natural gas demand

TTF hike raises concerns over perceived ‘return to normality’

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A steady rise in the TTF index over the past few days, following more than a year of decline, has market players concerned about the direction natural gas prices could take for the rest of this year.

The TTF, Europe’s gas benchmark, had fallen to as low as 23 euros per MWh a few weeks ago but has now rebounded, reaching a level of 28 euros per MWh yesterday. Gas futures dated December, 2024 and onwards are currently priced at over 30 euros per MWh.

The rising trend comes following a very mild winter of low consumption, which, however, was higher compared to last year.

Market players do not appear to be fully convinced by Europe’s extension of measures aiming to reduce demand for yet another year, until the end of next winter.

The recent insecurity that has crept into the market appears to stem from Europe’s anticipated loss of Russian gas imported via a Ukrainian corridor. A five-year pipeline gas transit agreement between Kyiv and Moscow for Russian gas supply to Europe via Ukraine expires at the beginning of 2025. Ukraine has declared it does not intend to renew this agreement.

This bilateral agreement’s end is expected to reduce the EU’s total gas imports by 5 percent. The loss will need to be offset by an increase in LNG shipments.

Unfavorable news from across the Atlantic has further unsettled market players. Natural gas producers such as EQT have decided to reduce output as a result of extremely low gas prices in the domestic market.

The downward trajectory of the TTF in recent months was driven by weak demand in Asia, including China, a trend whose continuation cannot be depended on. Also, the EU cannot count on next winter being as mild as the previous two winters.

 

Gas amounts channeled north on decline, projects in doubt

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Market interest for further development of European gas infrastructure appears to be weakening, raising concerns about the success of forthcoming trans-Balkan market tests aimed at increasing regional network capacity, sources have underlined.

Although the level of interest for further development of gas infrastructure in Greece and the wider region was considerable in non-binding phases of market tests, potential users are now holding back as the procedure’s binding phases approach.

This essentially means that market players are avoiding making long-term commitments, which is necessary in order for the network expansion and upgrade plans to proceed.

Gas-order cancellations from Greece to markets further north are being recorded, which, if continued, will cast doubts over gas network expansion plans, or even make them unnecessary, sources told energypress.

A similar trend has taken hold at Greek gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens, as market players are cancelling LNG shipments because they have nowhere to channel gas quantities.

Though there is still plenty of time ahead before binding bids are submitted to trans-Balkan market tests, whose results will offer a clear-cut picture of the situation, the level of interest being recorded by operators preparing project proposals is well below that expressed in non-binding market tests. The Greek-Bulgarian IGB gas pipeline, now being gauged for a capacity boost, is one such example.

Gas consumption levels are on a downward trajectory and gas storage facilities in the EU are at high levels for this time of the year, averaging 68.61 percent full.

It is still too early to draw definite conclusions, but latest data is showing a change of scene. It remains to be seen how this shift could influence the investment plans of operators.

Gas demand slump prompting LNG shipment cancellations

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A significant decline in natural gas demand has prompted a number of gas companies to cancel shipments planned for the Revythoussa LNG terminal on the islet just off Athens, a complete contrast to the frenzy and congestion experienced at the terminal last winter, energypress sources have informed.

Low gas demand, the country’s mild winter weather, so far, and still-full gas storage units around Europe have made many previous orders unnecessary, sources at Greek gas grid operator DESFA, operating the Revythoussa LNG terminal, have explained.

DESFA is monitoring the situation to ensure gas-order cancellations do not impact operations at the Revythoussa LNG terminal, the sources noted.

The decline in natural gas demand, which ended 2023 21.6 percent down year-on-year, according to latest DESFA data, is expected to continue in the first quarter of 2024.

Though last year’s lower gas demand did show signs of a rebound in the final quarter of 2023, this was not enough to make up for weakened demand in the year’s previous quarters.

A year ago and, even more so in the autumn of 2022, high demand for slots at the Revythoussa LNG terminal had resulted in bids of as much as 4 million euros for a slot at DESFA’s related auctions.

At the time, the role of the Revythoussa LNG terminal was upgraded by the EU’s efforts to counter the energy crisis and end Europe’s reliance on Russian natural gas. As a result, Revythoussa became a strategic entry point for European gas imports.

Revythoussa LNG terminal slot demand strong for 2025, 2026

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Gas grid operator DESFA’s ongoing auctions for slots at its Revythoussa islet LNG terminal just off Athens, currently offering slots for 2025 and 2026, are continuing to attract strong bidding interest, as was the case with a preceding session offering slots for 2024.

This year, DESFA is, for the first time, staging LNG slot reservation auctions offering capacities for the next 15 years, from 2024 to 2038, triple the five-year extent offered up until last year.

The strong interest in the Revythoussa slots has been attributed to a projected increase in gas demand over the next few years. A number of new gas-fueled power stations are planned to be launched between 2024 and 2026.

Participants have fully booked all 41 LNG slots offered for 2025. Of these, 25 had already been secured during last year’s cycle of auctions. The remaining 16 slots were all taken up by domestic users.

The 41 LNG slots offered for 2025 were secured by a total of 7 users of which six are domestic players.

Bidding interest remains just as firm for 2026, with just one of 45 slots offered still vacant. Of these, 21 were secured by bidders at auction last year, drawing bidders from Greece and abroad.

It should be pointed out that, even if slots are all taken, the terminal’s rules permit other users to store quantities for shorter in-between periods if slots are temporarily emptied or any LNG load cancellations arise.

 

DESFA slot auction for 2024 successful, premia levels drop

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Gas grid operator DESFA auctions staged last week for LNG cargo slots in 2024 proved successful, as had been anticipated. Just five of a total of 45 slots were available as 40 slots had already been reserved by bidders during a previous round.

This year, DESFA is, for the first time, staging LNG slot reservation auctions offering capacities for the next 15 years, from 2024 to 2038, triple the five-year extent offered up until last year.

Slot commitment by bidders beyond five years constitutes a significant qualitative leap for both the natural gas market and gas infrastructure as, on the one hand, long-term capacity agreements are bolstered, and on the other, infrastructure development visibility is improved through the expression of definite interest, market officials noted.

Latest auction premia have fallen to much lower levels, compared to last year, a development attributed to two key factors, reduced gas demand and the forthcoming launch of the Alexandroupoli LNG facility in Greece’s northeast, DESFA sources noted.

Reduced gas demand and the imminent launch of the new Alexandroupoli LNG facility, along with other gas-sector infrastructure, has led to a better supply-demand balance in terms of capacity commitment at the Revythoussa terminal – Greece’s only LNG unit at present – and  prevented conditions for high premiums, as was the case last year.

Heightened gas demand last year pushed slot prices well above auction starting prices. As a result, premia, or windfall earnings, generated at the Revythoussa slot auctions and the Greek gas grid’s other entry and exit points reached 65 million euros.

DESFA’s windfall earnings, according to domestic gas market regulations, need to be utilized to benefit grid users. The 65 million-euro amount accumulated last year will go towards supporting the country’s latest supply security effort, as part of a 160 million-euro preventive action plan.

This initiative will lessen, by 65 million euros, the supply security effort’s collection target through various surcharges on consumer bills.

DESFA forecasts gas demand increase of 25% by 2029

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Gas grid operator DESFA expects a sharp rise in domestic gas demand over the next few years, seen rising 25 percent by 2029, according to company data.

Natural gas usage in Greece is projected to rise to 7.3 bcm by 2029, a 25 percent increase compared to 2022, when consumption reached 5.8 bcm. according to DESFA’s data.

DESFA anticipates domestic gas demand will reach 6.7 bcm by 2027 and approximately 15.5 percent over the next two years.

The anticipated rise in domestic gas demand by DESFA is closely linked to the development of new gas-powered electricity stations being established in Greece.

GEK-Terna and Motor Oil Hellas have teamed up for the development of an 877-MW gas-fueled power station in Komotini, northeastern Greece. This project is now under construction and slated for a commercial launch in early 2024.

In addition, power utility PPC, gas company DEPA Commercial and the Copelouzos group have established a partnership for the development of an 840-MW gas-fueled power station in Alexandroupoli, also in the country’s northeast. It is expected to be completed at the end of 2025.

DESFA forwarded its gas-demand data to ACER, Europe’s Agency for the Cooperation of Energy Regulators, for an analysis concerning network fees proposed by the gas operator in consultation staged by RAAEY, the Regulatory Authority for Waste, Energy and Water.

ACER has described the amount of data provided for DESFA’s network fees proposal as insufficient.

The European agency wants RAAEY to clearly set the duration of the new formula for network fees, based on planned investments intended to stabilize gas network flow.

 

Gas-sector companies under pressure as a result of low demand

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Companies linked to the natural gas sector, from power producers to gas traders and suppliers, are expected to be seriously impacted by a decline in natural gas demand, down 15.29 percent in the first quarter compared to the equivalent period last year, according to data provided by DESFA, Greece’s gas grid operator.

Gas usage dropped off significantly in the first quarter, down 33.92 percent to 12.39 TWh, from 18.74 TWh in the equivalent period last year.

According to gas market experts, gas usage has been just as flat in the Balkans, not a good prospect for Greece’s gas exports.

This overall decline in gas trading activity, despite signs of some recovery ahead of the summer, is placing gas-linked companies under increasing financial pressure.

The current market conditions are particularly adverse for gas-focused enterprises such as DEPA Commercial, a gas wholesaler, exclusively, as opposed to companies with more diverse portfolios.

Gas consumption in the retail market – covering residential, professional small-scale industrial and industrial usage – had fallen by as much as 50 percent at the beginning of the year, according to market officials.

The mild winter, increased caution by consumers amid the energy crisis, as well as the switch, by many companies, from gas to lower-cost fuels such as diesel, all contributed to this sharp decline.

 

Greece to back gas usage cut extension at Energy Council

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Greek energy minister Kostas Skrekas is expected to back a European Commission proposal for a 12-month extension of a measure supporting a 15 percent reduction of natural gas usage at today’s Energy Council of EU energy ministers.

The group of 27 energy ministers will seek to reach a political agreement on the measure’s proposed extension, from April 1, 2023 to March 31, 2024, so that Europe may also be prepared for next winter should EU member states face gas supply issues or even disruptions.

This measure, first introduced on August 1, 2022, is set to expire in a few days’ time, on March 31. It called for a 15 percent reduction of gas usage during this period, compared to the previous five-year average during the equivalent eight-month periods. Greece exceeded the measure’s target by reducing its natural gas usage by 20.9 percent.

The measure’s gas usage restrictions are voluntary but would become binding should higher-alert conditions come about.

Europe’s natural gas savings stand to reach 60 billion cubic meters over the next twelve months if the EU’s 27 energy ministers agree on a one-year extension of the measure for an annual 15 percent reduction of natural gas usage.

Skrekas, Greece’s energy minister, also plans to present, at today’s Energy Council, the country’s proposal for an EU power grid capacity boost and expansion to facilitate electricity flow from south to north, as part of a wider plan envisaging RES flow from north Africa to Greece and the rest of Europe, via the western Balkans.

 

Overdevelopment danger for LNG terminals in Europe, IEEFA warns

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Major LNG terminals being developed in various parts of Europe, including Greece and Germany, in response to reduced Russian gas supply, could fail to achieve full commercial potential as the continent may end up possessing a far greater number of such facilities than required by 2030, the Institute for Energy Economics and Financial Analysis (IEEFA) has warned.

If REPower EU objectives are attained and Turkish gas demand remains steady, then European demand for LNG will be restricted to a level of just 150 billion cubic meters in 2030, down from 175 bcm in 2022, IEEFA pointed out. At such a level in 2030, LNG terminals in Europe would operate at less than 40 percent of capacity.

IEEFA also stressed that European gas operators have an incentive to over-expand their infrastructure and asset base in order to deliver profits to shareholders, even if projects do not end up being fully utilized.

Existing legislation provides operators with guaranteed revenues collected through tariffs, IEEFA pointed out. Evidence strongly suggests the Russian attack on Ukraine has accelerated Europe’s energy transition by dramatically boosting the penetration of green technologies that reduce demand for gas and LNG, the institute added.

 

NECP adjusted to meet loftier EU aim for energy usage drop

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The Greek government has adjusted its National Energy and Climate Plan (NECP), setting a loftier energy consumption reduction goal that aligns the plan with an even more ambitious EU target just set.

Greece has now set a loftier 8 percent energy consumption reduction goal, compared to 2020, by the end of the decade, while the EU, through a provisional agreement reached by the European Council Presidency and Members of the European Parliament, is aiming for an overall 11.7 percent drop by 2030, compared to 2020, above the target of a 9 percent reduction that was set in 2021.

The 11.7 percent reduction goal, at EU level, is a binding target and means EU consumers will need to limit annual energy usage to the equivalent of 763 million tons of oil by the end of this decade.

The EU reduction target is not proportionally shared by member states but, instead, takes into account their capacity to limit respective consumption, a realistic approach offering a certain degree of flexibility.

Greek authorities intend to intensify the country’s energy-efficiency drive concerning buildings, further promote smart management of energy consumption, and maintain efforts aiming to reshape consumer behavior for an overall reduction of energy demand.

Gas demand plummets, power stations off, gas importers hit

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Natural gas demand has fallen sharply in Greece, firstly as a result of the mild winter weather being experienced, which has restricted household gas demand for heating purposes, and secondly as gas-fueled power stations have remained sidelined for many hours per day because they are not competitive and are being undercut by electricity imports.

Retail gas demand for household, professional, small-scale industrial and industrial usage has fallen by as much as 50 percent, market officials have told energypress.

The reduced level of competitiveness affecting gas-fueled power stations has been primarily attributed to an extraordinary levy of 10 euros per MWh imposed, as of November 1. Also, many businesses have turned to alternatives such as diesel and LNG.

The sharp drop in natural gas usage has especially affected gas importers, some of which are committed to import agreements with take-or-pay clauses, while others have reserved slots at the Revythoussa LNG terminal close to Athens for LNG shipments.

Electricity imports currently cover approximately 25 percent of daily demand, data provided by the Hellenic Energy Exchange for the past week has shown.

Government moves ahead with plan to reduce energy consumption

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The introduction of energy saving measures, both compulsory and optional, for consumers has now become a priority for the government following growing shortage fears, throughout Europe, prompted by Russia’s indefinite closure of the Nord Steam I gas pipeline, supplying Germany and, by extension, central Europe.

At a meeting of government officials in Athens yesterday, Prime Minister Kyriakos Mitsotakis agreed to move ahead with measures intended to restrict electricity and natural gas consumption in an effort to avoid energy shortages during winter, sources informed.

The government will aim to decrease the amount of natural gas used for electricity generation by approximately 10 TWh, sector officials told energypress.

Annual natural gas consumption in Greece amounts to 70 TWh, of which 50 TWh is used for electricity generation.

An initiative was taken in early July, through a joint ministerial decision, to reduce electricity consumption at all public buildings, numbering 212,000, by 10 percent. The response, so far, has been poor, according to sources.

Campaigns raising the public’s awareness of the need to cut back on energy consumption will soon be launched by energy companies and operators. Citizens will be advised to keep heating temperatures at a maximum of 19 degrees Celsius and lights switched off in rooms not being used.

The government is also striving to limit electricity and natural gas consumption in the industrial sector.

Energy minister Kostas Skrekas met yesterday with key industrialists at the helms of Titan cement group, Viohalco and the Mytilineos group, whose subsidiaries include Aluminium of Greece, to discuss plans limiting energy consumption, as well as the replacement of natural gas with diesel as an energy source wherever possible.

 

 

Decarbonization plan increases 2030 gas demand forecast to 8bcm

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The natural gas sector will benefit most from the country’s plan to decarbonize by 2028 but new infrastructure will be needed to cope with the higher gas demand, officials have pointed out at an Athens forum.

Greece’s overall natural gas demand forecast for 2030 has now been revised upwards and is expected to exceed 8 billion cubic meters. Also, LNG appears likely to dominate over pipeline-supplied gas.

Prime Minister Kyriakos Mitsotakis announced a decarbonization objective for Greece by 2028 while delivering a speech at the recent UN Climate Action Summit in New York.

Prior to this announcement, domestic natural gas demand was forecast to rise to 6 billion cubic meters by 2030 with a possible additional amount of up to one billion cubic meters, depending on the number of new gas-fueled power stations to be developed in coming years.

The revised gas demand forecasts for Greece were presented yesterday by gas grid operator DESFA and Gastrade company officials at the Athens Investment Forum.

Gastrade general manager Konstantinos Sifneos projected annual gas demand will increase to 7 billion cubic meters over the next five years.

Gas demand increased by 17 percent this year, while, for the first time, LNG quantities exceeded pipeline gas, it was noted.

Natural gas takes lead in energy mix, demand up 21.6%

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Demand for natural gas demand grew by more than 20 percent in 2017, primarily driven by the electricity generation sector, which absorbed 18.6 percent more natural gas during the year to capture a 66.8 percent share of overall demand for natural gas in Greece.

The total amount of natural gas transmitted through the country’s distribution system reached 4.64 billion Nm3 in 2017, up from 3.84 billion Nm3 in 2016, a 21.06 percent increase. In energy terms, 53.57 billion kWh was distributed last year compared to 44.42 billion kWh in 2016, a 20.6 percent increase.

Small-scale industry, households and enterprises captured 19.5 percent of overall natural gas demand following a distribution increase of 10.5 percent.

Large-scale industry also experienced an impressive consumption increase of 64.9 percent, which took its share of overall natural gas demand to 13.7 percent.

Part of the overall increase has been attributed to the particularly heavy winter experienced around Greece in 2016-2017, which led to an increase in demand for natural gas-fueled electricity generation as well as natural gas through the pipelines for heating purposes.

The share of natural gas used for electricity generation increased to 31.5 percent in 2017 from 26.6 percent a year earlier. Total electricity production grew to 52.04 TWh in 2017 from 51.24 TWh in 2016, a 1.56 percent increase.

Increased natural gas consumption in the industrial sector, which became apparent during the final months of 2016, remained consistently higher throughout 2017.