Motor Oil

Six Greek heavyweights among DEPA Commercial contenders

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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.

 

 

 

Seven bidders through to DEPA Commercial sale’s final round

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The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF), during today’s meeting decided, that seven interested parties meet the criteria to participate in Phase B (Binding Offers Phase) of the tender process for the acquisition of 65% of the share capital of DEPA Commercial (Trade) S.A., with an option of acquiring the total of its issued share capital by virtue of a Memorandum of Understanding (MoU) between DEPA S.A. shareholders, HRADF and Hellenic Petroleum S.A. (HELPE), the development fund has announced in a statement.

The prequalified interested parties to participate in Phase B of the tender are (in alphabetical order):

  1. C. G. GAS LIMITED
  2. Consortium HELLENIC PETROLEUM SA & EDISON INTERNATIONAL HOLDING N.V
  3. Consortium MOTOR OIL HELLAS CORINTH REFINERIES SA & PPC SA
  4. GEK TERNA SA
  5. MET HOLDING AG
  6. MYTILINEOS SA
  7. SHELL GAS BV

Following the signing of the relevant Confidentiality Agreement, the prequalified interested parties will receive the documents of Phase B (Binding Offers Phase) and will grant access to the virtual data room (VDR), where data and information related to DEPA Commercial S.A. are uploaded, the statement added.

 

 

 

 

DEPA Trade sale short list this month, sooner than expected

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Privatization fund TAIPED is expected to announce its short list of final-round qualifiers in a tender offering a stake of at least 65 percent, possibly even 100 percent, of DEPA Trade – a new entity formed by gas utility DEPA as part of its privatization – within the next few weeks, far sooner than expected.

Deteriorated international investment conditions have prompted fears of a slower sale procedure.

The privatization fund, now close to finalizing its appraisals of nine first-round bids, has requested clarification from participants.

The DEPA Trade privatization was expected to drag well behind that of DEPA Infrastructure, seen as a lower-risk sale effort offering investors regulated earnings, but the two privatization efforts now appear likely to move ahead almost concurrently, or a few weeks apart.

A list of six final-round qualifiers in the DEPA Infrastructure sale was announced a week ago. Authorities are aiming to complete this sale towards the end of the year.

As for DEPA Trade, this entity promises the winning bidder an immediate advantage in Greece’s natural gas market as more than 200,000 customers around the country will be gained.

DEPA Trade’s wholesale gas trading activity is another appealing factor, despite the fact that it shrunk to 40 percent of the market’s total last year, as the growing southeast European market offers huge potential.

DEPA Trade’s nine first-round bidders are: C.G GAS LIMITED; MET HOLDING AG; POWER GLOBE LLC; SHELL GAS B.V.; VITOL HOLDING B.V.; GEK TERNA; HELLENIC PETROLEUM (ELPE) & EDISON INTERNATIONAL HOLDING N.V. consortium; MOTOR OIL HELLAS & GREEK POWER UTILITY PPC (consortium); MYTILINEOS.

 

Petroleum sector rebounding, Motor Oil deputy tells

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The petroleum market is now rebounding, a trend reflected by rising sales figures in May, Motor Oil’s deputy chief executive Petros Tzannetakis has told analysts during a virtual conference.

The official, responding to a related question, expressed cautious optimism for the petroleum sector’s performance this coming summer.

“Greece’s successful management of the pandemic can attract tourists. The borders have been opened and, at the same time, demand for gasoline is rising. I am cautiously optimistic,” Tzannetakis said.

It is currently not possible to make predictions on aviation fuel demand, he noted.

Motor Oil proved to be durable and resilient amid the pandemic’s unprecedented demand and price collapse for petroleum products, the deputy chief noted. The  corporate group’s major debt reduction and high-level liquidity played a key role, he pointed out.

Record sales figures in preceding years contributed to the corporate group’s resilience during the lockdown period, he explained.

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

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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.

Revythoussa at full capacity in May, 10 LNG orders scheduled

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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.

Motor Oil, PPC Renewables in talks for major wind energy park

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Talks between PPC Renewables and the Motor Oil Hellas group for joint development, installation and operation of an island-based wind energy farm with a capacity of approximately 100 MW have reached an advanced stage, sources have informed.

The project’s feasibility, however, will depend on the development of a grid interconnection with the mainland system.

PPC Renewables and Motor Oil are currently examining details concerning the prospective wind farm’s sustainability, interconnection and financing. Once they have reached conclusions, the two sides will decide on whether to proceed with the project.

PPC Renewables and Motor Oil have already joined forces to express first-round interest in a tender offering a stake in DEPA Trade, a new entity established by gas utility DEPA.

PPC Renewables has set as a strategic objective the formation of partnerships with domestic and foreign players for new projects not included in the existing portfolio of parent company PPC, the power utility. PPC Renewables intends to develop these new projects without involvement by PPC.

The company’s wind energy park plan with Motor Oil could serve as a base for more projects involving the two sides.

PPC Renewables has already planned a series of collaborations with foreign partners, including Germany’s RWE, UAE group Masdar Taaleri Generation  D.O.O. (MTG), as well as EDP Renoveis, a Portuguese company with a Chinese main shareholder. PPC Renewables is striving to have developed RES projects with a total capacity of 1.5 GW by 2024.

Motor Oil has made clear its plan to broaden its portfolio with emphasis on green energy. The refining group wants to establish a solid presence in the renewable energy market through acquisitions and partnerships.

Motor Oil has already completed two acquisitions, a wind-energy purchase from Stefaner and a solar energy project acquisition from Metka EGN, a member of the Mytilineos group.

 

DEPA Trade sale’s PPC-Motor Oil union, Shell return surprise

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The privatization of DEPA Trade – a new entity established by gas utility DEPA – offering the Greek State’s 65 percent stake in a procedure whose deadline for first-round offers expired yesterday, produced two surprises. Firstly, Shell reemerged in the country’s gas market following a withdrawal less than two years ago. Secondly, in an unanticipated move, power utility PPC teamed up with Motor Oil for a joint bid.

Shell departed from the Greek natural gas market in July, 2018 by selling its 49 percent stakes in gas supplier EPA Attiki and gas distributor EDA Attiki, both covering the wider Athens region, to DEPA.

Shell received a total of 150 million euros, 39 million for its 49 percent stake in EPA Attiki and 111 million euros for its 49 percent stake in EDA Attiki.

The company’s reemergence can be primarily attributed to an interest in DEPA’s long-term contracts with Gazprom, Sonatrach and Botas, with an eye on the wider Balkan and southeast European regions, sources said.

PPC and Motor Oil decided to join forces for the DEPA Trade sale as a result of the failure of both to secure slots for 2020 at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. PPC holds a 30 percent stake in its partnership with Motor Oil, sources informed.

Following its Revythoussa failure, PPC has been more aggressive in a market test for the Alexandroupoli FSRU, expiring today. PPC wants to secure a capacity at this prospective unit in the country’s northeast as the company is determined to have LNG access. A successful bid in the DEPA Trade sale would bolster this position.

Hellenic Petroleum (ELPE) and Edison did not submit a joint bid for DEPA Trade through Elpedison, their joint venture for Greece’s retail energy market, as had been speculated. Instead, they are believed to have made separate bids. The two had not shaped a common action plan in the event of a successful DEPA Trade bid, sources said. However, the establishment of a new joint venture by the two firms at a latter stage, specifically for DEPA Trade, cannot be ruled out.

The country’s planned privatizations, including DEPA Trade, face likely delays as a result of the coronavirus pandemic’s repercussions. The progress of these sales will depend on the course of the pandemic.

DEPA Trade’s first-round bidders forwarded their offers on-line and must follow up with deliveries of official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

DEPA Trade offers due today, at least 7 players interested

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Five Greek and two international investment groups are expected to submit bids for the DEPA Trade privatization, whose first-round deadline expires today at 5pm.

DEPA Trade was established as a new gas utility DEPA entity for the privatization, offering the Greek State’s 65 percent stake.

Bidders may also submit their expressions of interest online, via email, as a result of restrictive measures prompted by the coronavirus crisis, but will need to follow-up with official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

The local bidders expected to submits bids, all leading energy players, are Mytilineos, GEK Terna, Motor Oil, Hellenic Petroleum (ELPE) and the Copelouzos group.

ELPE plans to submit a joint bid in partnership with Edison, possibly through Elpedison, their joint venture for Greece’s retail energy market, sources informed.

The Copelouzos group is also working on delivering a joint offer, with Czech firm KKCG.

Shell is among the foreign companies looking interested, despite its sale, two years ago, of stakes in DEPA gas supply and distribution companies.

Dutch firm Vitol is the other foreign player believed to have been drawn to the DEPA Trade sale. Vitol had reached the final stage of an ELPE sale with Algeria’s Sonatrach as a bidding partner, but the pair ended up not submitting a binding offer.

Expressions of interest in DEPA Trade may also come from Swiss-based Hungarian firm Met Energy Holding, active in natural gas wholesale trade. This firm is already present in Hungary, Croatia, Italy, Serbia, Slovakia, Spain, Turkey and Ukraine. Qatar’s Power Global is another possibility.

DEPA Trade’s portfolio includes 409,000 customers – households and businesses.

 

Crisis impacting energy sub-sectors in different ways

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Energy companies are not being impacted in a universal way by the impact of the coronavirus pandemic, its effects varying from one sub-sector to another, as was made clear during conference-call presentations of 2019 financial results by two different types of firms, Motor Oil, active in refining and fuel trade, and Mytilineos, whose interests include energy production and supply.

Motor Oil needs to counter lower international oil prices, lowered by the coronavirus outbreak combined with a price war between Russia and Saudi Arabia. Oil prices may have fallen but fuel demand is expected to slide further as stricter coronavirus stay-at-home orders are enforced.

The main challenge for Motor Oil is to maintain liquidity at levels ensuring sustainability.

As for the corporate group Mytilineos, represented by Protergia in the retail energy market, it has yet to experience a drop in electricity demand. Italy, hardest-hit by the coronavirus in Europe, has seen electricity demand drop by 7 percent.

The significant decline in natural gas prices is expected to offer Mytilineos purchase cost savings of about 99 million euros over a one-year period.

The group is continuing its development of a new gas-fueled power plant.

Despite the crisis, the Mytilineos group aims to continue operating its units at full capacity and utilize the availability of low-cost fuel.

Fuel price plunge pressuring refineries, opportunities seen

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The plunge of international crude oil prices is impacting Greek refineries and local fuel trade, while, worse still, market forecasts are impossible to make, even for the short term.

Hellenic Petroleum (ELPE) and Motor Oil, Greece’s two refinery groups, are being tested by the fall of Brent prices to levels of around 30 dollars per barrel. Highlighting this challenge, unleaded 95 octane fuel prices have dropped to less than 1,000 euros per cubic meter (including surcharges before VAT) for the first time in many years.

This represents a drop of more than 100 euros compared to prices on March 9, dubbed “Black Monday” as it was the worst day in markets since the financial crisis, a result of the outbreak of the oil price and output level war between Russia and Saudi Arabia, along with the coronavirus spread’s impact on demand.

The drop in prices is seen continuing. Domestic fuel demand is falling as a result of the Greek government’s broadened enforcement of restrictive measures aiming to contain the coronavirus spread. Local transportation needs have subsequently dropped dramatically, while the only other viable option left for Greek refineries, exports, has been canceled out by plunging fuel demand internationally. Borders have closed and airlines are limiting flights.

The cost of fuel stocks, purchased at far higher prices, is a big concern for both ELPE and Motor Oil. This cost, however, can be partially offset by opportunities currently available for lower-cost production.

On a more positive note, both refineries reduced their loan servicing costs prior to the crisis. This is particularly so for ELPE as the petroleum group was pressured by high borrowing costs. Motor Oil has traditionally pursued a more conservative borrowing policy.

Both refineries will need to take extremely cautious steps amid these highly unpredictable market conditions, analysts agree.

Energy sector transactions forecast to grow in 2020

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Energy sector acquisitions and mergers are expected to represent an increased share of overall transactions this year, according to officials at professional services multinational PwC.

The combined effect of a European turn towards investments for green energy growth and Greece’s decarbonization plan is focusing Greek investment interest on the renewable energy sector, PwC officials pointed out during a presentation of an annual report.

Hellenic Petroleum ELPE’s recent decision to purchase an unfinished 204-MW solar energy park from Germany’s Juwi for 130 million euros, as well as petroleum group Motor Oil’s move to acquire a 47-MW RES project from Mytilineos for 45.8 million euros were highlighted as signs of things to come.

PwC officials also confirmed the interest of major foreign funds for RES investment opportunities in Greece, as was disclosed by energypress earlier this week.

Gas utility DEPA’s privatization of DEPA Infrastructure, a new company entity, will be completed this year, while nine prospective bidders, in the procedure’s preliminary stage, have already emerged to express official interest, PwC officials pointed out.

In 2019, Greece’s energy sector represented 5.8 percent of the country’s total number of takeovers and mergers, transactions worth a total of 4.3 billion euros.

 

Motor Oil makes second renewable energy investment in 3 months

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Petroleum group Motor Oil, making gradual, carefully considered and targeted adjustments to meet demands of the renewable energy era, has added 47 MW to its RES portfolio through the acquisition of shares in two companies, Radiant Solar Holdings and Greensol Holdings, at a total cost of 45.8 million euros, the group’s second RES sector initiative in three months.

These stakes were previously held by METKA EGN, a member of the Mytilineos group.

Motor Oil’s move into the RES market will not feature the same traits and coverage of other refining and energy sector companies, officials at the corporate group have informed. However, Motor Oil officials see diversification as necessary for a reduction of the group’s carbon footprint.

The group also plans to develop solar energy parks at its refining units as an energy-saving initiative.

Last October, Motor Oil acquired an 85 percent stake of Stefaner Energy, holding three wind energy production licenses with a total capacity of 9.4 MW.

Rising LNG imports reshaping gas market, led by Mytilineos

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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.

 

Improved Gazprom deal raises DEPA in the eyes of investors

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Lower-price deals sealed or about to be sealed between gas utility DEPA and its international suppliers are among the factors the government is relying on for a successful privatization procedure of the gas utility, a procedure launched yesterday, beginning with DEPA Trade, one of DEPA’s two new entities formed for the sale.

DEPA is believed to have renegotiated a far more favorable supply deal with Russia’s Gazprom, the Greek utility’s biggest supplier.

Forty percent of DEPA’s natural gas orders from Gazprom will no longer be pegged to fluctuating international oil prices. Instead, this percentage of DEPA’s Gazprom orders will be linked to price levels of Dutch gas trading platform TTF, one of Europe’s biggest hubs. Just days ago, prices at TTF were about half those of pipeline gas. The other 60 percent of DEPA’s orders with Gazprom will remain oil indexed.

This development promises to make DEPA’s supply deals with Gazprom far more competitive. Prospective bidders already appear to be warming to the prospect.

Major Greek corporate groups such as Mytilineos, Hellenic Petroleum (ELPE) – already holding a 35 percent stake in DEPA and considering teaming up with its Elpedison partner Edison for the DEPA sale – GEK Terna and Motor Oil are believed to be gearing up for bids. The Copelouzos group’s involvement in the DEPA Trade sale is considered certain – in a partnership with Czech entrepreneur Karel Komarek, holding a key stake in Greek lottery OPAP.

RAE to change LNG terminal rules following congestion

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RAE, the Regulatory Authority for Energy, has decided to shape a new regulatory framework for gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens, attributing recent congestion problems at the unit that have left companies without slots for 2020 to an outdated legal framework from 2011 no longer serving new market needs, energypress sources have informed.

The authority is expecting proposals from DESFA before it starts shaping a new regulatory framework for the LNG terminal. The new framework, whose details remain unknown, will not apply in 2020 but is planned for 2021.

Lawmakers behind the 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, the sources noted.

Stronger LNG demand expressed by major-scale consumers and energy groups has been driven by increased global LNG output and significantly lower prices compared to pipeline gas.

Companies left without slots on DESFA’s finalized unloading plan for 2020, just announced, will eventually secure places during the year as other qualifiers have overstated their slot requirements and will make resulting vacant capacities available, the sources said.

According to the finalized unloading plan, the Mytilineos group will import a total of 22 LNG shipments in 2020, beginning January 1, Elpedison has planned an equivalent number of shipments, gas utility DEPA has scheduled 14, including Algerian contracts, while Heron has scheduled five shipments.

Power utility PPC and Motor Oil Hellas, both importing LNG shipments through the Revythoussa terminal in 2019, have been left out.

 

No changes to LNG unloading plan for 2020, PPC, Motor Oil both miss out

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Gas grid operator DESFA has announced a finalized unloading plan for 2020 at the Revythoussa LNG terminal without any changes to a temporary plan as participating players did not make any revisions to their initial requests for slots.

According to the finalized unloading plan, the Mytilineos group will import a total of 22 LNG shipments in 2020, beginning January 1, Elpedison has planned an equivalent number of shipments, gas utility DEPA has scheduled 14, including Algerian contracts, while Heron has scheduled five shipments.

Power utility PPC and Motor Oil Hellas, both importing LNG shipments through the Revythoussa terminal in 2019, have been left out of the facility’s unloading plan for 2020 as they failed to secure slots. Both companies have reacted firmly.

Players requesting bigger capacities are given priority, according to a DESFA formula, which remained largely unchanged, except for one revision, introducing tougher penalties for importers should they cancel capacity reservations.

Finalized unloading plan at LNG unit delayed by overdemand

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An announcement of the Revythoussa LNG terminal’s finalized unloading plan for 2020 has been delayed until tomorrow by RAE, the Regulatory Authority for Energy, as a result of an unprecedented overdemand for capacity slots registered by importers.

Power utility PPC and Motor Oil Hellas, both missing out on places, according to an initial plan, have protested against such a prospect.

Participating companies were invited to submit their finalized bids on November 22 following the announcement of a temporary unloading plan. No changes were reported. This left PPC and Motor Oil Hellas off the plan without slots.

RAE, troubled by the resulting shortage of slots at the Revythoussa terminal, is looking for a solution, which prompted a deferral of the finalized plan’s announcement by gas grid operator DESFA, operating the LNG facility.

RAE has refused to approve the finalized plan and extended its announcement date to December 3.

Including PPC and Motor Oil Hellas on the unloading program for 2020 will be difficult to achieve without the cooperation of other firms, pundits noted.

The temporary unloading plan’s initial shape was determined through the application of standard rules and formula used by DESFA.

Players requesting bigger capacities are given priority, according to the current formula.

A sharp increase in slot requests, double the quantity compared to the previous season, has been registered for 2020.

DEPA Infrastructure sale to be announced mid-December

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Privatization fund TAIPED is preparing swift privatization action at gas utility DEPA to follow the government’s ratification of a restructuring plan at the company that will place for sale two new corporate entities, DEPA Trade and DEPA Infrastructure, emerging through this process.

A tender offering investors the Greek State’s 65 percent of DEPA Infrastructure – resulting from the Greek State’s equivalent stake in DEPA – will be announced no later than December 15, according to energypress sources.

Hellenic Petroleum ELPE’s 35 percent stake – resulting from the Greek State’s equivalent stake in DEPA – is expected to be included in the DEPA Infrastructure sale, sources noted. The petroleum group has indicated it is not interested in maintaining interests in DEPA Infrastructure. If this is so, then the potential buyer or buyers of DEPA Infrastructure will become full owner.

DEPA Infrastructure is the full owner of Attiki gas distributor, covering the wider Athens area, and DEDA, covering the rest of Greece. DEPA Infrastructure also holds a 51 percent stake in distributor EDA Thess (Thessaloniki and Thessaly). Italy’s ENI is the minority partner in this venture.

DEPA Infrastructure, through all its interests, has lined up a five-year investment program worth 250 million euros. Revenues at DEPA Infrastructure are regulated and worth a total of approximately 130 million euros.

Italy’s Italgas and Germany’s E.ON are believed to be among the potential bidders for DEPA Infrastructure. Belgium’s Fluxys and Spain’s Enagas, both part of a three-member consortium controlling Greek gas grid operator DESFA, may also participate in the DEPA Infrastructure sale.

The announcement of a sale procedure for DEPA Trade will follow and is expected by the end of January.

ELPE is not expected to offer its 35 percent stake to this sale, meaning bidders will most probably be bidding for the Greek State’s 65 percent.

The Mytilineos group, Motor Oil and a partnership comprised of Copelouzos and KKCG, the Czech company holding a stake in Greek lottery company OPAP, are seen as likely participants in the privatization fund’s ELPE Trade sale. International players ENI and Edison have also been mentioned by pundits.

 

Motor Oil’s Crete LPG unit decision in January, deputy tells

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Motor Oil is conducting a feasibility study for the development of a 120-MW LPG-fueled combined cycle power power plant on Crete, an investment with a budget estimate of 100 million euros, deputy managing director Petros Tzannetakis (photo) has informed analysts during a conference call.

A finalized investment decision on the Crete project will be made early in 2020, the deputy chief added.

The energy group is continuing its gradual penetration of the renewable energy market and considering various small-scale projects, the company focus, Tzannetakis noted.

Motor Oil recently acquired Stefaner Energy, holding three wind energy station licenses with a total capacity of 9.4 MW. The energy group is considering projects that would capitalize on the right opportunities, Tzannetakis said, responding to questions on Motor Oil’s renewable energy plans.

Motor Oil is now preparing to proceed with a 310 million-euro investment for an upgrade of its Corinth refinery for production of higher-octane gasoline, the deputy informed, adding this project is expected to begin in January.

Tzannetakis, during the teleconference, supported Motor Oil’s refining facilities are ready to meet tougher standards set by the International Maritime Organization (IMO) for marine fuels with lower sulfur content.

 

Revythoussa LNG terminal congestion generates tension between rivals

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Gas importers who appear to have failed to secure slots at gas grid operator DESFA’s Revythoussa terminal for 2020, due to congestion caused by high demand, are expected to react, initially through formal written complaints to RAE, the Regulatory Authority for Energy, and DESFA, and, if needed, escalated action at the Competition Committee.

A finalized list of Revythoussa slot reservations for 2020 is expected to be announced by DESFA today. A preliminary list announced last week prompted complaints by importers who failed to make the cut.

DESFA opted to give priority to importers preparing to ship in bigger LNG quantities. The sidelined importers will await the finalized list before taking any action.

As a result of the higher demand for Revythoussa slots, DESFA, following public consultation, decided to sharply increased a penalty rate for unfulfilled terminal capacity reservations, as has often been the case in the past.

PPC and Motor Oil Hellas, two market players who imported a number of LNG shipments through the Revythoussa terminal in 2019, are among the companies left off the list for 2020.

The two companies contend other importers have submitted reservation applications representing more than double their required amounts in 2019 and, as a result, will not fully use these slot capacities.

Four players made successful bids. Of these, just one importer requested slots for 2020 that represent an LNG quantity anywhere near its requirements for the current year, sidelined firms have complained. Slots have been intentionally overbooked by some players to sweep rivals aside, they added.

A total of 18 LNG shipments to Revythoussa were made in 2018. The current year is expected to end with 35 shipments, while the initial schedule for 2020 includes 120 shipments.

Suppliers face tougher times, NOME benefits ending

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The termination of NOME auctions in Greece leaves independent suppliers with enough lower-cost wholesale electricity to fully cover their needs until the end of the year but the subsequent gradual change of market conditions can be expected to begin taking effect as of January when the suppliers start being exposed to the wholesale market.

By March, 2020, suppliers will be fully exposed to the System Marginal Price (SMP), practically meaning the sector’s course will depend on the course of the wholesale market.

If LNG prices remain low to contain the SMP level, then independent retail electricity suppliers should avoid losses despite their wholesale market exposure and, as a result, will be able to compete against the power utility PPC for market share gains.

For many companies, as much as 50 percent of their profitability has been derived from trading lower-cost NOME electricity, primarily as an export product to neighboring markets. In certain cases, significant profits earned through this trading activity enabled aggressive pricing policies in the domestic market, especially the mid-voltage category.

The new market conditions will make electricity export activity more challenging as earnings will be lower. Greater exposure to SMP risk will create problems. The triggering of SMP clauses will require consumers to pay greater amounts and independent suppliers will be less competitive against PPC.

An increase of the SMP level would put some suppliers who have offered relatively low-cost mid-voltage supply contracts in the unpleasant position of needing to maintain supply to customers at below-cost levels. Mid-voltage prices offered by independent suppliers have risen in recent times but are still below those of PPC.

The tougher conditions amid a fluid market of more than 20 retail suppliers in electricity and gas – of which no more than 12 hold market shares of consideration – promise to narrow down the field.

Three takeover and merger agreements have already been reached over the past year or so, beginning with Motor Oil’s acquisition of NRG, followed by a transfer of Green’s client list to Heron, and, just days ago, Volton’s acquisition of KEN.

 

 

 

Local players dividing interest for DEPA trade, network units

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The country’s major energy sector players are more or less split in their investment interest for DEPA Trade and DEPA Infrastructure, the two new entities to emerge from gas utility DEPA’s privatization plan, but the overall interest for DEPA Trade appears to be more substantial.

The Mytilineos group, Motor Oil and the Copelouzos group have already expressed interest in DEPA Trade and will probably submit bids once the  tender is staged. Hellenic Petroleum ELPE, holding a 35 percent stake in DEPA, is also expected to express interest in DEPA Trade.

The emergence of foreign bidders cannot be ruled out as Greece’s natural gas market is gaining prominence as a hub for the wider region in southeast Europe.

As for the gas utility’s networks, Italy’s Eni, maintaining interests in the trade and distribution markets of Thessaloniki and the Thessaly region, is reported to be interested in DEPA Infrastructure. GEK Terna is also believed to be seriously considering this entity’s gas distribution prospects.

Besides the level of bids, the energy ministry will also take into account the respective business plans to be submitted by investors to the DEPA Infrastructure tender, the objective being to secure further network expansion covering new regions.

Details and procedures concerning the DEPA privatization plan have been included in a draft bill to soon be delivered to Greek Parliament. In the lead-up, the plan will be presented for public consultation, possibly beginning today.

Unlike the previous government’s plan, the Greek State’s entire 65 percent stake in DEPA will be offered through the two new entities.

The DEPA Trade and DEPA Infrastructure tenders are expected to be staged concurrently.

 

 

Motor Oil’s LPG power plant plan for Crete raises local objections

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Motor Oil is preparing to develop a 120-MW LPG-fueled combined cycle power power plant on Crete but will need to overcome local resistance, early developments have already indicated.

The company has applied to RAE, Greece’s regulatory authority for energy authority, for an electricity production license for a combined cycle power power plant in the Hania prefecture’s Souda area, seen as a major prospective investment for Greece’s electricity generation sector.

The region’s Pera Platani area has been classified as an industrial zone in Crete’s new regional spatial plan, already revised and endorsed by authorities.

However, local community and authority objections have already been raised. The Hania municipal council yesterday voted unanimously against the project, noting its choice of location is part of a residential area. The island’s Korakia, Atherinolakkos and Xylokamara areas have been classified as the island’s energy hubs, the local council noted in its decision.

All parties with objections to Motor Oil’s choice of location for the investment plan have until March 23 to inform RAE.

ELPE, PPC among firms eyeing DEPA Trade majority stake

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The field of contenders believed to be examining a majority stake (50% plus one share) of DEPA Trade to soon be offered through a tender include Promitheas (Copelouzos, Gazprom), Motor Oil, Mytilineos and ELPE (Hellenic Petroleum), which revealed an interest in the natural gas market last week, while presenting group results.

The main power utility PPC another firm that has indicated it intends to enter the gas market to offset anticipated losses in the electricity market is another possibility. However, PPC’s financial standing and ability to access capital markets could prove to be an obstacle.

Promitheas has shown particular interest in DEPA’s international agreements, Motor Oil is looking closely at EPA Attiki, the gas utility DEPA’s supply firm covering the wider Athens area, while Mytilineos appears to be focused on the utility’s international trade and gas supply activity.

An energy ministry draft bill splitting DEPA into two new corporate entities, DEPA Trade and DEPA Infrastructure, ahead of the utility’s bailout-required privatization was ratified in Greek parliament late last week.

The tender offering a majority stake in DEPA Trade is expected to be launched in about one month. The privatization fund will not wait for the procedures concerning DEPA’s split to be completed before launching the DEPA Trade tender. Investors will be offered a minority stake in DEPA Infrastructure at a latter date.

 

Motor Oil’s 90% buy into NRG, as retail arm, worth €16.65m

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Motor Oil’s takeover of independent power supplier NRG, one of the retail electricity market’s smaller players, through the acquisition of a 90 percent stake announced early last summer and completed in September, is valued at 16.65 million euros, the petroleum firm’s nine-month results have shown.

Given the general mobility and wider interest for takeovers and mergers in the retail electricity market, this agreement promises to serve as a benchmark for other possible deals.

A 16.65 million-euro price tag for 90 percent NRG, an electricity supplier ranked sixth with a 1.35 percent market share, according to September data, means the company’s total value stands at 18.5 million.

Motor Oil has noted NRG will serve as its vehicle for entries into Greece’s retail electricity and gas markets.

The country’s retail electricity market can be divided into three categories. A top-tier group of vertically integrated firms, all holding market shares of over 3 percent, is comprised of Heron, Protergia (Mytilineos) and Elpedison. The mid-tier group consists of four firms, Watt & Volt, Voltera, NRG and ELTA, all with market shares of over one percent, while the third pack, a group of suppliers with markets shares under one percent, consists of KEN, Volton, EPA Attiki and Zenith.

Minimal customer mobility registered in natural gas market

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Little movement from one supplier to another has been observed in the country’s retail natural gas market despite the entry into this market by virtually all of the country’s electricity suppliers from the beginning of the year.

The capital’s Aerio Attikis and the north’s Zenith, both older gas suppliers, have lost a minimal amount of customers in their respective regions and are even managing to secure a small number of new supply contracts in each other’s regions.

Independent electricity suppliers seeking to also penetrate the country’s natural gas market have secured no more than 1,000 new supply contracts in total.

The lack of mobility witnessed in the gas market has been attributed to the lack of leeway available to new suppliers for appealing packages.

Retail natural gas prices are determined by wholesale price levels,  which change constantly and do not enable suppliers to guarantee specific price terms to prospective customers.

Major energy sector players such as the main power utility PPC and petroleum firm Motor Oil are expected to also enter Greece’s retail natural gas market within the next few weeks, while all players are preparing combined electricity-gas packages, a development that could prompt some mobility.

Motor Oil set for electricity market entry through NRG buy

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Motor Oil Hellas plans to soon enter the country’s retail electricity market following its recent takeover agreement reached with independent power supplier NRG, one of the retail electricity market’s smaller players, the petroleum company’s administration noted during yesterday’s presentation of first-half results.

Competition committee authorities are expected to endorse Motor Oil’s acquisition within the next two months, possibly between late September and early October.

Besides the retail electricity market, Motor Oil Hellas also intends to enter the natural gas market through subsidiary firm Coral, operating a retail network of 700 outlets and serving a daily customer base estimated at 200,000.

Domestic fuel demand was below satisfactory in the second quarter, Motor Oil officials told analysts at yesterday’s presentation of first-half results. Second-quarter sales dropped by 4.3 percent despite the summer tourism season’s arrival, officials told. However, Motor Oil Hellas subsidiaries increased their market shares, company officials informed.

Positive developments at Motor Oil Hellas included an increase in the sale of shipping and aviation fuel. Profit margins have increased in both sectors.

Also, the petroleum group is expecting results – early October – of a consultancy firm study for compulsory refinery improvements as a result of International Maritime Organization (IPO) regulation changes concerning a reduction of shipping fuel sulfur content levels, globally. Motor Oil Hellas is gaining an increased share in this market.

 

DEPA sale schedule now rests with Competition Committee

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An on-schedule launch of the DEPA gas utility’s privatization procedure will depend on the time it will take the Competition Committee to approve a recent local takeover agreement between DEPA and Shell concerning the Greek gas utility’s acquisition of the Dutch firm’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area.

DEPA went into the negotiations with Shell already holding 51 percent stakes in these joint ventures. The deal was reached for a price of 150 million euros.

If the Competition Committee approves the DEPA-Shell agreement by September, then the DEPA privatization could begin on schedule, in September or October, with the gas utility’s split into two firms, DEPA Infrastructure and DEPA Trade, as agreed to by the government and the country’s lenders for the privatization.

According to the plan, a 50.1 percent stake of the trading firm is expected to be offered to investors while 14.9 percent, including veto rights, will be maintained by the Greek State. As a second stage of the privatization, the Greek State’s offering to investors of DEPA Infrastructure will be limited to a minority stake of no less than 14 percent. The Greek State is expected to retain a 51 percent stake in DEPA Infrastructure.

The gas utility’s privatization procedure will most likely be delayed until 2019 if the Competition Committee requires an extended period to examine the DEPA-Shell agreement.

Pundits closely following the developments have not ruled out delays in the DEPA privatization procedure.

Greek petroleum group Motor Oil Hellas lodged an official complaint to the Competition Committee over the DEPA-Shell agreement while it was still in the making, noting it would enable DEPA to dominate natural gas supply in the wider Athens area. Motor Oil plans to soon enter Greece’s natural gas retail market through its subsidiary Coral (Shell).

DEPA, whose repositioning in Greece’s natural gas retail market was included as a bailout term, has also reached a deal with Italy’s Eni. DEPA agreed to withdraw from the Zenith gas supply company covering the country’s north by selling its 51 percent stake in this venture to the Italian firm, previously a minority partner with a 49 percent share.

At least three key players, Mytilineos, the Copelouzos group and ELPE, which already holds a 35 percent stake in DEPA, have expressed an unofficial interest for DEPA Trade.

These players, as well as others who have yet to disclose their interest, all see DEPA Trade as an enterprise that is ready for robust business given DEPA’s experience, existing customer base and foreign deals. More crucially, the investors also see a company that is soon expected to wholly own the EPA and EDA supply and distribution firms which, until recently, monopolized the retail gas market in the wider Athens area.

 

Copelouzos group emerges as latest DEPA Trade candidate

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The Copelouzos group has stepped forward to made clear its interest in a 51 percent stake of DEPA Trade, gas utility DEPA’s forthcoming subsidiary to be offered as part of a bailout-required privatization along with a minority stake in DEPA Infrastructure, the DEPA sale’s other subsidiary in the making.

The Copelouzos group is the latest major player to have emerged as a prospective buyer of DEPA Trade. Mytilineos and ELPE (Hellenic Petroleum), holding a 35 percent stake in DEPA, have both already declared they will bid for DEPA Trade.

Mytilineos and ELPE expressed their interest in DEPA Trade immediately following the recent unveiling of the DEPA privatization model. More interested investors are expected to emerge, including Motor Oil Hellas (MOH).

Just recently, Motor Oil Hellas made known an intention to enter the retail natural gas market through the fuel station network controlled by its subsidiary Coral.

Motor Oil Hellas has lodged an appeal to the competition committee against a local takeover agreement between DEPA and Shell, selling its 49 percent stake in their EPA Attiki natural gas supply joint venture, covering the wider Athens area, to DEPA. The gas utility already holds a 51 percent share of this joint venture and, as a result, will fully control own EPA Attiki.

DEPA already holds the biggest gas supply contracts in the country’s wholesale market and a complete takeover of EPA Attiki would offer the gas utility an unfair advantage over competitors, Motor Oil Hellas argues.

Without a doubt, the prospective field of DEPA Trade bidders sees major potential in the country’s natural gas market. The gas utility’s vast experience, existing client base and major wholesale gas agreements are all seen as big positives generating interest for DEPA Trade. Control of EPA Attiki, a key retail market player, promised by a 51 percent stake in DEPA Trade, is another prospect exciting investors.