.

The “Dioryga Gas” FSRU project will ease the saturation pressure on Greece’s other FSRU, on the islet Revythoussa, just off Athens, reinforce gas supply to the Greek market as the country’s LNG storage capacity will increase by 80 percent, and also facilitate further penetration of natural gas in remote parts of the country.

DESFA’s Alexandroupoli FSRU entry awaiting DG Comp OK

Gas grid operator DESFA’s agreement, last November, for the acquisition of a 20 percent stake in Gastrade, the company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal planned for Greece’s northeast, requires, as its final step, approval from the European Commission’s Directorate-General for Competition, to officially make the operator the consortium’s fifth member.

DG Comp approval of DESFA’s agreement is needed as the operator, managing Greece’s gas transmission system, is entering an independent gas system through its agreement to buy a Gastrade stake.

The DG Comp’s endorsement of the anticipated DESFA entry is seen as a formality following its recent approval of the entry of Bulgaria’s Bulgartransgaz as a fourth member of the consortium, also with a 20 percent stake.

A finalized investment decision by Gastrade for the development of the Alexandroupoli FSRU is expected this spring. The unit’s launch is scheduled for the first half of 2023.

The FID will enable the procurement procedure for the project’s equipment to go ahead, beginning with the floating unit, for which a Gastrade tender has already been completed.

A preferred bidder has also been declared for the FSRU’s subsea-and-overland pipeline, to link the floating unit with the country’s gas grid.

Bids for a tender offering a contract for the design, procurement and construction of the project’s fixed mooring system were submitted in late-February.

Talks are still in progress, at a diplomatic level, for the possible entry into the Alexandroupoli FSRU by North Macedonia’s state gas company, through the acquisition of a 10 percent stake from Gastrade. The outcome of these talks will not affect the project’s development.

Man Energy Solutions to support Terna for LNG truck-loading station

German company Man Energy Solutions has signed an agreement with construction company Terna to help with the development of a truck-loading station at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens.

Man Energy Solutions will take on the task of fully constructing infrastructure needed for the management of LNG supply, through trucks, to customers.

Commenting on the agreement, Thanassis Papaioannou, head of Man Energy Solutions’ Department of Machines and Electricity Units in Greece, noted: “We are very pleased to bring our knowhow in the LNG domain to [the] DESFA [terminal], joining forces with TERNA, one of the leading construction companies in the country. The actualization of this project will create new growth opportunities in areas where natural gas networks do not exist – that is, access to gas.”

Just days ago, it was also announced that DESFA has reached a finalized investment decision on the development of a small-scale LNG jetty at the Revythoussa terminal, as an addition to the facility’s LNG truck-loading station, contributing, amongst other things, to the emergence of LNG bunkering at the nearby Piraeus port.

DESFA to develop small-scale LNG jetty at terminal by late ‘22

Gas grid operator DESFA has reached a finalized investment decision to develop a new small-scale LNG jetty at its LNG terminal on the islet Revythoussa, just off Athens, paving the way for the establishment of a small-scale LNG supply chain in Greece.

This new infrastructure, to be developed at the northeastern flank of the islet, will come as an addition to the facility’s LNG truck loading station, contributing, amongst other things, to the emergence of LNG bunkering at the nearby Piraeus port.

The new small-scale LNG jetty, budgeted at 20.4 million euros, is planned to begin operating in autumn, 2022, according to the gas grid operator’s ten-year development plan covering 2021 to 2030.

DESFA has applied for subsidized financing support through the National Strategic Reference Framework (2014-2020), which would cover 50.42 percent of the project’s cost. The operator will either use cash reserves or take out a loan for the remainder of the project’s cost.

LNG bunkering at Piraeus port will begin with supply to small-size gas-fueled vessels.

Alexandroupoli FSRU 2Q investment decision, work to start in ’21

The shareholders of Gastrade, a company founded by the Copelouzos Group for the development and operation of the Alexandroupoli FSRU planned for Greece’s northeast, are gearing up for an investment decision, expected in the second quarter, ahead of the beginning of the project’s development, anticipated within the current year.

Gastrade’s shareholders will most likely make an investment decision in May, sources informed.

The consortium’s shareholders are currently awaiting final administrative details that will formalize the entry into Gastrade of Bulgaria’s Bulgartransgaz and DESFA, the Greek gas grid operator.

Last week, Thanassis Dagoumas, the head official at RAE, the Regulatory Authority for Energy, approved the transfer of a 20 percent Gastrade stake from the Copelouzos Group’s Asimina Eleni Copelouzou to the Bulgarian gas company.

Copelouzou now controls 40 percent of Gastrade, with three stakeholders, Gaslog, DEPA Commercial and Bulgartransgaz each holding 20 percent.

Within the next few weeks, the RAE chief is also expected to endorse a further 20 percent transfer from Copelouzou to DESFA, giving the consortium’s five partners equal shares of 20 percent each.

Gastrade has already announced a tender offering an EPC contract for the floating LNG terminal in Alexandroupoli. Participants face a February 18 deadline.

An investment decision promises to push forth engineering studies, including geotechnical, as well as the order of a floating vessel for the project during the year. The FSRU will be completed in 2023, Gastrade shareholders have announced.

The shareholders appear receptive to the idea of North Macedonian involvement in the Gastrade consortium. They are awaiting bilateral developments at a diplomatic level, sources informed.

Gas developments in the East Med

The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Gas market competition intensifies, TAP lowering prices

Competition has intensified in the country’s wholesale gas market at a time of changing conditions and negotiations for 2021 deals between importers and major-scale consumers, namely electricity producers and industrial enterprises.

Many gas supply contracts expired at the end of 2020, requiring a large number of players to renegotiate deals. Some of these big consumers have already reached new agreements with gas wholesalers.

Market conditions have changed considerably compared to a year earlier. Supply of Azeri gas through the new TAP route has already begun to Greece as well as Bulgaria, increasing overall supply, which has obliged, and permitted, gas utility DEPA to pursue a more aggressive pricing policy as the company pushes to absorb quantities it has committed to through clauses in existing contracts.

Also, the TAP-related increase of gas supply to Bulgaria, combined with this country’s inflow of Russian gas through oil-indexed price agreements, currently relatively cheaper, is now depriving Greek wholesale gas companies of entry into a neighboring market that was available for trading activity last year.

Furthermore, conditions have also been impacted by a competition committee decision no longer requiring DEPA to stage gas auctions to make available a share of its gas orders to rival traders. This measure was introduced and maintained to help liberalize Greece’s gas market.

The new conditions are pushing Greek traders towards more competitive pricing policies. They appear to have acknowledged that their profit margins will be narrower in 2021.

DEPA, helped by the fact that a sizeable proportion of its gas purchases is oil-indexed, is said to be playing a dominant role in the ongoing negotiations for new contracts with customers.

It should be pointed out that, unlike rival gas importers such as Mytilineos, Elpedison and Heron, all benefitting through self-consumption of a large part of their gas orders for gas-fired power stations they operate, DEPA does not self-consume.

Prometheus Gas, a member of the Copelouzos group, remains a formidable player, while the power utility PPC and petroleum company Motor Oil are less influential in the wholesale gas market.

Higher LNG prices, compared to pipeline gas, will decrease demand for LNG this year and weaken the interest of traders for LNG supply through gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens. Last year, this facility was a hot spot of trading activity as a result of lower-priced LNG.

Target model decision needed in 2021, Elpedison chief points out

The new year will demand a decision from authorities and market participants on whether a true target model for the electricity market is desired, Nikos Zahariadis, chief executive at Elpedison, has pointed out in an article published by energypress as part of a feature on 2021 prospects.

The market was caught by surprise during the launch of the new electricity market in the final weeks of 2020, the official pointed out. Balancing market costs rose sharply during this period.

Most authorities and participants were expecting a different development, including a solution for the market’s chronic “missing money” problem, as well as a drop in retail electricity prices, Zahariadis noted, expressing belief that the new year will present an opportunity, even for the unprepared, to adjust to the new conditions that will ultimately enable the new energy market to operate without restrictions and showcase its advantages.

However, the new market, even when it has matured and stabilized, will still pose threats, especially for players seeking to keep distinctly separate retail and production portfolios, as protection against price manipulation has stopped functioning since the launch of the target model, he pointed out.

Looking towards the future, a gradual prevalence of the RES sector is discernible, as long as economically feasible energy storage technology is developed, Zahariadis projected. Until then, the grid will rely on natural gas-fueled power stations, the only flexible solution available at present, he added.

As for the natural gas sector, two unrelated events late in 2018, the first being an expansion at the Revythoussa LNG terminal facilities that enables bigger tankers to dock, and the second, a drop in LNG prices, have brought about permanent change in the Greek market, the Elpedison official noted.

Market players responded swiftly with LNG imports, prompting gas price reductions along with concurrent electricity price reductions. Also, the first steps were taken towards the establishment of a Balkan hub for transboundary LNG sales, Zahariadis noted.

More gas market opportunities will be offered in 2021 through the TAP project’s functioning, the company official pointed out.

Elpedison has played a leading role in sector developments, capitalizing on opportunities by importing significant LNG amounts and capturing a key position in the wholesale gas market, Zahariadis added.

The completion of equipment procurement tenders for a new 800-MW combined cycle power station, a project that will enable Elpedison to double its production as of 2023 and gradually increase sales to higher levels, stands as the company’s biggest challenge in the new year, he noted.

Higher gas prices, projected to rise further, not impacting demand

Higher LNG and pipeline gas prices resulting from new market conditions have not impacted gas demand in the Greek market, a key driver being opportunities presented to electricity producers by the target model’s new trading markets.

Latest data has shown a significant price increase in futures contracts at central European hubs, compared to levels recorded just a few weeks ago.

This price rise is seen as somewhat of a paradox given the pandemic’s second wave, now in progress, and its wider impact on demand.

Officials believe the current upward price trajectory heralds an upcoming new round of higher gas prices following extremely low prices in recent times. They sunk to a low in spring.

In Greece, LNG prices are currently rising at a steeper rate compared to those for pipeline gas. Despite this ascent, demand has so far remained strong and no cancellations have been reported for LNG orders to the Revythoussa islet terminal just off Athens.

Pundits have attributed the absence of any LNG order cancellations to the need of electricity producers to be stocked up on gas quantities in readiness for grid entry and utilization of opportunities offered by the target model’s new balancing market.

DEPA Commercial invites RES companies for collaboration

DEPA Commercial, one of two new entities formed by gas utility DEPA for its upcoming privatization, has invited renewable energy companies with existing production units or advanced projects to express interest in prospective collaborations.

DEPA Commercial is aiming to transform into an energy company with emphasis on green energy activities, chief executive Costas Xifaras has noted.

According to sources, DEPA Commercial is looking to develop a RES portfolio totaling 240 MW.

Related investments at DEPA Commercial are expected to reach 120 million euros, the company head has stated.

DEPA Commercial, interested in both solar and wind energy projects, is looking to acquire RES production licenses and, especially, mature-stage projects, sources informed, adding the company is seriously considering takeovers.

For the time being, DEPA Commercial does not intend to partner with energy groups active in the RES market as well as the company’s privatization procedure.

Besides its plan to expand into the RES market, DEPA Commercial, currently developing major LNG projects, is also exploring the possibility of entering the hydrogen sector.

Africa Upstream, LNG & Gas Summit taking place tomorrow

Following the success of the online Oil & Gas Summit, hundreds of EPs and service providers are gathering to listen to Africa’s biggest E&P opportunities, expand their partnerships and prospects at the Africa Upstream, Gas & LNG Summit, taking place tomorrow.

Speakers include: Ritu Sahajwalla, Managing Director, Greenville LNG; Ian Simm, Principal Advisor, IGM Energy; Keith Hill, President & CEO, Africa Oil corp; Harriet Okwi, Consultant & Founder, Okwi & Partners; Immanuel Mulunga, Managing Director, NAMCOR; Martin Bawden, Business Development Manager, Zebra Data Sciences; Gbemi Otudeko, Principal, Actis; Matt Tyrrell, Chief Geologist, TROIS Geoconsulting; Philippe Herve, VP Energy, SparkCognition; Adeleye Falade, General Manager Production, Nigeria LNG; Brian Marcus, Head, Capital Management, Seplat Petroleum Development Company Plc; Tabrez Khan, Director, EMEIA Oil & Gas Transactions, Ernst & Young; Mike Lakin, Founder and Owner, Envoi, Allan Mugisha, Project Manager, Springfield E&P; Gil Holzman, President & CEO, Eco Atlantic Oil & Gas; Chryssa Tsouraki, Co-CEO, IN-VR; Gawie Kanjemba, Lawyer and Energy Specialist; Scott Macmillan, Managing Director, Invictus Energy; Gregory Germani, Managing Director, West African Gas Pipeline Company; Kadijah Amoah, Country Director, Aker Energy; Eyas Alhomouz, CEO, Petromal; Duncan Rushworth, VP Business Developmemt, Svenska Petroleum; Rogers Beall, Executive Chairman, Africa Fortesa Corporation; Oumarou Maidagi . D, Head of Exploration & Production, Ministry of Hydrocarbons; Peter Dekker, Chief Geophysicist, PetroSA; Tom Perkins, Director, Stellar Energy Advisors Limited; Yann Yangari, Head of New Business, Strategy and Intelligence, Gabon Oil; Monica Chamussa, Exploration Manager, ENH; David Boggs, Managing Director, Energy Maritime Associates Pte Ltd; Jorg Kohnert, Managing Director, Jagal; Amina Benkhadra, General Director, National Office of Hydrocarbons and Mines, ONHYM; Jeremy Asher, Chairman and Chief Executive Officer, Tower Resources plc; and Khaled AbuBakr, Executive Chairman and Co-founder, TAQA Arabia.

 

 

Incoming LNG shipments down sharply, prices rise globally

LNG shipments into Greece are headed for a quieter period following heightened recent trading activity that put this energy source at the domestic sector’s forefront in the first half of 2020, overshadowing pipeline gas supply.

Latest activity indicates a swing in favor of pipeline gas, now favorably priced.

Last November, 18 tankers docked at gas grid operator DESFA’s Revythoussa LNG terminal just off Athens, bringing in a total amount of 1.5 million cubic meters of LNG, well over the schedule for this coming November, limited to three tankers booked for a total of 355,000 cubic meters.

Activity at the Revythoussa terminal was also subdued last month. Four LNG tankers brought in a total quantity of nearly 300,000 cubic meters.

LNG prices at the Dutch gas trading platform TTF, one of Europe’s biggest hubs, have risen constantly, as is the case internationally, following a dip in July.

Analysts believe rising demand in Asia, especially China, will make up for anemic demand in Europe and push LNG prices even higher as winter approaches.

Pipeline gas supply is expected to reassert its position in Greece.

Higher LNG prices prompting pipeline gas resurgence

Increased LNG prices, well above levels registered in 2019 and the first half of 2020, promise to bring about market changes, including a decrease in the high level of imports witnessed over the past few months.

LNG prices are currently double those registered at the beginning of this year, reaching 4 dollars per 1000btu from 2 dollars per btu.

The period of lower LNG prices in the market appears to have ended, officials have noted.

This development promises to bring about a pipeline gas resurgence following LNG’s dominance in the Greek market over the past year and a half, driven by record-low price levels.

LNG prices fell to extremely low levels as a result of the market availability of significant shale gas amounts from the US as well as new sources, primarily Australian.

LNG prices now appear to be steadying at higher levels.

The prospect of a pipeline gas rebound is also being helped by a stabilization of oil prices at low levels, containing oil-indexed pipeline gas prices and reinstating the competitiveness of pipeline gas.

The market fluidity caused by the pipeline gas and LNG price shifts has increased the work challenge for gas traders, affecting their ability to make forecasts.

 

 

 

DEPA Commercial to enter RES field, starting with 200-MW goal

DEPA Commercial, the new entity emerging from gas utility DEPA, will enter renewable energy production as part of the company’s transformation from a gas to energy company, its administration has decided.

The firm has already held talks with green energy players with the aim of involving DEPA Commercial in solar and wind energy projects about to enter the construction stage or already being constructed, sources informed.

An initial objective for the accumulation of a green-energy portfolio comprising approximately 200 MW has been set by the company, sources added.

Careful steps are being taken in the RES sector, Dr. Konstantinos Karagiannakos, the company’s Coordinating Director of Trading Activities, recently noted.

Having lost a steady and reliable market share in gas distribution, a sector that guaranteed DEPA annual profit of about 25 million euros, DEPA Commercial is now eyeing new activities and revenues from domains that offer more consistency than trade, entailing higher risk.

Besides the RES sector, DEPA Commercial’s lower-risk approach has also led to an interest in the prospective Alexandroupoli FSRU in northeastern Greece.

The company is also broadening its activities to cover gas supply for the industrial sector and customers in areas without gas networks, through small-scale LNG and remote CNG solutions, as well as the gas-run vehicle market through the development of a nationwide network of refueling stations.

In addition, the company is also making plans to enter eco-friendly alternative fuel markets such as hydrogen and biomethane.

 

DESFA one step away from Alexandroupoli FSRU entry

Just days after the entry of Bulgaria’s Bulgartransgaz, Greek gas grid operator DESFA appears set to become the fifth member of Gastrade, the company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal envisioned for Greece’s northeast.

Talks concerning a DESFA entry, ongoing since the beginning of this year, have essentially concluded, while an announcement of the operator’s entry into Gastrade’s line-up is expected soon, no later than the end of September, energypress sources informed.

DESFA’s interest to join the consortium for the Alexandroupoli FSRU project, the first ever private-sector plan for such infrastructure in Greece, reflects the intention of the company’s new ownership and administration to broaden DESFA’s role from gas grid operator to a major player in Greece’s natural gas market.

As for Gastrade, keen to establish partnerships that support its strategic objectives, DESFA’s expected entry into the Alexandroupoli FSRU consortium appears to have been encouraged as a result of the operator’s knowhow, as a TSO, in LNG and the Greek gas market, its players, as well as the legal framework.

DESFA’s entry would also give the Greek State a stake in the Alexandroupoli project, supported for years by the previous and current Greek governments.

Besides the Copelouzos group, holding a 40 percent stake, the Gastrade consortium is currently also made up of Gaslog, Greek gas utility DEPA, and Bulgartransgaz, each holding 20 percent stakes. The entry of a fifth member will give all partners equal 20 percent shares.

The project, budgeted at 380 million euros, is expected to be launched no later than early 2023.

The Alexandroupoli FSRU, along with the existing Revythoussa islet LNG terminal just off Athens, are crucial given the current strains in Greek-Turkish relations as the two units represent the country’s only gas infrastructure not relying on Turkish territory.

The LNG terminals also promise to increase competition in the regional market and reduce natural gas supply costs to neighboring countries.

A market test was successfully completed for the Alexandroupoli FSRU in March.

Alexandroupoli FSRU investment decision later in ’20

Investors behind the Alexandroupoli FSRU are expected to make final decisions on the project’s development in the final quarter of this year.

Two pending issues, the completion of a regulatory framework for the project, as well as approval by the European Commission’s Directorate-General for Competition of the project and funding via the National Strategic Reference Framework (2014-2020), are expected to be resolved by the final quarter.

Also, RAE, the Regulatory Authority for Energy, is soon expected to reach a preliminary decision exempting the FSRU from compulsory access to third parties as well as tariff adjustments every three to four years. This decision, needed for the project’s regulatory framework, is expected by late October or early November, when the European Commission’s approval is anticipated.

The Directorate-General for Competition will also need to give the green light for NSRF funding.

Once these pending issues are all resolved, investors will be able to decide on the project’s development, expected to require two years to construct. Investors envision a launch in 2023.

Yesterday’s anticipated entry of Bulgartransgaz, for a 20 percent stake, highlights the project’s regional prospects. This regional dimension will be highlighted even further if ongoing Romanian interest is materialized.  Talks that have been going on for some time were disrupted by the pandemic.

For the time being, Greek gas utility DEPA, Gaslog and Bulgartransgaz each have 20 percent stakes, while the Copelouzos group holds a 40 percent share. The entry into the project of Gastrade, as a fifth partner, remains pending.

Most crucial for the project’s prospects, a market test completed in March showed that the Alexandroupoli FSRU is sustainable. The test prompted a big response from Greek and international gas traders, who placed capacity reservation bids for a total of 2.6 billion cubic meters per year.

US interest for LNG supply via the Alexandroupoli FSRU is strong. Last year, Cheniere sold a big shipment to Greek gas utility DEPA, while a further ten American shipments have been made so far this year.

US investments in Greek RES sector rising, LNG imports up

New US investments in Greece’s RES sector are on the rise, the energy ministry has stressed following a meeting yesterday between Greek energy minister Costis Hatzidakis and the U.S. Ambassador to Greece, Geoffrey Pyatt, for a discussion on major energy project plans in the wider region and the related American investment activity.

U.S. companies such as ONEX, Black Summit, with support from DFC (International Development Finance Corporation), Quantum Energy Partners, National Energy, General Electric, Fortress Investment Group, Blink and Tesla are all currently pursuing investments in the Greek market.

Hatzidakis, the energy minister, expressed satisfaction over the level of foreign investments in Greece, noting U.S. participation has significantly increased, especially in the energy sector.

Last month, 547 Energy, an American renewable energy venture backed by Quantum Energy Partners, participated for a third time in a row in a RES auction staged by RAE, the Regulatory Authority for Energy, adding 107 MW in wind energy capacity to its Greek portfolio for a current tally of eight RES projects and 390 MW, the energy ministry noted.

National Energy is drawing American funds to develop wind and solar energy projects in Greece with a total capacity of 270 MW, the statement added.

Also, the energy ministry noted, General Electric has supplied equipment for a wind energy farm in Fokida, west of Athens, a project being partially financed by the Fortress Investment Group; Blink recently began an investment plan in the electromobility sector, for rechargers and other equipment; while Tesla, a producer, amongst other things, of electric vehicles, recently announced a plan to expand its operations into Greece.

During their meeting, Hatzidakis and Pyatt also discussed the partnership between Greece, Cyprus and Israel, plus the U.S.

The progress of work at the Greek-Bulgarian IGB gas pipeline, whose geostrategic importance was stressed by the Greek minister, was also addressed. A closer association with Bulgarian contractors is being sought for the project’s punctual delivery.

Work on the Alexandroupoli FSRU in northeastern Greece is progressing at a satisfactory pace, the two officials agreed, noting the project will have a positive impact on geostrategic and energy matters.

The U.S. supplied nearly half of the 2,651,903 cubic meters of LNG imported into Greece in the first half of 2020, almost quadruple the amount supplied by America to Greece during the equivalent period a year earlier.

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.