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LNG facility strikes in Australia raise European concerns

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Strike action at three LNG facilities in Australia, a key player in the global LNG market, has raised concerns in Europe as the ongoing dispute between employers and employees could have a significant impact on global gas supply and, by extension, the price of the Dutch TTF futures contracts.

The strike action, taking place at facilities that account for roughly 10 percent of global supply, has destabilized the European natural gas market over the past few weeks.

Europe needs to prepare for the possibility of further instability and price rises as it remains unclear how the ongoing dispute at the LNG facilities in Australia will play out, the Institute for Energy Economics and Financial Analysis (IEEFA) noted in a report.

North West Shelf, an LNG facility run by Woodside Energy, and two Chevron-run facilities, Gordon and Wheatstone, could be affected by the ongoing strike action, IEEFA warned. All three facilities, combined, represent roughly 10 percent of global LNG supply.

Australia, along with Qatar and the USA, represent nearly 60 percent of global LNG supply. Although the majority of Australian LNG exports are destined for Japan, China and South Korea, the disruption caused by the strikes will lead to Asia and Europe competing for LNG.

REPower EU plan overambitious, ‘an objective, not a specific strategy’

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The European Commission’s REPower EU transition plan, aiming to greatly reduce Europe’s reliance on Russian gas, is overambitious and should be regarded as an objective rather than a set of specific measures, officials taking part in the recent annual Gas Infrastructure Europe conference, an authoritative sector event, have concluded.

The calculations offered by the REPower EU plan are incorrect, Torben Brabo, GIE’s president, has told the Euractive agency, adding that a closer look at the figures concerning Russian natural gas supply, LNG supply, as well as biomethane projections, renders the European plan as overambitious.

LNG availability and purchase projections in the REPower EU plan are possibly too high, the GIE president stressed.

Officials linked with LNG infrastructure told the GIE conference that the LNG market’s actual conditions will prevent the EU plan’s lofty targets from being achieved. Anything beyond 50 percent of the target set will be difficult to attain, these officials contended.

American current gas liquefaction capacity does not suffice for supply of an additional 15 bcm of LNG to Europe, as specified in the EU plan, officials taking part in the GIE conference contended.

Qatar and other LNG exporters in the Middle East have already committed amounts to non-EU buyers, while the REPower EU plan’s 35-bcm biomethane objective appears to be too optimistic, they added.

 

 

 

 

Lignite re-emphasis temporary measure for security, PM says

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A government decision for an increased lignite share of the country’s energy mix is purely temporary and driven by energy security concerns, Prime Minister Kyriakos Mitsotakis clarified during a speech yesterday in Kozani, northern Greece.

The same goes for Athens’ thoughts about extending the lives of state-controlled power utility PPC’s two lignite-fired power stations, Meliti and Agios Dimitrios V. PPC plans to withdraw these units by the end of 2023, as part of the country’s decarbonization strategy, but this exit date may now be delayed.

The technical future of PPC’s Ptolemaida V, a new convertible power station, is unclear. During yesterday’s speech, the Greek prime minister informed that, if needed, this facility would operate as a lignite-fired facility until 2028, before switching to natural gas. This switch could be made at an earlier date if the war ends and natural gas prices fall significantly, seen as unlikely at present.

This overall change in direction is directly linked to the European Commission’s decision to significantly revise the EU’s Fit for 55 plan, originally setting a target for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. Details of the Fit for 55 revisions, prompted by the impact on markets of Russia’s ongoing war in Ukraine and the EU’s resulting decision to drastically reduce its reliance on Russian natural gas, are expected to be announced by the European Commission in May.

The EU’s new energy strategy is expected to lead to an increase in the use of biomethane and green hydrogen, as well as reduced gas consumption, regardless of the supplier, be it Russia, the USA, Qatar or Algeria.

Authorities admit the international LNG market cannot increase production to a level that would fully replace Russian gas supply.

War, energy crisis hastening plans for new LNG facilities

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Russia’s war on Ukraine and the energy crisis are precipitating new natural gas and LNG supply solutions, a development that has increased the importance of related projects planned in Greece.

The EU’s decision to drastically reduce the continent’s reliance on Russian gas by two-thirds this year and terminate the dependence prior to 2030 has increased the importance of supply routes not linked to Moscow’s interests.

This development has increased the feasibility of new infrastructure promising to facilitate natural gas and LNG supply to Europe from alternative sources.

A major US-EU agreement established late last week for supply of an additional 15 bcm, at least, of American LNG to the continent this year, and gradual supply increases further ahead in time, has greatly boosted the prospects for related infrastructure.

The EU intends to follow up on this agreement by also establishing further supply deals with other producers, including Qatar and Egypt, in an effort to increase its LNG imports by a total of 50 bcm.

The EU’s new direction, focused on LNG imports, is seen as essential as the deterioration in relations between Europe and Moscow is expected to last many years.

Related projects in Greece promise to serve as LNG gateways for the country as well as southeast and central Europe, while also establishing Greece as a gas hub with an increased geostrategic role.

The Gastrade consortium recently decided to begin planning a second FSRU for Alexandroupoli, northeastern Greece, as an addition to a prospective first unit.

Petroleum group Motor Oil aims to begin development of its “Dioryga Gas” FSRU project, 1.5 km southwest of the company’s refinery in Korinthos, west of Athens, by the end of the year.

Gas grid operator DESFA is preparing to further upgrade its LNG terminal on the islet Revythoussa, just off Athens.

Also, the Mediterranean Gas company is planning to develop an FSRU at Volos port, on the mainland’s east coast. RAE, the Regulatory Authority for Energy, has already issued a license for this project.

In addition, another investor, still undisclosed, is set to begin licensing procedures for yet another FSRU in Greece, sources have informed.

 

 

 

EU headed for joint energy supply plan, challenges faced

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The EU appears headed towards adopting a strategy for joint supply of natural gas, LNG and hydrogen, along the lines of a policy implemented for joint Covid-19 vaccination orders at the height of the pandemic, to combat skyrocketing energy prices, a draft prepared ahead of tomorrow’s summit, bringing together the EU’s 27 leaders, has indicated.

Governments of Europe’s south, hit harder by the energy crisis, and European consumers across the continent are anticipating measures that can help contain sharply increased gas, electricity and oil prices.

The joint supply plan’s implementation would come as a bold initiative by the EU, taking steps to greatly reduce its reliance on Russian gas, but various obstacles will need to be overcome.

Joint energy orders will be far trickier for the EU to execute than the mass orders it had placed with pharmaceutical companies for Covid-19 vaccinations back in June, 2020, as the former are commodities traded in fluctuating markets.

LNG suppliers such as the USA, Qatar and Algeria would have to redirect to Europe quantities usually shipped to Asian markets at highly profitable prices. Also, the reaction of China, America’s number one buyer of LNG, remains unknown.

The joint-supply strategy would be combined with the establishment of an energy safety reserve, as the European Commission has ordered EU member states to fill underground gas storage (UGS) facilities to 90 percent of their capacities by November 1, in preparation for next winter.

This would resolve energy sufficiency concerns but currently elevated prices are an issue. Also, many European UGS facilities have, until now, been managed by Russia’s Gazprom. It remains unclear if the Russian gas giant would be legally obliged to abandon these facilities.

The joint-supply strategy has been on the negotiating table since last year but held back by disagreements.

 

 

EC announcing plan to end EU dependence on Russian gas, oil

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The European Commission will today present a new energy plan for the EU-27 that will aim to end Europe’s dependence on Russian natural gas imports, amounting to roughly 155 billion cubic meters per year, as well as Russian oil.

Tools to be used for an end of this energy dependence will include LNG imports from the US and Qatar, further LNG terminal investments throughout Europe, accelerated development of RES projects, and emphasis on biogas and hydrogen.

A preliminary announcement of the EU’s new energy doctrine was made yesterday by European Commission President Ursula von der Leyen following a meeting with Italian Prime Minister Mario Draghi.

She also spoke of the need to protect consumers, especially lower-income groups, as well as enterprises, against skyrocketing energy prices as the continent braces for even higher electricity prices next month.

If natural gas prices remain at levels of over 300 euros per MW/h, wholesale electricity prices in Greece could soon exceed 700 euros per MWh. The wholesale electricity price in Greece today is at 462.90 euros per MWh, up 52 percent in a day.

The energy market turbulence is expected to persist until at least early next year.

 

LNG tankers reroute for Europe as prices soar on continent

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Natural gas prices in Europe, well over price levels in Asia, are prompting LNG tankers to reroute mid-voyage and head for Europe as the gas supply crunch on the continent worsens.

Buyers in Asian countries have outbid Europeans for LNG shipments for much of the year, but with storage now full across Asia, uncommitted cargoes from the Atlantic basin that were heading for Asia are being turned round by their owners and sent to Europe to cash in on soaring prices and demand.

The ships carrying liquefied natural gas to Europe include the first Australian LNG tanker headed for the continent in a decade.

American LNG exports are expected to rise significantly in 2022, surpassing quantities exported by Qatar and Australia.

According to US agency EIA, the Energy Information Administration, American LNG exports will rise to 11.5 billion cubic feet annually in 2022, 22 percent of projected global demand.

The US is expected to maintain the leadership in LNG exports until at least 2025, when Qatar is scheduled to launch an extension of its North Field gas deposit.

According to Reuters, 13 percent of American LNG exports in 2021 went to South Korea, 13 percent to China and 10 percent to Japan.

Three new gas liquefaction plants are planned to be launched in the US in 2022, by Cheniere Energy, Venture Global, and Tellurian.

 

PPC expects major LNG tender turnout for 2.7 million MWh

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Gas suppliers are expected to turn up in numbers for a power utility PPC tender expiring today with offers to provide three LNG shipments needed by the utility between March and May. PPC plans to purchase a total of 2.66 million MWh through this tender.

Between nine and ten gas suppliers, including major Greek and foreign LNG players, will submit offers, PPC has been informed, according to energypress sources.

Besides leading Greek gas traders, the procedure is expected to attract companies such as Rosneft, Eni Trading, Gunvor, Glencore, Shell, Cheniere and Tellurian.

All participants were required to sign Master Sale Agreements, committing them to their offers without any revisions.

PPC wants a first LNG shipment of 900,000 MWh on March 24, a second delivery of 815,000 MWh on April 21 and a third of 950,000 MWh on May 20.

Today’s tender confirms a change of strategy by PPC, searching markets around the world, from Asia to Qatar and the USA to Russia, for low-priced LNG.

The continual drop in LNG prices promises major cost savings for a company the size of PPC, requiring 1.35 bcm per year.

 

Rising LNG imports reshaping gas market, led by Mytilineos

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The drastic reduction of LNG price levels in recent times has not only boosted the amount of LNG imports into Greece but also reshaped market shares held by domestic gas traders.

Last year, natural gas consumption rose to a new record level of more than 60 TWh, up from 52.4 TWh in 2018 and 53.7 TWh in 2017.

LNG imports rose sharply to 30.92 TWh in 2019 from 11.59 TWh in 2018 and 15.54 TWh in 2017.

Overall gas consumption increased by approximately 15 percent last year while LNG import levels nearly tripled compared to two years earlier.

For the first time ever, LNG represented half of the country’s total gas consumption in 2019.

In 2019, a total of six traders imported LNG to the Revythoussa terminal, close to Athens, some of these for the first time.

Mytilineos made the most LNG shipments for a 50.2 percent share. Gas utility DEPA followed with a 26.1 percent. Elpedison was next with a 12.4 percent market share, trailed by power utility PPC (7.6%), Heron (2.4%) and Motor Oil (0.4%).

Market leader Mytilineos imported a total of ten LNG shipments to the Revythoussa terminal in 2019, some of these originating from the US, via Shell and BP, managing US shale gas exports.

A total of six LNG shipments to Greece in 2019 carried American shale gas. This trend is continuing this year. A 140,000 cubic-meter shipment of American LNG arrived at the Revythoussa terminal on January 25.

Mytilineos also chartered large-scale Q Flex tankers to Revythoussa in 2019, a development enabled by the completion of upgrade work at the LNG facility.

The Q Flex tankers, built in Qatar and offering a 201,000 cubic-meter capacity, were previously unable to approach the Greek terminal.

 

DEPA awaiting Gazprom news for lower gas price, LNG a market hit

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Gas utility DEPA, which has asked for a lower natural gas supply price from Gazprom, can expect a response around June 15, the Russian gas giant has informed.

DEPA was driven to action by extremely low spot-market prices for LNG currently available in Europe.

Major European hubs, such as the TTF facility in the Netherlands, are currently offering prices of 10.928 euros per MWh, compared to Gazprom’s supply contract for the Balkans, including Greece, of approximately 20 euros per MWh.

It remains to be seen how DEPA will respond if the price-related news from Gazprom is not favorable.

LNG is projected to have captured roughly 55 percent of western European energy markets five years from now, up from approximately 40 percent last year, authorities told a recent forum in Brussels.

According to the World Energy Council, LNG will capture a 51 percent share of the global market by 2025, from 25 percent in 2000 and 45 percent in 2018, as a result of new production line investments in the USA, Qatar and Australia.

Lower LNG prices have coincided with an upgrade at the LNG terminal on Revythoussa, an islet just off Athens, resulting in its capacity increase to 220,000 cubic meters. This has enabled bigger incoming shipments.

So far this year, LNG shipments have arrived from Qatar and the USA. More are expected.

Meanwhile, DEPA’s domestic market share for LNG supply is on a downward trajectory and currently at around 30 percent as a result of intensifying competition.

Crete-Athens link tender announcement seen 1Q of 2019

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Power grid operator IPTO, given the green light by RAE, the Regulatory Authority for Energy, for the development of the Crete-Athens grid interconnection, despite European Commission objections, is pressing ahead and expects to receive approval of its related environmental studies in two to three months before launching a tender by March, 2019.

IPTO, currently progressing based on a schedule set by RAE, has completed various preliminary work, including deep-sea studies, and aims to complete the project by September, 2022.

Greek authorities are planning to keep the main power utility PPC’s diesel-fired power stations on Crete running beyond an end-of-2019 limit set by Brussels to avert an energy supply threat on the island, as was made known earlier this week by energy minister Giorgos Stathakis. His ministry has submitted a related application to Brussels for a deadline extension.

RAE is believed to still be considering various alternative options, including a proposal from Qatar for 200-MW capacity electricity supply to the island via an LNG tanker and generation facility. The cost of this option is believed to equal that of keeping PPC’s current stations running.

A proposal by energy firm Terna entailing the transfer of its gas-fueled Heron I unit, located on the outskirts of Thebes, to Crete is also still on the cards.

Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status project planned to link the Greek, Cypriot and Israeli power grids, has contested with IPTO for control of the wider project’s Crete-Athens segment.

Qatar team in Crete to survey units for sufficiency proposal

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A team of Qatar state-run energy company officials has arrived in Crete to survey the main power utility PPC’s diesel-fueled power station in the Atherinolakos region as part of the firm’s interest to offer a solution for Crete’s looming energy sufficiency threat as of 2020, when PPC will need to have withdrawn its diesel-fired power stations operating on the island.

The survey to be conducted by Qatari energy company technical officials will also include the Atherinolakos port facilities, intended to be utilized as a key part of the plan. The firm’s proposal entails the usage of a floating power station and electricity supply unit to be anchored at the Atherinolakos port for additional electricity generation on Crete. The vessel will include an LNG storage facility as well as a gasification unit, according to the Qatar firm’s plan.

At this crucial stage, given the little time remaining before the withdrawal of PPC’s old diesel-fired power stations on Crete, it still remains unclear how the government and RAE, the Regulatory Authority for Energy, will go about resolving the island’s energy sufficiency threat from 2020 onward.

As his most preferred choice, energy minister Giorgos Stathakis hopes the European Commission will offer a further operating extension for Crete’s existing power stations. If Brussels does not, then the old units will need to stop operating by December 31, 2019.

GEK Terna, Socar and Spain’s Enagas have also made proposals along the lines of the plan proposed by Qatar’s energy firm.

PPC currently operates three diesel-fueled power stations on Crete with a total capacity of 728 MW. Total electricity demand on the island is estimated at 630 MW.

A planned submarine cable link from Crete to the Peloponnese will provide a further 150 to 180 MW to the island, while a major-scale grid interconnection, to link Crete with Athens, will offer around 700 MW.

These interconnection projects have been delayed as a result of an ongoing dispute between Greek power grid operator IPTO and Euroasia Interconnector – a consortium of Cypriot interests heading a wider Greek-Cypriot-Israeli PCI-status interconnection project – for control of the Crete-Athens segment.

 

 

 

Socar, Qatari firm proposals for Crete energy sufficiency issue

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LNG usage and the establishment of a floating regasification terminal for gas-fueled electricity generation at power stations are the common factors of at least two proposals to be presented this week to RAE, the Regulatory Authority for Energy, as possible solutions for the Crete’s looming energy shortage problem as of 2020.

An exemption to EU law concerning power station emission limits for local high-polluting units, such as those operating on Crete, is set to expire in December, 2019.

An Athens-Crete interconnection plan that would resolve resulting power insufficiency issues on the island has fallen behind schedule and prompted the need for solutions until the project’s launch.

Azerbaijan’s state-run energy firm Socar – possibly in partnership with Heron, which has been given permission to relocate a natural gas-fueled power station from provincial Thebes, slightly northwest of Athens, to Crete – is expected to present RAE a model implemented by the firm on Malta in 2016. The island country faced a similar energy situation to Crete. A gas storage facility (FSU) and floating regasification terminal and combinations of gas-based electricity production now provide 50 percent of electricity demand on Malta.

A representative of a state-run Qatar energy firm has also approached RAE for a solution entailing gas supply and electricity production via a floating terminal to be anchored off Crete.

Mytilineos expecting country’s first Qatar Gas order Saturday

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Qatar Gas, the world’s biggest LNG producer, is expected to make its first LNG shipment to the Greek market this Saturday, when a Bahamian flagged tanker, Al Thakira, is scheduled to deliver an order placed by the Mytilineos corporate group to the Revythoussa islet LNG terminal just off Athens.

The Mytilineos group plans to cover its corporate energy needs for the local market and also export to neighboring countries with this order, measuring 140,000 cubic meters.

The order also promises to further diversify the Mytilineos group’s sources, reduce costs and provide greater flexibility for coverage of the seasonal peak’s heightened production at Mytilineos units.

The Qatari firm’s Greek market presence also promises to offer greater supply diversification for the wider region.

The Mytilineos corporate group’s planned LNG exports to neighboring markets from the Revythoussa terminal highlight Greece’s potential as a gateway for the wider Balkan region.

This is not a one-off order as the Mytilineos corporate group has signed a supply agreement with Qatar Gas for further shipments, Evangelos Mytilineos, the chief executive at the Mytilineos corporate group, recently informed a general shareholders’ meeting without offering further details.

 

Qatar’s key energy role, foreign interests containing country’s crisis

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Qatar’s gigantic role in global LNG supply, combined with major interests maintained by key energy companies, including ExxonMobil, is helping contain tension over terrorism-sponsoring concerns linked to this Arab state.

In addition, a fuel price increase by any supply reduction would lead to economic problems for countries and regions dependent on natural gas imports, including the EU, Japan, China and India.

Last year, Qatar’s LNG exports represented 30 percent of the global market for this fuel, making the country the world’s market leader. Supply of such magnitude could not be replaced if the blockade imposed on Qatar were to include energy sanctions.

Qatar exported 79.62 million tons of LNG in 2016 and Qatar Petroleum was ranked the world’s fourth largest oil and natural gas producer.

Investments made in Qatar by foreign oil petroleum companies increase the difficulty of implementing any decisions that would broaden the blockade imposed on this major LNG exporter.

ExxonMobil, for example, until recently headed by the current US Secterary of State Rex Tillerson, holds a key stake in Qatar Petroleum, while France’s Total, another American enterprise, Occidental Petroleum, and the UAE’s national oil company have joined forces as operators of the Dolphin pipeline, exporting Qatar natural gas to the UAE at a rate of two billion cubic feet per day.

These factors indicate that Qatari natural gas exports will, for the time being, not be affected by any trade sanctions on Qatar.

Greek shipping companies are also greatly contributing to the transporation of natural gas in the wider region. Maran Gas, headed by Yiannis Aggelikousis, is a key partner of Qatar Nakilat, a joint venture established in 2005.

 

 

Local wind energy among the fields eyed by Qatari investors

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A delegation of highly-ranked officials from Qatar is scheduled to visit Athens in a fortnight in search of investment opportunities, including in the wind energy sector, according to energypress sources.

The Qatar team, expected to be in Greece between July 7 and 10, will include Dr. Raghavan Seetharaman, Group CEO of Doha Bank, as well as members of the state investment fund QIA (Qatar Investment Authority).

The visiting officials are expected to focus on three sectors, wind energy, tourism, especially hotels, and agri-foods.

As for their interest in Greece’s wind-energy sector, the potential Qatari investors have already arranged meetings with officials at firms active in the sector. Energypress sources informed that the Qatar investors have already reached a business decision to invest at least 100 million euros in wind-energy parks.

Talks with officials representing major hotel enterprises in Athens as well as the agri-foods sector, including greenhouse cultivation and poultry, have also been planned.

This is not the first time Qatar investors are seeking to enter the Mediterranean market via Greece. In 2013, Qatar’s emir Hamad bin Khalifa Thani purchased six idyllic Ionian Sea isles, while Qatar Petroleum International (QPI) has acquired a 25 percent stake in Heron II, a venture involving the GEK Terna corporate group and French energy giant GDF Suez.