natural gas storage

Milder, lower-cost gas storage measures planned for winter

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This winter season’s Preventive Action Plan for natural gas supply security in Greece is expected to be significantly lower in cost as it will be limited to a basic set of milder precautionary measures, energypress sources have informed.

The Preventive Action Plan will be determined by the outcome of a risk study currently being conducted for the upcoming winter, deputy energy minister Alexandra Sdoukou recently informed.

Though the study’s results are not yet out, it has already become apparent that drastic energy security measures such as those taken for last winter – among them the rental of an additional FSU at the Revythoussa LNG terminal just off Athens – will not be necessary, well-informed sources have contended.

This winter, gas grid operator DESFA, running the Revythoussa LNG terminal, does not intend to hire an additional FSU, which, along with gas-storage facility rentals abroad last winter season by electricity producers operating gas-fueled power stations in Greece, ended up costing 160 million euros.

In the lead-up to last winter, Greece’s gas-fueled electricity producers were required to store natural gas at underground storage units of other EU member states, as domestic gas storage facilities did not suffice to cover precautionary-measure needs.

The country’s electricity producers have, this autumn, remained far more subdued on gas-storage action at facilities in fellow EU member states. Some of Greece’s major electricity producers have reached agreements to use gas storage facilities, primarily in Italy, if needed, sources informed.

Gas amounts involved in these agreements are believed to be well below levels foreseen by EU regulations and RAAEY, the the Regulatory Authority for Waste, Energy and Water.

Last winter, RAAEY, aligning itself with EU Regulations, which require all member states to store gas amounts equivalent to 15 percent of national annual consumption, set a 7.5 TWh storage requirement.

Market officials have expressed concerns as to whether this requirement still needs to be maintained, noting the Revythoussa LNG terminal could cover extraordinary needs through additional LNG shipments.

Italy gas storage injections of no use, DESFA auctions show

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Gas grid users have fully reserved the capacity offered at the country’s Nea Mesimvria entry point in the north after expressing great interest in gas grid operator DESFA’s annual auctions, staged on July 2 and requiring over 24 hours to be completed as a result of the big turnout.

The capacity reservation level at the gas grid’s Nea Mesimvria entry and exit point is crucial for gauging, with clarity, natural gas amounts Greece should store away at Italian storage facilities ahead of next winter as, in the event of disruptions to Greece’s gas import schedule, the stored quantities could only be used if free capacity exists at the aforementioned entry point.

Last year, Greece had resorted to an uncommitted capacity at the Nea Mesimvria entry point in its negotiations with the European Commission for a gas-storage rule exception. It enables EU member states with a shortage of gas storage facilities, such as Greece, to keep storage requirements at 15 percent of the average consumption level over the past five years.

Uncommitted capacity at the Nea Mesimvria entry point last year worked out to 7,522 MWh per day, which resulted in a viable gas storage total in Italy of 1.14 TWh, from the start of November until the end of March.

This year, given the country’s fully reserved capacity at Nea Mesimvria, the prospect of storing gas in Italy would offer Greece no help in meeting domestic needs in the event of disruptions to the country’s gas supply.

DESFA gas auctions pivotal for winter’s storage requirements

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Gas grid operator DESFA’s annual gas auctions, taking place today to offer capacities at the grid’s entry and exit points, will play a pivotal role in clarifying and determining to what extent Greece could reduce gas quantities that will need to be stored away at Italian and Bulgarian facilities between November and March for energy security next winter.

The outcome of the auctions will shape Greece’s negotiating position in talks with the European Commission for the country’s gas storage needs.

If the vacant grid capacity left over from today’s auction process is small, then Greece will seek a smaller gas-storage requirement from Brussels authorities.

Greece’s gas storage requirement last winter was limited to 1.14 TWh, based on the country’s vacant capacity at the Nea Mesimvria grid entry point, in the north.

An exception offered by the European Commission to EU member states with a shortage of gas storage facilities, such as Greece, enables storage requirements to be kept at 15 percent of the average consumption level over the past five years.

 

Gas firms requested to store away 7.5 TWh total this year

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RAE, the Regulatory Authority for Energy, has requested natural gas suppliers to start storing away gas quantities ahead of next winter, based on EU energy-security provisions, energypress sources have informed.

The authority aims to encourage companies to make the most of current favorable terms in international gas markets. Gas price levels are currently far lower than they have been during the energy crisis, so quantities required for storage can be secured at competitive prices.

RAE is believed to have informed gas companies that a total of 7.5 TWh will need to be stored away in 2023. The country’s gas importers, DEPA Commercial, Mytilineos, Elpedison, Heron, power utility PPC and Prometheus Gas will need to take on the responsibility of securing this 7.5 TWh quantity.

An EU regulation set last year requires member states without – or without sufficient – domestic gas storage facilities to store away gas quantities representing 15 percent of the previous five-year average of annual gas usage by November 1 at existing storage facilities maintained by fellow member states.

Bulgaria’s underground Chiren gas storage facility appears to be short of space to accommodate Greek gas orders, meaning Greek importers will need to turn to costlier Italian and French alternatives, along with the FSU on the islet Revythoussa, just off Athens.

Annual gas usage in Greece averaged 61.1 TWh between 2018 and 2022, meaning that a 15 percent proportion works out to 9.2 TWh. RAE deducted 1.7 TWh for alternate purposes, resulting in its 7.5-TWh figure set for this year.

Contrary to last year, companies are not expected to be compensated for any leftover gas quantities. Also, gas companies will need to assume all gas transportation and storage costs, to ultimately be passed on to consumers.

Gas companies have already expressed complaints, calling the storage requirement and its related obligations an unfeasible, high-cost plan. They are seeking revisions.

 

DEPA Commercial gas storage in Italy, Bulgaria, 200,000 MWh

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DEPA Commercial has stored away, at facilities in neighboring Bulgaria and Italy, natural gas quantities for a total of 200,000 MWh, slightly less than one third of the 622,440 MWh the company is expected to store through a Preventive Action Plan established by RAE, the Regulatory Authority for Energy.

DEPA Commercial began its effort by storing natural gas at Bulgaria’s Chiren facility and, over the past 15 days or so, has also been storing away gas quantities in Italy.

DEPA Commercial, like all main gas suppliers licensed to use the country’s gas network, is expected to make these gas reserves available for all of the upcoming winter period, or, more specifically, from November to March.

These gas reserve amounts stocked up through the Preventive Action Plan are planned to play a protective role should Moscow make changes to deliveries of pipeline gas quantities.

Gas suppliers whose imports represent no more than 1 percent of the country’s total gas imports have been exempted from RAE’s gas storage requirement.

DEPA Commercial is Greece’s biggest gas importer, requiring the company to establish gas reserves for 622,440 MWh. The top three include Mytilineos, which must store away gas for 267,900 MWh and Promitheas Gas with 137,940 MWh.

 

European gas storage units 80% full, sufficiency still not assured

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Europe’s natural gas storage facilities have been filled to 80 percent of their capacity, on average, well ahead of an early-October target that had been set by EU authorities as an energy crisis emergency plan.

Given the intense competition anticipated for LNG cargoes in the international market, as well as Asia’s strengthened markets, securing sufficient reserves is important but not a guarantee that Europe will make it through the winter unscathed.

German estimates project that European gas reserves at 80 percent of storage capacity, as an EU average, would last for approximately two months if Russia were to fully disrupt its supply to Europe. The winter’s level of harshness will greatly shape consumption levels and, by extension, consequences.

European gas reserves are likely to reach 90 percent of storage capacity over the next month.

At this stage, the challenge for the EU is to continue securing gas loads. This would minimize the use of gas kept in storage and maintain high storage levels all the way through winter for a bolstered position looking further ahead.

 

RAE approves energy crisis plans for winter sufficiency

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The board at RAE, the Regulatory Authority for Energy, has approved preventive action and risk preparedness plans for the country’s electricity sector, two tools shaped in response to soaring gas and electricity prices, breaking records, in the energy crisis.

Though it is generally hoped they will be needless, the two tools could prove useful during what is expected to be a challenging winter throughout Europe, including Greece.

The preventive action plan was approved by RAE following certain revisions to the initial plan, concerning gas reserve requirements.

According to the plan, a new floating storage unit installed in June at the LNG terminal on the islet Revythoussa, just off Athens, will maintain 0.57 TWH in strategic reserves for electricity production, while 1.14 TWh in gas supplier reserves will be stored at an Italian storage facility.

However, the plan is non-binding as these gas reserves may also be stored at other facilities if preferred by players, who are required to maintain strategic gas reserves.

 

Italian gas storage up to 2 TWh from October for 5 months

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Greek authorities are taking steps to prepare for a gas-storage solution ahead of next winter in neighboring Italy, in accordance with EU rules, requiring all member states without – or without sufficient – natural gas storage facilities, such as Greece, to store, by November 1, gas quantities representing 15 percent of annual consumption, based on last year’s level, at existing storage facilities maintained by fellow member states.

Based on this requirement and the country’s consumption level last year, Greece will need to store a total of approximately 900 million cubic meters of gas, or 8 TWh, of which up to 2 TWh will be stored at Italian facilities from October for a five-month period.

Storage costs for such a quantity are expected to reach 250 million euros, under favorable conditions.

A related proposal forwarded by RAE, the Regulatory Authority for Energy, will undergo consultation before final decisions on the country’s gas storage plan are made.

 

Lower-cost gas storage option for 15% of annual use sought

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The energy ministry is seeking lower-cost solutions to satisfy a European Commission order requiring all EU member states without – or without sufficient – natural gas storage facilities, such as Greece, to store by November 1, gas quantities representing 15 percent of annual consumption at existing storage facilities maintained by fellow member states.

A 15 percent proportion of Greece’s annual gas consumption represents approximately 900 million cubic meters. Its supply cost, alone, is worth roughly 700 million euros, based on current prices.

Besides the cost concerns expressed by energy ministry officials over an idea to use Italian storage facilities, companies active in Greece’s wholesale gas market are also troubled.

The head official of one domestic gas wholesaler described the cost of moving ahead with the Italian plan as forbiddingly high, adding that it would be far more preferable to rent as many additional floating storage units as are needed for mooring at Greece’s LNG terminal on the islet Revythoussa, just off Athens.

EU states without gas storage must use facilities of fellow members

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EU member states without natural gas storage facilities, such as Greece, will be required to store gas quantities representing 15 percent of annual consumption at existing gas storage facilities maintained by fellow member states by November 1, the European Commission has just announced.

In the lead-up, Brussels had issued an order requiring all EU member states with gas storage facilities to fill these at 90 percent of full capacity by November 1, in preparation for next winter. The EU is now taking steps to drastically reduce its reliance on Russian gas.

Governments in respective member states are responsible for the achievement of this objective and can impose fines and sanctions, according to the announcement.

The European Commission has notified it will conduct inspections to determine whether intermediate storage-capacity goals have been achieved. Warnings will be issued if discrepancies are found to be over two percent, followed by related talks with the respective member states. Lack of action a month after these talks have taken place will result in decisions from the European Commission, which the member states in question will need to adopt.