Gas supplier switching up 164% in newly liberalized gas market

A total of 20,134 gas company customers, 4.18 percent of 481,838 in total, switched suppliers in 2019, data provided by RAE, the Regulatory Authority for Energy, has shown.

This mobility highlights the Greek retail gas market’s heightened level of competition less than three years since its liberalization and the determination of customers to secure the best possible deals.

In 2018, when the country’s retail gas market was liberalized, 7,611 customers of 441,330 in total, a far lower 1.72 percent, switched gas suppliers.

These figures represent a 164 percent rise, between 2018 and 2019, of customers switching gas suppliers.

Businesses registered the greatest level of mobility, followed by household customers and industrial customers, in that order, both in terms of gas amounts used and number of supply connections.

The supplier switching rate in the household category was 4.12 percent in 2019, up from 1.69 percent in 2018. In the business category, 5.72 percent of consumers switched suppliers in 2019, up from 2.41 percent in 2018.

On the contrary, supplier switching in the industrial customer category fell sharply to 3.17 percent in 2019 from 8.78 percent in 2018.

In numbers, 19,180 household consumers of 465,018 in total changed gas suppliers in 2019. In the business category, 944 of 16,505 made switches to new suppliers last year. As for the industrial category, 10 of 315 customers moved to new gas suppliers in 2019.

Despite the increased level of customer mobility, two suppliers, Zenith and Fysiko Aerio, remained dominant, capturing market shares of 65.51 and 25.76 percent, respectively, in terms of number of connections, according to the RAE data. The two frontrunners were followed by Mytilineos (2.85%), Elpedison (2.05%) and NRG (1.16%).

These market shares and rankings differ when based on gas volume. Under these terms, Zenith’s share was 35.95 percent in 2019, while Fysiko Aerio captured a 31.13 percent share. They were followed by PPC (5.96%), Mytilineos (5.44%), Heron (5.25%), Elpedison (5.21%) and DEPA (3.51%), among a field of smaller players.

 

 

Drastic changes to reshape energy sector by end of 2020

Major developments in Greece’s energy sector, from lignite to natural gas, renewable energy, energy efficiency, as well as the geopolitical effects, promise a drastic reshape of the sector over the next year.

A first batch of power utility PPC’s existing lignite-fired power stations will have ceased operating as part of a plan for a full withdrawal by the end of 2023. PPC will have a reduced number of employees on its payroll. This will have positively impacted the utility’s profit figures.

Also, a first round of major renewable energy projects expected to be launched by PPC subsidiary PPC Renewables through partnerships, as part of the parent company’s wider turn to green energy, will intensify competition in the renewable energy market.

Furthermore, this time next year, assets currently belonging to gas utility DEPA, both in trade and infrastructure, may have been transferred to new owners. This development promises to reshape the entrepreneurial map as the private sector’s dominance will be absolute.

In the retail market, the number of players is expected to have diminished as a result of a new round of takeovers and mergers, amid heightened competition, as was also the case in telecommunications in the recent past.

In addition, Greece’s energy exchange will have clocked up several months of operations by the end of the year. Its arrival will intensify competition, remove market distortions and allow dormant potential to be realized through coupling with neighboring markets.

By the end of 2020, the TAP gas pipeline will have begun delivering its first orders of Azeri gas to Europe, the Greek-Bulgarian IGB gas pipeline will be nearing completion, while procedures leading to the development of the Alexandroupoli FSRU and an underground gas storage facility in the offshore area south of Kavala will have made progress.

Without a doubt, Greece’s energy sector appears to be waking up to the new reality, leaving behind anachronistic perceptions and embracing the green energy revolution. The country is now adopting new ways implemented by the overwhelming majority of European territories two decades earlier.

 

Stricter PPC hiring supervision among energy draft bill changes

A number of observations made during public consultation for an energy-sector draft bill concerning the energy market’s liberalization, power utility PPC’s modernization, gas utility DEPA’s privatization and RES support, including stricter recruitment control at PPC, have been incorporated into the bill.

The draft bill, submitted to Parliament last Friday, will now be distributed to parliamentary committees for discussion before being transferred to the house for ratification towards the end of the month.

The stricter recruitment control at state-controlled PPC will require inspections and approvals by ASEP, the Supreme Council for Civil Personnel Selection, during hiring procedures, not afterwards.

In another important draft bill revision, gas utility DEPA’s possible stake in the prospective Alexandroupoli FSRU would be held by DEPA Trade, a new DEPA entity being formed as part of the gas utility’s privatization. Previously, this stake was planned for the utility’s international projects division.

Furthermore, the new shareholders to acquire the Greek State’s 65 percent of DEPA Infrastructure, the gas utility’s other new entity in the making, will need to maintain this stake for at least five years.

Also, a universal electricity supply service covering the electricity needs of blacklisted consumers not wanted by suppliers for repeatedly failing to meet electricity bill payments, will require the market’s top five suppliers – up from three – to cover this sector’s market needs for two years if a competitive procedure for the service fails to produce a result.

Independent suppliers, repelled by market irregularities, have shunned this universal service since its introduction in Greece in 2011. This has forced PPC to step in, by law, as the dominant player.

The aim is to transform the universal service, offering electricity at considerably elevated rates, into an attractive market for local suppliers, as is the case in other European markets.

Energy sector draft bill to be presented at cabinet meeting tomorrow

The key aspects of a new institutional framework to bring about energy market revisions will be presented by energy minister Costis Hatzidakis at a Ministerial Council meeting tomorrow.

Power utility PPC’s detachment from bailout-related restrictions imposed on public sector enterprises; a plan for the partial privatization of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; and details concerning gas utility DEPA’s upcoming privatization represent the new framework’s most significant components.

Details of moves intended to accelerate the RES sector’s penetration in energy production and consumption are also included in the framework.

The energy ministry will also forward its plan to the country’s lenders, including the European Commission. It will also be forwarded for public consultation, sources believe.

Once these stages have been cleared, a draft bill is expected to reach Greek Parliament in the second half of November, the aim being to complete its ratification by the end of that month.

 

DEPA gas sales drop 11.5% in 2018 amid greater competition

Gas utility DEPA’s sales in 2018 fell 11.5 percent, to 37.8 million MWh, compared to the previous year, highlighting the growing competition in this liberalized sector.

Besides the intensified competition, DEPA also attributed the result to slightly weakened gas demand in the Greek market.

Total turnover for DEPA dropped to 996 million euros in 2018 from 1.08 billion euros in 2017, an 8.4 decline prompted by lower natural gas sales.

Gas auctions DEPA has been obligated to stage since 2016 have also played a key role in fueling competition and reducing the utility’s market share.

DEPA auctioned off a gas quantity of 7.2 million MWh in 2018, up 22 percent compared to a year earlier.

The gas utility’s share of Greece’s overall natural gas imports, and, by extension, the wholesale gas market, dropped further in 2018 as a result of a significant increase in pipeline gas and spot-market LNG imports made by competitors.

DEPA’s soon-to-be-appointed new administration expects sales to drop further in 2019 to a level of approximately 29 million MWh, primarily as a result of favorable conditions in international LNG markets. Current conditions are prompting greater spot-market LNG orders to Greece by electricity producers and independent suppliers.

Lender representatives visiting Athens in a pre-election mood

Pending energy market reforms, including privatizations, PPC’s disinvestment of lignite units, and other market liberalization measures, will be discussed between government officials and the country’s lender representatives, visiting Athens to begin a post-bailout review this week.

Long-term decisions on various matters will most likely need to be made following Greece’s elections, due in autumn, once the political climate has settled. This delay, though, could end up prompting tougher demands by the lenders, including the European Commission.

PPC’s sale of lignite units, relaunched following a failed previous effort, is expected to dominate the talks. The disinvestment’s deadline for binding bids has been extended to May 28, which virtually coincides with the European elections, making the prospect of the sale procedure’s punctuality uncertain.

The lenders are expected to push for financial restructuring measures at state-controlled PPC, which has just posted disappointing results for 2018. Some of these measures will entail political cost.

The lender representatives will also push for decisions on slow-moving energy-sector privatizations. The sale procedure for gas utility DEPA has fallen behind schedule while uncertainties have crept into the the ELPE (Hellenic Petroleum) privatization.

The target model as well as Crete’s urgently-needed electricity grid interconnection with Athens will also be on the agenda. The latter has led to a control-related dispute between Greek power grid operator IPTO and Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status Greek-Cypriot-Israeli electricity grid interconnection project.

DEPA’s EPA Attiki takeover a competition woe, officials react

Unfavorable results produced by gas utility DEPA’s most recent gas release auction, which sparked a surge in prices and severely limted amounts made available to independent suppliers, have sparked protests by market officials over a recent Greek competition committee decision approving DEPA’s acquisition of a 49 percent share held by Shell in their EPA Attiki supply venture, covering the wider Athens area.

The agreement gives DEPA, already holding a 51 percent stake, full control of the EPA Attiki supply firm and threatens to keep independent players out of the retail gas market.

The threat had been raised during Greek competition committee hearings ahead of the agreement’s local approval. Officials who opposed the DEPA-Shell agreement warned it would prompt market competition complications but were told EPA Attiki was headed for privatization as part of the DEPA sale.

However, the DEPA sale has been held back by a series of deferrals. It could take many more months to stage. During this time, retail gas market competition will remain subdued.

Despite the warnings and market issues now emerging, the Greek competition committee offered a swift and unconditional approval the DEPA-Shell agreement.

DEPA’s gas release auctions were introduced as a structural plan to promote market competition and reduce the gas utility’s market dominance.

The main power utility PPC secured the biggest amounts at DEPA’s most recent gas release auction. The gas amounts left for independent players were also severely restricted by substantial purchases from EPA Attiki, now fully controlled by DEPA.

Commenting on the resulting set up, one market official described the situation as DEPA selling gas quantities intended for independent players to itself.

Authorities are now expected to scrutinize the issue.

DG Energy boss in Athens to inspect on reforms, wider EU commitments

Klaus-Dieter Borchardt, Director of the European Commission’s Directorate-General for Energy, is currently in Athens for a series of meetings with local authorities to inspect on energy-sector reforms included in the bailout agreement, and, beyond the Greek progam, ensure the country is on the right track for EU energy policy commitments leading to the European energy market’s unification, as presented in the target model.

The DG Energy top official’s two-day agenda, concluding today, includes meetings with officials at IPTO, the power grid operator, RAE, Regulatory Authority for Energy, the main power utility PPC, and the Athens Energy Exchange.

Borchard is focused on ensuring the country’s ongoing and prospective energy-sector reforms will be implemented following the Greek program’s conclusion next month, according to certain local officials who have held talks with the visiting authority.

The DG Energy boss also appears to be applying pressure for the maintenance of schedules, by all local energy institutions, as presented in a binding road map resulting from the country’s EU membership, which stretches beyond the Greek bailout agreement.

Prior to his arrival in Athens, Borchard was in Bulgaria.

 

Major battle seen for liberalized gas market in 2018

The natural gas retail market’s liberalization, a new reality in Greece that has arrived along with the New Year as a follow-up to the wholesale gas market’s opening, promises to lead to major changes.

Combined electricity-and-gas packages are already being offered by retailers in a local energy market whose natural gas sales have grown from 2.9 billion cubic metres in 2015 to 5 billion cubic meters in 2017.

The natural gas market is expected to gain further impetus as a result of the electricity market’s liberalization. Numerous gas market retailers, besides EPA Attiki, covering wider Athens, and Zenith, covering Thessaloniki and Thessaly, are examining the prospect of offering combined electricity-and-gas packages.

The main power utility PPC has hired a consultant to help prepare its entry into the natural gas market, while major independent electricity suppliers have already launched campaigns for gas supply. Also, DEPA, the public gas corporation, is considering entering the electricity market, either alone or along with a partner.

As of 2018, independent gas suppliers will seek to further bolster their presence in a market traditionally dominated by DEPA.

The degree of DEPA’s future retail presence in the EPA supply companies serving wider Athens, Thessaloniki and Thessaly, to be determined by ongoing negotiations between the shareholders involved in these ventures, remains to be seen.

The government appears to favor DEPA’s withdrawal from EPA Thessaly-Thessaloniki and continued presence in EPA Attiki. DEPA currently holds 51 percent stakes in these ventures. Shell holds a 49 percent stake in EPA Attiki and ENI a 49 percent stake in EPA Thessaly-Thessaloniki. Shell appears to want to withdraw.

EPA Attiki and Zenith, covering Thessaloniki and Thessaly, have both expressed an interest to broaden their geographic reach.

According to data released for 2015, the retail natural gas market in wider Athens, Thessaly and Thessaloniki exceeded 293 million euros. EPA Thessaly-Thessaloniki posted a pretax profit of 45 million euros and EPA Attiki a pretax profit of 30.1 million euros, according to this data.

As for Greece’s wholesale natural gas market, DEPA, until recently, has stood as the undisputed dominant player owing to its overwhelming control of imports. In 2016, DEPA’s natural gas imports reached 42.7 million MWh, from 44.5 million MWh in total, a 96 percent share.

However, this picture began changing in 2017, beginning with Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export, whose imports for the year reached one billion cubic meters, or 20 percent of the 5 billion cubic meter total. These amounts were imported from the gas pipeline at Sidirokastro, via Bulgaria.

According to sources, Prometheus Gas has already signed contracts for a greater amount in 2018. Clients include PPC, which has placed orders for its natural gas-fueled power plants.

M&M, a joint venture involving Motor Oil Hellas and the Mytilineos Group, has also made imports.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, noted that the corporate group ranks as the country’s biggest natural gas consumer with a level of 1.5 billion cubic meters, adding that M&M Gas could soon start trading annual amounts of natural gas measuring around one billion cubic meters.

Despite the emergence of new players in Greece’s wholesale gas market, DEPA managed to increase its volume-based sales increase of 9 percent for 2017’s nine-month period, while its operating profit (EBITDA) rose by 32 percent to 223 million euros.

 

Competition Committee to decide on DEPA retail market role

The Competition Committee will decide whether DEPA, the public gas corporation, can maintain its presence in Greece’s retail natural gas market, according to additional terms included in the bailout agreement.

The terms specify that an assessment by RAE, the Regulatory Authority for Energy, and the Competition Committee, in association with the European Commission, to judge whether competition in the retail natural gas market remains restricted, will be made once the ownership make-ups of the existing EPA gas supply companies have been reshuffled. This assessment will need to be made prior to the bailout-required sale of a 65 percent sale of DEPA.

DEPA currently holds 51 percent stakes in EPA Attiki and EPA Thessaly-Thessaloniki, in respective partnerships with Shell and ENI.

If the Competition Committee decides that prospective line-up changes at the EPA companies continue to limit competition in the gas market, which needs to be fully liberalized by January 1, then the new corporate models will face reexamination.

At this stage, ENI appears interested in acquiring DEPA’s 51 percent in EPA Thessaly-Thessaloniki, while Shell seems interested in selling its 49 percent share of EPA Attiki to DEPA.

According to energypress sources, the country’s lenders are determined to prevent the formation of a state-controlled monopoly in Greece’s retail natural gas market. The lenders may allow DEPA to increase its stake in EPA Attiki, serving the wider Athens area, but they will not allow a full takeover, the sources informed.

Shell’s intended withdrawal from EPA Attiki is made complicated by the need for an evaluation of the premature loss of this venture’s monopoly, originally promised to last until 2030, but cut short by Greece’s bailout-required gas market reforms. The value of this lost monopoly will be factored into the sale price. For some time now, Shell has valued its monopoly loss at 150 million euros.

The negotiations, part of the road map established for the gas market, need to be completed by March, 2018, when, according to additional bailout terms, the tender for the sale of DEPA’s 65 percent needs to be announced. Any delays in the negotiations between DEPA, Shell and ENI promise to delay the planned DEPA sale.

 

Gas market’s future shape not finalized, despite third review agreement

The future look of Greece’s natural gas market, including the role to be played by DEPA, the public gas corporation, remains murky despite an energy-sector agreement just reached between government officials and the country’s lenders as part of the bailout’s third review.

The deal, announced last Friday, goes no further than to state that gas market details will be based on arrangements to be agreed upon between DEPA and its EPA supply company partners, Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures.

The country’s lenders, especially the European Commission, have been pushing for dominant DEPA to loosen its control of both the wholesale and retail natural gas markets.

Though the details still remain unclear, certain facts do offer an outline as to how things will stand.

DEPA can be expected to withdraw from EPA Thessaly-Thessaloniki and retain interests in EPA Attiki, serving the wider Athens area. The lenders appear to have agreed to a Greek proposal calling for DEPA’s increased stake in EPA Attiki. Energy minister Giorgos Stathakis has already made clear DEPA stands to gain greater control of the EPA Attiki board.

It is also known that Shell is negotiating its way out of EPA Attiki.

In addition, an internationally recognized consultant will be hired to conduct an evaluation of the EPA ventures as a negotiating base for the expected changes. The consultant will also be tasked with evaluating the value of premature monopoly losses imposed on EPA Attiki and EPA Thessaly-Thessaloniki. These monopolies will cease to exist in the retail natural gas market as of January 1 as a result of market reforms being applied.

DEPA still needs to negotiate a price for its EPA Thessaly-Thessaloniki withdrawal and, once having done so, will need to use the amount to be received to compensate Shell for its expected departure from EPA Attiki. DEPA will also be expected to use part of its 320 million-euro amount in cash reserves.

DEPA, Shell and ENI have been engaged in negotiations since last summer. The hardline approach of DEPA’s recently ousted leadership had not helped the negotiators find common ground. In fact, gaps widened during the process.

According to sources, ENI has shown willingness to compromise but was not backed by Shell.

Despite the difficulties, agreements between all three companies appear to be on the final stretch.

 

Shell to leave EPA Attiki, proposal for DEPA exit in north

Energy minister Giorgos Stathakis is expected to present the country’s lender representatives a gas-sector proposal entailing the full withdrawal by DEPA, the Public Gas Corporation, from EPA Thessaly-Thessaloniki through the sale of its current 51 percent stake to ENI, the current holder of a 49 percent in this retail venture, as well as a full takeover of EPA Attiki through the acquisition of Shell’s 49 percent in this retail gas firm supplying the wider Athens area, energypress sources have informed.

Both ENI and Shell both appear to agree to these EPA changes. According to sources, Shell has decided to withdraw from Greece’s natural gas market. The company hired a consultant to steer it through this process, it recently became known.

The energy minister is scheduled to meet with the lender representatives today and on Thursday to finalize energy sector measures needed for the bailout’s third review.

An agreement has already been reached with the European Commission, one of the country’s lender institutions, on main power utility PPC’s bailout-required lignite unit sale package, but the prospective changes in the natural gas sector remain unclear. The lenders are generally pushing for a diminished role by DEPA, currently dominant at both wholesale and retail levels.

DEPA appears willing to fully withdraw from EPA Thessaly-Thessaloniki. Last week’s leadership changes at the gas company are expected to facilitate this withdrawal.

The lenders had rejected a previous Greek offer entailing DEPA’s reduced presence in EPA Thessaly-Thessaloniki with a stake of at least 20 percent, as well as a management takeover at EPA Attiki and, possibly, the acquisition of Shell’s current 49 percent stake in this venture. Shell also failed to react positively to this proposal.

A counterproposal by the lenders called for DEPA’s reduced presence in both EPA ventures as a minor partner devoid of management rights.

It remains to be seen whether Greece’s latest proposal will be embraced by the lenders this week as part of the effort to conclude the bailout’s third review.

 

Prometheus Gas captures 20% of changing Greek market

Prometheus Gas, a joint venture involving the Copelouzos Group and Gazprom, has captured a 20 percent share of the Greek gas market, according to energypress sources.

This development highlights the fact that 2017 has been a year of major changes for the sector as significant natural gas amounts imported and distributed in Greece no longer involve DEPA, the Public Gas Corporation.

Prometheus Gas is expected to end the current year with volume-based sales of close to one billion cubic meters, one fifth of total demand in the Greek market.

The bulk of these sales were made to electricity producers and industrial consumers, while some amounts were also bought by suppliers who purchased gas amounts imported by Prometheus Gas through the Sidirokastro entry point in Greece’s north.

Gas pipeline imports, as well as exports, have also been made by other companies this year but Prometheus Gas remains the dominant trader, not including DEPA, the gas utility.

The new year promises further changes as households will be free to choose gas suppliers as of January 1.

A trading system change at Sidirokastro, the Greek-Bulgarian interconnection through which the majority of gas amounts enter the Greek market, has been a key factor behind the market changes.

Until recently, transactions at this point, pivotal for both the Greek and regional markets, were dominated by long-term contracts. The arrival of open auctions, in line with EU law, has enabled independent gas suppliers to buy and sell considerable natural gas amounts at competitive prices.

Implementation of the EU law for an interconnection agreement between the Greek and Turkish grid operators at the country’s Kipi entry point on the Turkish border would provide further impetus for market changes and bolster the country’s diversification of sources.

Gas market reforms ‘redefining the sector’, local authority notes

Natural gas market reforms made this year on a number of levels are redefining the sector’s nature and prospects, Nektaria Karakatsani, a member of RAE, the Regulatory Authority for Energy, pointed out during a speech at a recent industry event staged by the Greek Energy Forum, the University of Piraeus and the European Commission titled “Energy Union Future Leaders”.

The local energy authority noted that the significant progress achieved by Greece in implementing new gas network codes was thoroughly analyzed by national and EU authorities at a recent event staged by the European Commission. A road map of Greek gas-sector moves to follow was also examined at this event, Karakatsani told the Greek Energy Forum gathering.

The European gas network codes constitute a structured set of rules and tools whose aim is to boost levels of competitiveness, flexibility and lead to convergence of European markets, the RAE authority pointed out.

This framework envisions more effective natural gas flow through coordinated and transparent procedures and reliable economic models, as well as stronger links between individual markets, thereby enabling optimal utilization of transboundary interconnections, Karakatsani noted.

DEPA in robust financial condition amid Shell, ENI talks

Various alternatives are being examined for the future look of Greece’s natural gas market, especially the role to be played by DEPA, the Public Gas Corporation. Decisions on the direction to be taken are expected by the end of this month, officials have informed.

The gas utility, which has maintained a dominant, vertically integrated presence in the market, is currently engaged in negotiations with local retail gas business partners Shell and ENI – holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures – while the government is representing the utility in the ongoing third bailout review talks with the country’s lenders.

DEPA, a financially robust enterprise whose cash reserves are expected to have reached approximately 300 million euros by the end of the year, is strongly positioned in these talks. The gas utility has the ability to finance any decisions taken for its future market position, sources have noted.

The government is pursuing a plan that would maintain DEPA’s majority role in EPA Attiki, supplying the wider Athens area, in exchange for a minority role in EPA Thessaly-Thessaloniki.

According to sources, DEPA is close to striking a deal with ENI for their EPA Thessaly-Thessaloniki venture. A drastically reduced stake for DEPA, to a level well under 49 pecent, is regarded as a possible outcome.

As for EPA Attiki, the current arrangement, through which DEPA holds 51 percent of the venture and Shell 49 percent, could be left untouched.

A gas market reforms road map needs to be delivered by the end of the year, according to a term included in the revised bailout following a request by the lenders, its aim being to remove factors not promoting competition. Though this condition’s description has remained vague, it can be interpreted as representing pressure from the lenders for an end to DEPA’s omnipresence.

Major DEPA retail role, through EPA Attiki, supported locally

The leadership at the environment and energy ministry is insisting on a dominant role for DEPA, the Public Gas Corporation, in the retail gas firm EPA Attiki, serving the wider Athens area, and would settle for the gas utility taking on a minority role in EPA Thessaly-Thessaloniki, according to sources.

This position was apparently stressed during a meeting at the energy ministry yesterday. Officials representing DEPA, TAIPED, the state privatization fund, and ELPE, Hellenic Petroleum, which holds 35 percent stakes in DEPA and DESFA, the natural gas grid operator, all took part in the session.

Greece needs to deliver a gas market reforms road map by the end of the year, according to a term included in the revised bailout, following a request by the lenders, its aim being to remove factors not promoting competition. The future role of DEPA, currently omnipresent, is a key part of the road map.

The lenders have called for DEPA’s full withdrawal from Greece’s retail gas market but, as was indicated at yesterday’s meeting, the government is determined to maintain a commanding role for the gas utility through one of the two EPA companies. DEPA currently holds 51 percent shares in EPA Attiki and EPA Thessaly-Thessaloniki, while Shell and ENI are partners with respective stakes of 49 percent.

DEPA needs to reach agreements with its two EPA partners. According to sources, the gas utility is close to reaching a deal with ENI that would provide the Italian company with part of DEPA’s 51 percent in EPA Thessaly-Thessaloniki. The sources added that DEPA appears prepared to accept being a minor shareholder in EPA Thessaly-Thessaloniki with a stake well under 49 percent.

As for EPA Attiki, the ownership could remain as is, with DEPA maintaining 51 percent and Shell 49 percent, the same sources informed.

Given these indications, the government, in its negotiations with the lenders, appears to be sticking to the positions adopted at a DEPA shareholders’ meeting in the summer and by the board. Ultimately, the views of the lenders will be crucial.

It has become somewhat of a common secret that the lenders have persisted for DEPA to adopt a more passive role in the retail gas market with EPA stakes of no more than 49 percent. Shell and ENI have both expressed a clear interest to acquire majority stakes in these respective ventures.

A clearer picture on the gas market’s new look should emerge within the next fortnight. Time is running out for the road map’s delivery by the end of the year, as was highlighted at yesterday’s meeting.

Besides DEPA’s role in the gas market, Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030.

Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture. It is unclear to what extent Shell’s evaluation has been discussed by Greek officials.

DEPA, Shell, Eni talks crucial to gas market’s future look

The outcome of ongoing intensive talks between DEPA, the Public Gas Corporation, and local retail gas business partners Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures, over the future role of the Greek gas utility in the local gas market promises to be pivotal to its future look.

The partners are negotiating for a solution that will determine DEPA’s role in the existing EPA companies, or, even, whether the gas utility will have any role to play at all in these two retail gas firms.

Energy minister Giorgos Stathakis – speaking at a signing ceremony held yesterday for a license offering a consortium comprised of ELPE (Hellenic Petroleum), Total and Edison hydrocarbon exploration and exploitation rights to offshore Block 2, west of the Ionian island Corfu – stressed that time is running out for DEPA, Shell and ENI.

The minister noted that the partners will need to find a solution by the end of November, which, in turn, could be used as a platform for decisions to help conclude the bailout agreement’s third review.

Technical officials representing the country’s lender institutions have rejected a Greek road map proposal concerning gas market reforms. This has brought the future of DEPA’s role in Greece’s wholesale, distributions and – especially – retail gas markets to the fore.

A gas market reforms road map needs to be delivered by the end of the year, according to a term included in the revised bailout following a request by the lenders, its aim being to remove factors not promoting competition.

Though this condition’s description is vaguely expressed, it can be interpreted as pressure from the lenders for an end to DEPA’s omnipresence. Likewise, Shell and ENI have also called for a restriction of the gas utility’s widespread role in the local gas market.

Besides DEPA’s role in the gas market, Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030.

Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture.

 

 

 

Minister, lenders to tackle energy issues at end of week

Energy minister Giorgos Stathakis and the lender representatives have scheduled a meeting for the end of this week, sources informed, with the aim of resolving pending energy-sector issues, or, at least, putting them on track towards settlement.

The main power utility PPC’s bailout-required sale of units representing 40 percent of its lignite capacity, as well as a road map for the natural gas market’s full liberalization, expected by the end of the year, stand as the key issues.

At present, the European Commission’s Directorate-General for Competition and Greek officials remain at odds over the content of PPC’s unit sale package.

A letter forwarded by the DG Comp to the Greek energy ministry last week reiterated the Brussels authority’s rejection of an intention by Greek officials to include state-controlled PPC’s ageing Amynteo lignite-fired facility, located in Greece’s north, on the sale list. The DG Comp appears to favor this unit’s replacement by PPC’s more modern Megalopoli facility, located in the Peloponnese.

In its letter, the DG Comp rejects a Greek argument claiming PPC would be comparatively disadvantaged – in terms of unit lifespans – if the more modern Megalopoli facility is sold to investors, leaving PPC with older facilities, including Amynteo, which requires a major upgrade if its lifespan is to be prolonged.

The DG Comp, in the letter, also stressed PPC’s lignite sale ordeal needs to be settled as time is running out.

According to sources, the energy ministry is working on various scenarios, still under wraps, ahead of this week’s meeting.

As for the gas market reforms, a solution for DEPA’s (Public Gas Corporation) reduced market presence has yet to be found. A previous Greek proposal was rejected a while ago.

 

DEPA, Shell, ENI in intensive talks for retail market solution

DEPA, the public gas corporation, and local retail gas business partners Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures, are currently in the midst of intensive talks over the future of their collaborations, sources have informed.

Consensus needs to be reached within the first 15 days of October but common ground has yet to be found. Numerous proposals have so far been discussed, including stock swaps, DEPA’s withdrawal from certain posts and a stronger hold of others, as well as a division of the EPA companies based on the current shares held by the partners.

The country’s lenders have already rejected a road map on needed Greek gas market reforms, including the future role of DEPA, currenly omnipresent. Authorities are now focusing on the  changes required in DEPA’s partnerships with Shell and Eni.

DEPA’s role and level of participation in Greece’s wholesale, distribution and, primarily, retail gas markets, is a core issue.

Energy minister Giorgos Stathakis, who discussed the issue yesterday with European Commissioner for Financial Affairs Pierre Moscovici, recommended a certain degree of leniency in the talks with lenders for the achievement of the best possible solution.

The lenders have called for the delivery of a road map by the end of this year detailing gas market reforms aiming to end current conditions that are stifling competition. This road map demand has been included in the revised bailout agreement. Though the demands are currently vague, the lenders are essentially applying pressure for DEPA to reduce its widespread market presence.

Greek officials, striving to protect DEPA’s market value and ensure compensation for any retreats, also want the corporation to remain a retail market player, even if in a revised form.

Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030. Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture.

 

 

 

Creditors discontent with Greek gas market reforms plan

A team of creditor representatives appears to have already rejected the country’s proposal regarding the role and participation of DEPA, the Public Gas Corporation, in the natural gas market’s wholesale, retail and distribution domains.

The latest round of discussions on Greece’s bailout-required energy sector reforms commenced in Athens last week, focused on the gas sector. Talks on main power utility PPC’s sale package of lignite units have yet to begin but officials are expected to begin dealing with this front in Brussels today.

A demand by the creditors for the delivery of a completed road map concerning natural gas market reforms by the end of this year has been added to the latest revised bailout agreement. One of the intentions is to eliminate conditions that do not incite competition.

Though the gas market demands made by the creditors have remained vague, the underlying motive is to break DEPA’s omnipresence. At present, DEPA is active at wholesale and retail levels and holds stakes in the EPA and EDA supply and distribution companies.

Shell and ENI, strategic partners in the EPA and EDA companies for wider Athens and Thessaly-Thessaloniki, respectively, are also pushing to restrict DEPA’s widespread market presence, as expressed in letters to energy minister Giorgos Stathakis.

The Greek recommendation, which, for the time being, appears to have been deemed inappropriate by the creditors, proposes maintaining DEPA’s presence in the EPA Attiki and EDA Attiki companies with the existing 51 percent stake.

Greek officials also recommend DEPA’s full withdrawal from EPA Thessaly-Thessaloniki or a drastic reduction of the corporation’s stake in this venture in exchange for an equivalent increase in its share of EDA Thessaly-Thessaloniki.

Greek officials have also proposed abandoning the idea of DEPA’s entry into the retail gas market as an independent corporate unit. DEPA has already revised its corporate charter to cover retail gas and electricity market activities.

Besides the needed gas market reforms, also unsettled are compensation claims made by Shell and ENI for the premature losses of their regional monopolies. Shell, which, as a 49 percent parner in EPA Attiki, had signed an exclusive supply agreement for wider Athens until 2030, has valued the financial cost of the premature end of this agreement at approximately 100 million euros. The amount would be shared with DEPA, holding a 51 percent stake in the venture.

EPA Attiki to offer gas-electricity packages, energy savings services

EPA Attiki, a wider Athens gas supplier preparing to also enter the electricity market, as was highlighted by yesterday’s issuance of an electricity supply license by RAE, the Regulatory Authority for Energy, plans to offer combined gas-and-electricity packages to customers as of January.

These combined packages will also include energy savings services for households, buildings and businesses, based on expertise gained by energy firms in other parts of Europe. Major European partners are expected to join EPA Attiki for its new venture. These partners will soon be announced, the company has informed.

RAE has granted EPA Attiki a 20-year electricity supply license permitting the trade of 400 MW per year.

Originally founded by parent company DEPA, the Public Gas Corporation, as a gas supply subsidiary covering the wider Athens area, EPA Attiki will gain full independence as of 2018 as a result of the country’s gas market reforms.

The company is now preparing to launch an intensive campaign to promote its gas-and-electricity combined packages.

 

RAE accelerating effort for gas market’s full liberalization

The country’s natural gas market is expected to be fully liberalized at the onset of 2018, when a bailout term to offer all consumer categories the right to choose their supplier should come into full effect.

Greece’s gas market reforms demand full liberalization for household consumers in 2018, following the market’s liberalization for industrial consumers in 2016 and the business sector in 2017.

Local authorities will need to swiften their actions to implement the needed legal framework for complete market liberalization. RAE, the Regulatory Authority for Energy, will take on this task’s greatest load. The work that lies ahead promises to be a challenge for RAE given its wider energy market obligations and current understaffing problem.

Despite various difficulties encountered, RAE has managed to deliver on many of the regulatory framework revisions it has been tasked as part of the process leading towards a liberalized natural gas market.

The establishment of a code for natural gas supply to large-scale customers stands as one of the remaining tasks RAE must complete. Preliminary work has already been carried out. The authority recently decided to seek support from a consultant for this task. A budget of 24,800 euros, including 24 percent VAT, has been endorsed.

 

Gas trader EPA Attiki preparing its electricity market entry

Gas supplier EPA Attiki is moving ahead with a plan to revise its corporate charter so as to include electricity supply and trade among its business activities.

The company shareholders have already approved the amendment to the charter and, as the next step, the enterprise is preparing to soon submit an application to RAE, the Regulatory Authority for Energy, for a license enabling the gas trader to enter the electricity market.

Originally founded by parent company DEPA, the Public Gas Corporation, as a gas supply subsidiary covering the wider Athens area, EPA Attiki has now gained independence amid the gas market reforms.

EPA Attiki officials expect to be given the green light for trading activity in the electricity market by September, several months ahead of the full liberalization, in 2018, of Greece’s natural gas market. As a result, EPA Attiki will be licensed to offer combined electricity-and-gas packages to consumers.

The Greek natural gas market’s anticipated full liberalization next year will enable households to choose their gas suppliers. Industrial and commercial sector consumers were granted this liberty in 2016 and 2017, respectively.

EPA Attiki does not intend to establish a partnership with an existing electricity supplier.

Company officials noted that increased gas amounts offered at DEPA gas auctions have helped reduce EPA Attiki’s gas purchasing costs and, by extension, offer more competitive prices to customers.

Last winter, the cost of natural gas remained nearly 40 percent less than heating oil and as much as 70 percent lower than electricity.

EPA Attiki officials noted that further price improvements, including for households, will be possible in 2018 as a result of the supplier’s independence from DEPA.

Over the next two years, EPA Attiki plans to initally focus on its electricity market entry followed by an effort to further improve customer services in anticipation of the intensified competition as other suppliers seek to capture a share of the natural gas market in the wider Athens area. Until now, EPA Attiki has enjoyed a regional monopoly.

 

 

 

EPA Attiki prepares for low-cost CNG supply in liberalized gas market

EPA Attiki intends to supply CNG to major-scale industrial enterprises and businesses, a plan that will be made possible by the installation of compressors to the existing low and medium-pressure network, EPA general manager Yiannis Mitropoulos disclosed yesterday while addressing the many opportunities offered by the gas market’s developing liberalization.

EPA Thessaloniki and EPA Thessaly are also considering installing compressor stations to enable CNG supply to the market.

The EPA Attiki general manager pointed out that his company’s plans are focused on CNG supply, not LNG. Compared to LNG, requiring a costly liquefaction procedure, CNG is a lower-cost option once compressors have been installed.

The developing liberalization of the natural gas market will be completed as of January 1, 2018, when households will be free to choose supplier. Industrial clients were able to do so as of the beginning of 2016, while major-scale business customers were offered this right at the beginning of this year.

“Opportunities exist and will proliferate as the market continues to become increasingly liberalized and the arrival of 2020, when the TAP pipeline will be launched, draws nearer,” Mitropoulos noted. “We are already assessing alternative supply sources,” he continued.

Originally founded by parent company DEPA, the Public Gas Corporation, as a supply subsidiary covering the wider Athens area, EPA Attiki has now gained independence amid the gas market reforms. EPA Attiki’s initial objective, in its new life, is to enter the retail electricity market and follow up this entry by improving its services in anticipation of intensifying competition.

Mitropoulos said he expects household natural gas price levels to drop over the next few months. Price levels are currently at 5.7 cents per MWh, seven percent higher than in January, as a result of the energy crisis early this year. Despite the recent rise, household natural gas price levels remain 38 percent lower than heating fuel.

EPA Attiki has set itself an annual turnover target of 150 million euros for 2017.

 

 

 

 

DEPA forms retail gas division for changing energy market

Upcoming legal framework revisions and the imminent full liberalization of Greece’s natural gas market as of January 1, 2018 promises to reshape the retail energy market. The players, old and new, have already begun preparations.

According to latest information, DEPA, the Public Gas Corporation, is now establishing a retail division to be tasked with running the corporation’s imminent retail activities in the electricity and natural gas markets.

As was disclosed by energypress last November, DEPA has made changes to its company charter in order to widen its activities and participate in the electricity supply and waste management sectors.

Just days ago, EPA Attiki, a DEPA subsidiary that has made moves to now operate independently, unveiled a new business plan that includes an entry into the electricity supply market.

DEPA’s revision to also facilitate its entry into the retail gas and electricity energy markets at the beginning of 2018, along with plans by independent electricity suppliers to offer combined electricity and gas packages to households, promises to completely alter the local energy market’s retail landscape.

At this stage, it remains unclear whether partnerships will be established. Plenty of maneuvering by players exploring their options is now in progress.

EPA Attiki’s moves so far indicate that the company will operate independently. As for DEPA, its existing ties with major-scale industrial enterprises stand as a key strength.

 

Minister, lenders put further gas market measures on hold

Further natural gas market reforms that could be needed will be considered at the end of 2017, Greece’s recently appointed energy minister Giorgos Stathakis and the country’s creditor representatives appear to have decided at a meeting held in Athens yesterday as part of the bailout’s second review.

Officials will first assess the overall impact on Greece’s natural gas market of a series of measures already made and to take effect January 1 before deciding on any further action.

These measures, part of the bailout agreement, include the gas market’s liberalization for all business-related consumption; a split of supply and distribution activities at the country’s three exisiting EPA gas supply respectively covering the respective wider Athens, Thessaloniki and Thessaly regions; and DEPA’s (Public Gas Corporation) increased gas release, the proportion of low-priced natural gas offered by the corporation through its annual auctions. All these steps are intended to generate market competition.

According to energypress sources, RAE, the Regulatory Authority for Energy, possibly with assistance from a foreign-based consultant, has been given the task of preparing a study on the local gas grid’s needs.

The Government Council for Economic Policy (KYSOIP) will rely on this study’s results to prepare a road map of possible revisions overing the period between 2018 and 2020. The council’s study is expected to be delivered late in 2017.

Yesterday’s wait-and-see decision reached by the energy minister and the lenders puts on hold thoughts concerning a demand for DEPA to withdraw from the retail market. The corporation holds 51 percent stakes in the three regional EPA gas supply companies. Shell holds a 49% stake in the EPA supply company serving the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessaloniki and Thessalia ventures.

Gas market’s liberalization increasingly complex

The natural gas market’s liberalization process, directly linked to the privatization of DEPA, the Public Gas Corporation, is beginning to seem like an equation made increasingly complex by the addition of various factors whose impact remains unknown.

Most recently, the country’s lenders called for DEPA’s withdrawal from Greece’s retail natural gas market, a move intended to swiften the liberalization process, only to prompt the re-emergence of issues from the past that further complicate matters.

Shell, which holds a 49 percent stake in the DEPA subsidiary EPA Attica, a gas distribution company serving the wider Athens area, and Eni, the Italian multinational with 49% stakes in the equivalent EPA ventures covering Thessaloniki and Thessalia, may both seek compensation for the premature end to their regional monopolies. DEPA holds 51 percent stakes in all three EPA subsidiaries.

In 2001, Shell and Eni both signed contracts securing 30-year exclusive retail gas distribution rights to the aforementioned markets. These monopolies were abolished by the Greek bailout’s framework.

The recently replaced energy minister Panos Skourletis had ruled out the possibility of compensation amounts for Shell and Eni, while his successor, Giorgos Stathakis, who took control of the country’s energy portfolio just over a week ago, has yet to engage himself with the issue.

Brussels sources value the cost of the premature end of Shell’s retail monopoly for the wider Athens area at approximately 100 million euros. The same sources noted that Shell has yet to submit a compensation claim to the Greek government as it is waiting for a late-November announcement from RAE, Greece’s Regulatory Authority for Energy, on new tariffs. The level to be set will determine Shell’s future action. The same goes for Eni.

Should these two companies consider the upcoming new tariff levels as insufficient to cover the losses caused by the retail market’s liberalization, then the Greek State will face compensation claims. Theoretically, DEPA could act likewise as it, too, is being affected by the premature ends to the regional monopolies held by the EPA supply companies.

Given the tight condition of the Greek State coffers, compensation in the form of cash payments is most unlikely, meaning that some type of offsetting solution will need to be found.

DEPA risks facing double trouble as, unlike its EPA partners, the corporation may not be compensated for the premature ends to the retail monopolies and, in addition, would need to provide the compensation payments for Shell and Eni.

Also, the country’s lenders seem to be applying pressure for DEPA to be privatized in 2017. However, this process will be held up for as long as the possible EPA compensation issue and DEPA’s withdrawal from the retail market remain unresolved.

 

Lenders pressuring DEPA to leave retail natural gas market

DEPA, the Public Gas Corporation, an energy-sector issue in the bailout’s current second review, is being pressured by the lenders to withdraw from Greece’s retail natural gas market, a development that would destabilize the corporation’s future and the prospect of widened natural gas use around Greece.

Thought this latest request is not a bailout prior action, government officials fear the lenders will apply relentless pressure.

Already forced to increase its gas release, the proportion of low-priced natural gas offered by DEPA through its annual auctions as a means of generating market competition, the corporation is under pressure to abandon its 51 percent stakes in Greece’s three existing regional EPA gas supply companies covering the wider Athens area, Thessaloniki and Thessalia, without compensation. This would effectively leave DEPA out of the retail market.

The lenders, especially the European Commisson, represented by its Senior Economist for Greece, Carlo Viviani, want DEPA to abandon its retail role as of January 1, 2017, when distribution and retail activities of gas companies in the country’s natural gas market need to be split. Sources said the lenders are pushing for this move to further liberalize the gas market.

Shell holds a 49% stake in the EPA supply company serving the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessaloniki and Thessalia ventures.

This demand will surely prompt major legal issues as the public utility is being asked to abandon assets without any form of compensation. The prospect of expanding Greece’s natural gas network to parts of the country without access is also expected to be set back. The country’s role in prospective international gas transmission projects, through DEPA, would also be affected if the gas company’s role is diminished.

Regardless of this latest request by the lenders, DEPA needs to split its retail and distribution divisions at an administrative level.

 

DEPA planning action against rivals for Gazprom take-or-pay costs

DEPA, Greece’s Public Gas Corporation, intends to take action, including legal, to avoid shouldering the entire resulting cost of a take-or-pay clause in its supply agreement signed with Gazprom. Besides the Greek state-controlled corporation, the Russian gas giant has now also begun supplying other customers in the local market.

Subdued gas demand in Greece amid the long recession has activated the Gazprom supply agreement’s take-or-pay clause, requiring payments for unconsumed amounts.

“We’re not saying ‘no’ to the natural gas market’s liberalization, but DEPA can’t be left alone to cover this expense,” a corporation official contended, adding that the take-or-pay clause was included in DEPA’s agreements with Gazprom to ensure gas supply security for the entire Greek market and that its cost should be shared by all local traders.

Gazprom, operating through Prometheus Gas, its joint venture established with the Copelouzos corporate group, began direct gas supply to local firms  a couple of months ago. Recipients include Heron, a member of the GEK Terna group, Engie, QPI and Elpedison (ELPE, Edison, Eltex), while other industrial enterprises are also involved in negotiations with Prometheus Gas.

The natural gas is being supplied at a price level equal to that of the starting price offered at DEPA gas auctions.

Gazprom’s decision to break a long-running unofficial agreement for exclusive gas supply to DEPA comes at a time when the Russian side is heavily promoting its Southern Corridor pipeline plan to cover southeast Europe, either as an extension of Turkish Stream or as the South Stream project.

Another gas supplier, M&M Gas, a venture involving the Mytilineos Group and Motor Oil Hellas, has also begun supplying modest natural gas amounts to local customers, primarily industrial enterprises, who have stopped ordering from DEPA and its regional EPA supply subsidiaries.

EPA Attica to offer €50m in subsidies for gas installations

EPA Attica, the gas distribution company covering the wider Athens area, plans to offer a subsidy program worth five million euros per year, or 50 million euros over the next ten years, for private gas system installations.

According to energypress sources, the subsidy amount works out to 1,500 euros per apartment block or 700 euros per house.

EPA Attica has asked RAE, the Regulatory Authority for Energy, to incorporate part of the subsidy’s cost into tariffs, but it still remains unclear how this could be arranged.

The issue is connected to RAE’s recent endorsement of distribution fees concerning natural gas networks of the wider Athens area, Thessaloniki, Thessaly and the remainder of Greece.

Market officials expect RAE to endorse trading prices for 2017 before company strategies are determined. Traders are expected to submit their proposals late this month and a response from the authority is expected within November.

Shell, which holds a 49 percent stake in EPA Attica, and ENI, also a 49 percent shareholder of the EPA supply companies covering Thessaloniki and Thessaly, will be waiting for RAE’s decisions before they decide whether to seek compensation from the Greek State for the premature end to their respective regional monopolies. DEPA, the Public Gas Corporation, controlled by the Greek State with a 65 percent stake, holds majority 51 percent stakes in all three EPA gas supply companies.

As part of the country’s gas market reforms in progress, all non-household gas consumers will be free to choose suppliers as of January 1, 2017. Household will be abe to do so a year later.

A WACC (Weighted Average Cost of Capital) figure of 9.23 percent determined by RAE has prompted a negative reaction from the EPA gas supply companies. EPA Attica officials have noted that the figure neither reflects the Greek market’s level of risk nor the limited penetration of gas in the Greek market. Shell and ENI will need to decide on whether such a WACC rate is satisfactory for new investments concerning the network’s expansion to new areas.