Gas market competition intensifies, TAP lowering prices

Competition has intensified in the country’s wholesale gas market at a time of changing conditions and negotiations for 2021 deals between importers and major-scale consumers, namely electricity producers and industrial enterprises.

Many gas supply contracts expired at the end of 2020, requiring a large number of players to renegotiate deals. Some of these big consumers have already reached new agreements with gas wholesalers.

Market conditions have changed considerably compared to a year earlier. Supply of Azeri gas through the new TAP route has already begun to Greece as well as Bulgaria, increasing overall supply, which has obliged, and permitted, gas utility DEPA to pursue a more aggressive pricing policy as the company pushes to absorb quantities it has committed to through clauses in existing contracts.

Also, the TAP-related increase of gas supply to Bulgaria, combined with this country’s inflow of Russian gas through oil-indexed price agreements, currently relatively cheaper, is now depriving Greek wholesale gas companies of entry into a neighboring market that was available for trading activity last year.

Furthermore, conditions have also been impacted by a competition committee decision no longer requiring DEPA to stage gas auctions to make available a share of its gas orders to rival traders. This measure was introduced and maintained to help liberalize Greece’s gas market.

The new conditions are pushing Greek traders towards more competitive pricing policies. They appear to have acknowledged that their profit margins will be narrower in 2021.

DEPA, helped by the fact that a sizeable proportion of its gas purchases is oil-indexed, is said to be playing a dominant role in the ongoing negotiations for new contracts with customers.

It should be pointed out that, unlike rival gas importers such as Mytilineos, Elpedison and Heron, all benefitting through self-consumption of a large part of their gas orders for gas-fired power stations they operate, DEPA does not self-consume.

Prometheus Gas, a member of the Copelouzos group, remains a formidable player, while the power utility PPC and petroleum company Motor Oil are less influential in the wholesale gas market.

Higher LNG prices, compared to pipeline gas, will decrease demand for LNG this year and weaken the interest of traders for LNG supply through gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens. Last year, this facility was a hot spot of trading activity as a result of lower-priced LNG.

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.


Continual flow of LNG imports reshaping gas market

LNG is continuing to enter the Greek market through gas grid operator DESFA’s Revythoussa terminal just off Athens at a continual and elevated flow that is reshaping the overall gas market.

The Mytilineos group was the market leader in the first quarter, capturing a market share of more than 40 percent of gas imported into Greece either via the Revythoussa LNG terminal or pipeline infrastructure.

Gas utility DEPA, a more subdued LNG player in the first quarter as a result of take-or-pay costs linked to the company’s pipeline gas orders with Russia’s Gazprom and Turkey’s Botas, registered a first-quarter market share of approximately 30 percent.

Elpedison, propelled by the increased use of its gas-fueled power stations, captured a higher share of 15 percent.

The Greek gas market’s remaining 15 percent was shared by Prometheus Gas, power utility PPC and Heron.

PPC’s gas market share is expected to increase over the coming months as it has placed LNG orders via the Revythoussa terminal.


Flurry of activity at Revythoussa LNG terminal over next two months

A flurry of LNG import activity planned through the Revythoussa islet terminal, just off Athens, in September and October, highlights the strong interest maintained by Greek energy companies in this energy source.

The country’s total of five players have all made arrangements to import large and small LNG shipments via Revythoussa during this two-month period, gas grid operator DESFA has announced.

Mytilineos has placed the biggest order, an LNG shipment of approximately 0.5 bcm, expected in October.

The second-biggest LNG order was made by gas utility DEPA, a 0.282-bcm quantity resulting from the utility’s long-running association with Sonatrach for Algerian supply.

Elpedison and Heron have each programed LNG shipments of 148,000 cubic meters, their respective arrivals scheduled for September 12 and 24.

Prometheus Gas has ordered 45,000 cubic meters of LNG for  September 27.

Country’s big energy players gearing up for DEPA sale

The past couple of days could be regarded as an unofficial launch of DEPA’s (public gas corporation) privatization, given the strong interest expressed by major players for the gas utility’s commercial division.

Two of the country’s biggest energy market players, the Mytilineos corporate group and ELPE (Hellenic Petroleum), which holds a 35 percent stake of DEPA, made clear their interest in the gas utility’s commercial section yesterday, just hours after energy minister Giorgos Stathakis updated energypress on the DEPA privatization model to be adopted.

The government and country’s lenders have agreed on a DEPA sale model entailing a split of the gas utility into two subsidiaries representing its commercial and distribution network divisions. This split is expected in September.

Motor Oil Hellas is also expected to emerge as a candidate, highlighting how coveted the DEPA privatization is for energy players.

Motor Oil Hellas recently announced a plan to enter the retail natural gas market through its Coral network of gas stations.

The petroleum firm has filed a complaint to the competition committee over DEPA’s close-to-finalized effort to acquire Shell’s 49 percent of their EPA Attiki joint venture covering supply in the wider Athens area. DEPA already holds a 51 percent stake and would fully own EPA Attiki if the deal with Shell is finalized.

The Motor Oil Hellas complaint could turn into legal action as DEPA, already controlling the country’s biggest wholesale gas agreements, would also gain major control in the capital’s retail market and affect competition.

This issue is certainly not one of minor importance and could end up delaying the overall plan for the retail gas market’s restructuring as well as DEPA’s privatization.

Greece’s wholesale gas market is also changing. Until recently, DEPA controlled this market as the dominant importer of natural gas. DEPA held a 96 percent of the wholesale gas market in 2016.

Things began to change in 2017 when Prometheus Gas, a joint venture formed by the Copelouzos group and Gazpromexport, imported a total of one billion cubic meters, capturing a 20 percent share of the market. M&M Gas, a joint venture involving Motor Oil Hellas and Mytilineos, also imported gas amounts in 2017, through the Greek-Bulgarian interconnection.

Mytilineos is already very active in the wholesale natural gas market as an LNG importer. It plans to import a first Qatar Gas shipment next month. Mytilineos has also established a direct trading partnership with Gazprom and is believed to be negotiating a deal with another major player.


PPC, expanding sources, places first Prometheus Gas order

The main power utility PPC has taken a major step towards expanding its natural gas supply sources by placing its first order with Prometheus Gas, a Gazprom-Copelouzos group joint venture, for a total amount of 839,500 MWhth in 2018. Until now, PPC has relied on DEPA, the Public Gas Corporation, for its gas needs.

PPC’s move follows a number of Prometheus Gas orders made this year by independent electricity producers and industrial enterprises.

The power utility’s order, based on a board decision made just days ago, will partially cover PPC’s gas needs in 2018 for electricity generation at its gas-fueled facilities.

Prometheus Gas is expected to end the current year with sales of close to one billion cubic meters, an amount representing 20 percent of the Greek market’s total gas demand, based on current figures.

According to sources, Prometheus Gas has already signed deals for natural gas supply totaling over one billion cubic meters in 2018. Most of these orders have been placed by electricity producers, industrial consumers, as well as suppliers, now operating in a reformed retail gas market.

The shape of Greece’s natural gas market in the year to come has yet to be finalized. The Mytilineos Group, the country’s biggest natural gas consumer with annual needs totaling 1.5 billion cubic meters, has yet to unveil its plans.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, suggested the corporate group could soon begin trading amounts of around one billion cubic meters a year through M&M Gas, a wholesale trading joint venture involving the Mytilineos Group and Motor Oil Hellas.

Natural gas sales in the Greek market, currently dominated by three key players, have skyrocketed in recent times. Sales are expected to total 5 billion cubic meters in 2017, nearly double the sales figure of registered 2.9 billion cubic meters in 2015. worth slightly below one billion euros.

Despite the emergence of new players, DEPA, the gas utility, has managed to increase its sales by 9 percent in terms of volume and 32 percent in terms of operating profit. The utility’s EBITDA figure is estimated at 223 million euros.

The market data clearly shows that all players, including DEPA, have benefited from the overall rise in demand for natural gas. This trend may be repeated in 2018, a year during which PPC’s Megalopoli V power plant is expected to enter the system, which will further increase local natural gas demand.



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.