Middle East

PM prioritizes south-north link in talks with German leader

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Green Aegean, a electricity supply corridor envisaged, by Athens, to run from Greece to Germany’s south, dominated talks between Prime Minister Kyriakos Mitsotakis and German Chancellor Olaf Scholz in Berlin yesterday, sources close to the Greek leader have informed.

Mitsotakis, determined to promote this project, prioritized Green Aegean over the European migrant crisis and the Middle East conflict at yesterday’s meeting.

The German side, no longer appearing worried about the Greek economy, was keen to listen to the Greek leader’s views on the south-north corridor, but, despite agreeing with Mitsotakis on most points raised, refrained from expressing any clear position, either because of other priorities or because Berlin remains unconvinced about the project’s financial sustainability.

Mitsotakis presented Green Aegean as an important plan for both countries, noting Germany’s energy needs are high in winter, and have become even more acute ever since low-cost Russian gas supply stopped flowing as a consequence of Moscow’s war in Ukraine, while energy demand in Greece is high during the summer.

Berlin is well aware of the fact that additional green-energy sources will be needed, beyond large-scale offshore wind farms in the North Sea, if German industry is to become carbon-neutral by 2050.

For its part, Athens knows very well that problems will arise in the future if RES output does not reach central Europe. Greek RES output is already many times over the country’s needs and grid capacity. Also, green energy the country aspires to import from Egypt and the Middle East will require a new electricity corridor to Europe’s north. Without such an export corridor, north African and Middle Eastern producers will surely look elsewhere for pathways to Europe.

Electricity prices projected to rise 15-20% in November

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A recent rise in the Dutch TTF index, a European gas benchmark, as a result of the Middle East crisis and a rupture on the Baltic-connector undersea gas pipeline between Finland and Estonia, which has raised suspicions of Russian involvement, will result in significantly higher November gas delivery contracts, which, in turn, will push up domestic wholesale electricity prices, market officials have projected.

Wholesale electricity prices are seen rising between 15 and 20 percent next month, which suppliers would relay to consumers.

Electricity suppliers are expected to announce monthly nominal tariffs – not including subsidies – of at least 18 cents per KWh for November.

The country’s electricity suppliers, under current law, are required to announce price levels for every forthcoming month by the 20th of each preceding month. This requirement will be terminated at the end of the year, when emergency energy-crisis measures are to be lifted.

The energy ministry is currently finalizing a plan that will introduce – as of January, for 12 months – a single variable tariff formula for all electricity suppliers, who will apply it and then set respective tariff levels depending on their profit-margin strategies.

The plan’s objective being to intensify competition and subdue prices, while also offering consumers price-comparing clarity.

All electricity consumers will be automatically transferred to the new single variable tariff as of January 1, unless they opt, prior to this date, for any other supply deals offered by suppliers.

 

Major east Mediterranean projects brought to a standstill

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The Brent crude price began trading today 5 percent up, over 88 dollars a barrel, as markets have not ruled out stricter US sanctions by the US against Iran, which supports Hamas, responsible for the weekend’s shock attack on Israel.

European and US markets are also expected to rise today, reflecting anxiety over an escalated conflict that would be brought about by an Israeli ground military operation in Gaza and the involvement of the powerful Hezbollah from the Israel’s north, with the support of Iran and Syria.

Should the US impose stricter sanctions on Iran, global oil supply would be reduced, creating an opportunity for Russia to increase its share, analysts have noted.

Washington, since late 2022, has turned a blind eye to an increase in Iranian exports circumventing US sanctions, on the basis of an informal détente with Tehran, analysts have reminded. The US has pursued such a course knowing it would hurt Russia.

Israel’s energy-related interests in the eastern Mediterranean, including talks with Cyprus and other regional players for gas exports to Europe, will now be put on hold following the Hamas attack on Israel.

Earlier today, Israel’s energy ministry ordered US oil giant Chevron to halt operations at the Tamar gas field, off the coast of Israel. The company stated it is complying with the ministry’s request.

The development of a Cypriot LNG terminal, planned to receive Israeli pipeline gas, and, even more crucially, a recent push by Israeli Prime Minister Benjamin Netanyahu for decisions promoting exports from east Mediterranean fields within the next three to six months, are now being brought to a standstill.

As for the role of Turkey, statements made yesterday by President Recep Tayyip Erdogan, who called for restraint from both sides without condemning the Hamas attack on Israel and spoke again of a Palestinian state with Jerusalem as its capital, probably reinforce Israel’s reservations against Turkey.

At a recent meeting in New York, Netanyahu and Erdogan agreed to schedule an exchange of visits aimed at restoring relations between the two countries. Erdogan, at that meeting, had proposed the transportation of Israeli gas to Europe via a subsea pipeline running alongside the Turkish coast.

Operations by Greece’s Energean Oil & Gas, listed on the London Stock Exchange, at licenses within the Israeli EEZ have not been disrupted by the conflict, company officials informed, noting the Energean Power FPSO and all other company facilities are not situated close to the battle zone.

 

 

Hamas attack on Israel raises energy security questions

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The weekend’s shock attack by Hamas on Israel, which has cast doubts over the capabilities of Israel’s secret services while also proving the country’s Iron Dome air defense system inadequate as it failed to respond to thousands of rockets launched from Gaza, has, inevitably, also spilled over into the energy sector, raising security fears about Israel’s Exclusive Economic Zone.

Israel’s defense shortcomings, combined with the likelihood of an escalation of the current situation involving other Arab organizations, raise concerns about the country’s ability to protect critical infrastructure such as platforms and gas pipelines.

Upstream companies operating within Israel’s EEZ need to feel secure about the safety of their personnel and investments in the region.

For the time being, production at facilities operated by Greece’s Energean have not been disrupted.

The developments also extend into the political sphere. Earlier this year, Israel and Lebanon reached an EEZ delimitation agreement that enabled Lebanon to begin hydrocarbon exploration on its side. Total, Eni and QatarEnergy took on the project and are expecting initial results a few weeks from now.

The agreement between Israel and Lebanon, a politically sensitive one, gives Israel a 17 percent share of revenue from the Qana gas field.

Israel has also been considering the prospect of conducting drilling efforts off Gaza in collaboration with the Palestinian Authority and Egypt.

As for Europe, which saw in the Middle East an opportunity to escape from the dangers associated with Russian natural gas, this latest escalation comes as a reminder that energy security remains a difficult equation.

 

 

IPTO seeks Green Aegean grid link’s entry into ENTSO-E plan

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Greek power grid operator IPTO intends, within the next few days, to submit a Green Aegean grid interconnection plan, envisaged to run from Greece to Germany’s south, to the ten-year development plan of ENTSO-E, promoting closer cooperation across Europe’s TSOs to support the implementation of EU energy policy and achieve Europe’s energy and climate policy objectives.

The project’s inclusion in the development plan of ENTSO-E, representing operators from all of the EU’s 27 member states, would represent a significant first step towards PCI/PMI status for the project, securing EU funding, as planned by IPTO.

The Green Aegean grid interconnection project is seen as vital for channeling, further north in Europe, huge quantities of green energy that are expected to enter Greece in the coming years from the Middle East and Asia through projects such as the Saudi Greek Interconnection. The project would also allow Greece to export some of its excess domestically-produced energy.

Greek and Saudi delegations met yesterday to establish a 50-50 joint venture for the Saudi-Greek Interconnection, with IPTO and Saudi Arabia’s National Grid as shareholders.

The Greek-German Green Aegean grid interconnection; the Saudi-Greek interconnection; along with Euroasia Interconnector, planned to connect the Greek, Cypriot and Israeli grids; as well as the Greek-Egyptian GREGY grid link, all represent parts of a green-energy intercontinental axis running several thousands of kilometers and involving many individual interconnections and special purpose companies. All these initiatives share one common goal, to transport, via Greece, renewable energy from Asia and the Middle East to green energy-hungry markets of Europe’s north.

 

REPower EU plan overambitious, ‘an objective, not a specific strategy’

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The European Commission’s REPower EU transition plan, aiming to greatly reduce Europe’s reliance on Russian gas, is overambitious and should be regarded as an objective rather than a set of specific measures, officials taking part in the recent annual Gas Infrastructure Europe conference, an authoritative sector event, have concluded.

The calculations offered by the REPower EU plan are incorrect, Torben Brabo, GIE’s president, has told the Euractive agency, adding that a closer look at the figures concerning Russian natural gas supply, LNG supply, as well as biomethane projections, renders the European plan as overambitious.

LNG availability and purchase projections in the REPower EU plan are possibly too high, the GIE president stressed.

Officials linked with LNG infrastructure told the GIE conference that the LNG market’s actual conditions will prevent the EU plan’s lofty targets from being achieved. Anything beyond 50 percent of the target set will be difficult to attain, these officials contended.

American current gas liquefaction capacity does not suffice for supply of an additional 15 bcm of LNG to Europe, as specified in the EU plan, officials taking part in the GIE conference contended.

Qatar and other LNG exporters in the Middle East have already committed amounts to non-EU buyers, while the REPower EU plan’s 35-bcm biomethane objective appears to be too optimistic, they added.

 

 

 

 

DEPA Trade sale launch near, Middle East tension a concern

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The launch of a privatization procedure offering 100 percent of DEPA Trade, a new entity established by gas utility DEPA for the sale, is near, as long as the heightened tension in the Middle East does not lead to extreme events and turbulent market conditions.

Officials at privatization fund TAIPED and the energy ministry are aiming for a start before the end of January, while, according to some sources, the sale’s launch may take place at the end of next week.

The heightened tension in the Middle East is a concern for the organizers of this privatization as extreme developments could unsettle oil and gas markets to an extent that would render the current period unsuitable for the DEPA Trade sale. If so, officials may need to delay the sale’s launch.

TAIPED and Hellenic Petroleum (ELPE), holding a 35 percent stake in DEPA, are close to reaching an agreement on the sale process of this stake should ELPE not emerge as the sale’s winning bidder. The petroleum group intends to seek a full acquisition in the DEPA sale. The details of a clause requiring ELPE to sell its stake, if the group fails to submit the winning bid, are now being worked on.

The agreement between TAIPED and ELPE will need to be endorsed by the boards of both entities.

 

 

ELPE bond issue plan may be delayed by Middle East tension

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A Hellenic Petroleum ELPE plan for an imminent bond issue that will seek to raise a sum of at least 300 million euros at an interest rate of less than 2 percent in order to refinance an existing loan could be delayed by increased tension in the Middle East over the past few days as a result of drone attack on Saudi Arabia’s oil installations.

A firm US reaction against Iran would further escalate this tension in the wider area and could negatively impact ELPE’s planned bond issue as some investors would certainly hesitate to invest.

The petroleum group’s net debt is 1.4 billion euros, down by approximately 500 million euros compared to a year earlier, according to ELPE’s first half results, announced August 29.

Along with its first-half results, ELPE announced a bond issue plan for within 2019, the objective being to further decrease its financial costs.

PPC eyeing ‘partnerships, deals in Russia, Turkey, Middle East’

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The main power utility PPC’s international aspirations were highlighted during a speech delivered today by the utility’s CEO, Manolis Panagiotakis, at a Greek-Russian energy conference in Athens.

Panagiotakis, while addressing various European and international developments, pointed out that they stand as challenges of strategic dimension for PPC and “need to be confronted positively and creatively” so that the utlility can make swift achievements in areas where it has failed over many years.

Commenting on the domestic electricity market, PPC’s chief executive stressed that maintenance of a significant proportion of lignite-fired electricity production is necessary for supply security and protection against any international oil price increases.

On the utility’s international presence, the CEO said PPC is seeking partnerships with both local and foreign enterprises, including Russian firms.

He pointed out that PPC’s international aspirations stretch beyond the EU. Neighboring Turkey, whose market is experiencing rapid growth, is a key aspect in this expansion plan, Panagiotakis noted. He added that Iran, a country where opportunities are currently being sought by the utility, as well as Middle East countries are also being looked at for market opportunities.

The conference was held within the framework of the 4th Greek-Russian Social Forum, which, in turn, is part of the wider “2016 – Year of Greek-Russian Friendship” series of events.