TTF hike raises concerns over perceived ‘return to normality’

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

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

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

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

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

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

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

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

 

EU energy-crisis concerns over Ukraine corridor ‘manageable’

European fears of further energy-crisis woes that could result from the nearing end of a five-year pipeline gas transit agreement between Kyiv and Moscow for Russian gas supply to Europe via Ukraine, appear to be manageable, as long as a series of specific measures are implemented, most EU ministers responsible for energy agreed at an Energy Council in Brussels yesterday.

The bilateral agreement between Ukraine and Russia expires at the beginning of 2025. Ukraine has declared it does not intend to renew this agreement.

Further energy-crisis concerns as a consequence of this agreement’s conclusion, expected to reduce the EU’s total gas imports by 5 percent, can be prevented if EU member states speed up their development of roughly 20 LNG facilities planned from Europe’s north to south; renewable energy investments gain further momentum; energy-savings measures are continued; natural gas consumption reductions continue at the current rate; and LNG imports are increased to make up for reduced Russian gas imports, energy ministers of most EU member states agreed at the Brussels meeting.

Last year, approximately 14 bcm of Russian gas was transported through the Ukrainian corridor to countries such as Austria, Hungary and Slovakia.

Numerous EU member states achieved renewable energy production all-time highs last year. In Portugal, renewables covered 61 percent of the country’s energy needs in 2023. RES coverage of Greece’s energy needs reached 57 percent. In Germany, RES units met 52 percent of the country’s energy needs, while in Belgium the figure reached over 30 percent.

European fears of further energy-crisis woes not yet over

European Commission officials fear the continent has yet to fully break away from further energy-crisis dangers, despite capacity-filled gas storage facilities and a mild winter, as a five-year bilateral pipeline gas transit agreement signed by Kyiv and Moscow in 2019, three years before Russia’s invasion of Ukraine, is set to expire at the end of this year and could lead to higher energy prices.

The agreement’s end would reduce the EU’s total gas imports by 5 percent, the European Commission has briefed Brussels officials in a memo, Politico has revealed. Countries in central and southeast Europe would be particularly affected, the memo notes.

Natural gas supply to EU member states has continued through this Ukrainian-Russian transit agreement, despite the ongoing war.

However, Ukraine has declared it does not intend to renew this agreement, which  facilitates Russian gas supply to Europe, while European Commissioner for Energy Kadri Simson has noted it is not in the EU’s interests to push for an extension.

 

 

PPC, a regional player, turning into an energy ambassador

Power utility PPC’s strategic moves into southeast European markets are becoming a powerful tool of economic diplomacy for Greece and the country’s interests in the wider region as control of energy corridors and resources is equivalent to geopolitical power.

PPC’s chief executive Giorgos Stassis and his associates have been making more regular and intensified contact of late with government officials in the wider region and across the Atlantic.

Stassis’ meeting with Geoffrey Pyatt, the US’s Assistant Secretary of State for Energy Resources, in Washington just over a week ago, followed by a meeting earlier this week with Romanian Prime Minister Marcel Ciolacu, highlight the important diplomatic role now been played by PPC.

During their Washington meeting, Stassis and the US’s Assistant Secretary of State for Energy Resources discussed how PPC could play a more active role through east Europe’s major energy corridors and the US-backed Three Seas initiative, involving 13 Baltic Sea, Black Sea and Adriatic Sea countries and aiming to offer protection against the threat of Russia.

The US sees Greece’s initiatives in the wider region as moves that are aligned with America’s geostrategic interests, especially at a time when Russia’s war in Ukraine has turned arming eastern Europe against Russian influence into a priority.

Gas demand slump prompting LNG shipment cancellations

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

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

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

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

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

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

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

Alexandroupoli FSRU, arriving 1Q, to offer 45,000 MWh daily

The Alexandroupoli FSRU, scheduled for launch at the country’s northeastern port in the first quarter, is planned to start operating by supplying roughly 45,000 MWh of natural gas into the Greek network daily, a major sufficiency boost for the domestic system.

The facility, set for launch by March 10, will initially offer an annual capacity of 1.5 bcm, or 27 percent of its annual capacity, to the Greek system. A further 4 bcm quantity will be supplied to the Bulgarian network via the IGB grid interconnection, and, by extension, Romania, North Macedonia, Serbia, and in any markets where traders that have signed contracts with Gastrade, the project’s consortium, have customers.

An initial LNG load, to be used for testing, is scheduled to reach the Alexandroupoli LNG on January 20. It will not stem from Russia as the project is designed to contribute to ending southeast Europe’s reliance on Russian gas.

The testing stage will entail filling a 28-kilometer gas pipeline, running mostly underwater, that connects the terminal with the Greek gas system, in order to check all systems and correct any minor issues so that the FSRU can be ready to operate commercially after six to seven weeks, or early March.

The FSRU, comprised of a floating storage unit with a capacity of 153,500 m3 and three gasification units, offering daily gasification capacity of approximately 22.5 million m3, is a project of national significance that reinforces Greece’s role as an energy gateway to the markets of the wider region.

 

Helleniq Energy: Clarity needed on DEPA Commercial future

The future of gas company DEPA Commercial, whose privatization of the state’s 65 percent stake was postponed about a month ago, needs to be clarified in the immediate future, within the next three to six months, Andreas Siamisiis, chief executive of the Helleniq Energy group, holding a 35 percent stake in the gas company, has noted.

DEPA Commercial is currently developing business interests that directly compete against those of Helleniq Energy. These interests include participation in new gas-fueled power stations, both in Greece and abroad.

Subsequently, the current status, under which Helleniq Energy holds a 35 percent in DEPA Commercial, cannot be maintained. Helleniq Energy will need to sell its stake in the gas company, possibly to the Greek State or a third party.

Greek privatization fund TAIPED postponed its sale of DEPA Commercial until the company’s business plan, which includes an expansion strategy, begins reaping rewards, effectively meaning that no further steps concerning the company’s sale should be expected before late 2024 or early 2025.

As for Helleniq Energy, the company intends, in 2024, to intensify its efforts in the Bulgarian RES market, especially photovoltaics.

Helleniq Energy currently holds a 360-MW portfolio of RES projects in operation, along with projects at advanced stages of development, which, once launched, promise to boost the group’s total RES capacity to 1 GW over the next 18 months.

Besides its interests in renewables, Helleniq Energy is monitoring the sale process of Russian multinational energy corporation Lukoil’s refinery in Bulgaria. It is the only refinery in the neighboring country.

Although a Helleniq Energy move to acquire this refinery is hard to imagine, as it would run contrary to the group’s transformation plan, it cannot be ruled out as any new buyer might be interested in exporting fuel to Greece. Helleniq Energy may choose to buy the Lukoil refinery to block further competition in the Greek market.

Whatever the outcome, Helleniq Energy would not be prepared to spend big on such an acquisition.

 

 

Levy on gas used for power production to end January 1

The energy ministry has decided to terminate, as of January 1, a special levy imposed on natural gas used for electricity production, energypress sources have informed.

The special levy has been applied by the energy ministry as a tool to limit domestic gas consumption and, as a result, help subdue gas prices. Up until recently, the ministry was considering to extend the levy for a brief period into 2024.

The energy committee at SEV, the Hellenic Association of Industrialists, had pushed for this special levy to be terminated during a recent meeting with the energy ministry’s leadership in late October.

At the time, the ministry officials refused to offer any specific withdrawal date for the levy, noting the matter would be examined with the course of international gas prices in mind. The ministry officials indicated the levy would be maintained if international gas prices remained at levels of the time, or increased.

However, international gas prices have since fallen. Last week, the TTF index fell to 38 euros per MWh, a level not recorded since early 2022, prior to Russia’s invasion of Ukraine and the attack’s impact on energy markets.

This price de-escalation in international markets should eliminate any risk of a demand-driven natural gas price increase in Greece, officials believe.

The special levy’s formula was revised in May to 5 percent of the TTF, replacing a previous flat rate of 10 euros per MWh that had been introduced in November, 2022.

DEPA, Gazprom talks stand better chance of agreement

Long-running negotiations between Greek gas company DEPA Commercial and Russia’s Gazprom, which commenced late in 2022, now stand a better chance of resulting in an agreement, energy ministry sources have informed.

The talks between the two sides are dealing with possible price revisions as well as a compensation claim, by Gazprom, concerning an existing agreement running until the end of 2026.

DEPA Commercial is seeking a greatly improved supply price for 2024 as well as a retroactive price decrease from January 1, 2023, while Gazprom is pushing for a compensation payment based on a take-or-pay agreement signed with the Greek company.

The Russian company is demanding compensation over DEPA Commercial’s alleged failure to fully absorb an agreed 17 TWh gas quantity in 2023.

The Greek side has refused to acknowledge the Russian claims, arguing that its non-absorption of specific quantities has resulted from a violation of the contract by Gazprom.

The contract requires the Russian company to supply DEPA Commercial at a price ensuring a competitive advantage over rivals in the Greek market, but this has not been achieved for quite some time, local sources contended. Gazprom has been supplying both lower-priced LNG and natural gas to at least one of DEPA Commercial’s domestic competitors for months, the sources pointed out.

Despite these dealings, Greece’s energy ministry insists the country is pushing to completely end its reliance on Russian gas, in line with the overall EU strategy.

 

Gas prices will not fall as market still tight, experts note

LNG prices will not decline, market experts have forecast, noting the global market remains tight, new production-related investments will not be completed before 2025, while a cold winter could quickly deplete European gas reserves.

This projection was highlighted by executives representing some of the world’s biggest LNG companies at the 23rd World LNG Summit & Awards, hosted in Athens. Participating officials generally agreed that gas prices will remain relatively high this year due to a number of factors, including geopolitical instability, inflationary pressure and, most importantly, the absence of additional international production capacity.

“Natural gas reserves in Europe are high, accounting for 30 percent of demand in winter. However, if this winter season is cold, these reserves will diminish quite fast,” Anatol Feygin, executive vice president and chief commercial officer of Cheniere Energy, told the event, adding that no significant number of new LNG plants will come on stream in 2024.

Europe is not expected to encounter supply issues this winter as European countries can afford high prices and, as a result, will be able to attract significant volumes for yet another winter, unlike less affluent countries in other parts of the world.

Feygin, along with other LNG industry officials, agreed that LNG prices cannot de-escalate to pre-energy crisis levels if Russian pipeline gas remains sidelined from many markets.

 

PM prioritizes south-north link in talks with German leader

Green Aegean, a electricity supply corridor envisaged, by Athens, to run from Greece to Germany’s south, dominated talks between Prime Minister Kyriakos Mitsotakis and German Chancellor Olaf Scholz in Berlin yesterday, sources close to the Greek leader have informed.

Mitsotakis, determined to promote this project, prioritized Green Aegean over the European migrant crisis and the Middle East conflict at yesterday’s meeting.

The German side, no longer appearing worried about the Greek economy, was keen to listen to the Greek leader’s views on the south-north corridor, but, despite agreeing with Mitsotakis on most points raised, refrained from expressing any clear position, either because of other priorities or because Berlin remains unconvinced about the project’s financial sustainability.

Mitsotakis presented Green Aegean as an important plan for both countries, noting Germany’s energy needs are high in winter, and have become even more acute ever since low-cost Russian gas supply stopped flowing as a consequence of Moscow’s war in Ukraine, while energy demand in Greece is high during the summer.

Berlin is well aware of the fact that additional green-energy sources will be needed, beyond large-scale offshore wind farms in the North Sea, if German industry is to become carbon-neutral by 2050.

For its part, Athens knows very well that problems will arise in the future if RES output does not reach central Europe. Greek RES output is already many times over the country’s needs and grid capacity. Also, green energy the country aspires to import from Egypt and the Middle East will require a new electricity corridor to Europe’s north. Without such an export corridor, north African and Middle Eastern producers will surely look elsewhere for pathways to Europe.

Crucial DEPA, Gazprom talks on gas price, take-or-pay clause

Greek gas utility DEPA’s negotiations with Gazprom on new natural gas prices for 2024 and the Russian company’s insistence on activating a take-or-pay clause for a payment of approximately 400 million euros as compensation for unused gas quantities in 2022 and 2023 have reached a crucial stage and could end up in court.

A current price agreement between the two sides, signed in 2021, is 80 percent linked to the TTF index at the Dutch energy exchange and 20 percent linked to the price of oil.

DEPA is seeking an improved price level for 2024 as well as a retroactive price cut from January 1, 2023, which, if agreed on, would result in a reimbursement.

Also, DEPA disagrees with Gazprom’s insistence on triggering a take-or-pay clause in response to the Greek company’s failure to absorb a minimum natural gas amount of 17 TWh per year. DEPA contends its shortfall resulted from the Russian company’s failure to honor a crucial price-related term for gas supply at a price level that would ensure a competitive advantage for DEPA in the Greek market.

Over the past few months, Gazprom has supplied LNG and natural gas to at least one other customer in Greece at price levels lower than those offered to DEPA, sources at the gas utility have claimed.

Despite the introduction of EU measures designed to restrict Russian gas imports into Europe, they remain high in Greece, representing approximately 40 percent of the country’s overall gas imports – both LNG and pipeline gas – compared to just 9 percent in the EU.

Greek energy minister Thodoris Skylakakis, responding to journalists’ questions, contended he remains unperturbed by Gazprom’s dispute with Bulgaria over the Russian company’s refusal to meet a Bulgarian network usage surcharge demand of 10.2 euros per MWh.

Though this dispute could result in a disruption of Russian supply to Bulgaria and, by extension, Greece, the outcome would rid Greece of Russia’s high-cost demands, the minister contended.

The cost of the DEPA-Gazprom take-or-pay clause for 2022 is 150 million euros and is estimated to reach 300 million euros in 2023, according to the minister.

 

Biomethane sector draft bill forwarded for consultation

A draft bill for the development of Greece’s biomethane sector is ready and set to be forwarded for consultation, deputy energy minister Alexandra Sdoukou has told a conference organized by the Hellenic Association of Biogas Producers (HABIO/ESPAV).

Consultation on the draft bill will, according to the energy ministry plan, begin with a closed procedure involving biomethane producers, supply companies, gas operators and other public entities directly associated with the sector, to provide initial comments and observations on the draft bill for preliminary corrections.

The consultation procedure will then continue as normal with the aim of being completed by the end of the year so that legislation procedure may begin early in 2024.

The ministry opted for a double-staged consultation procedure believing it will bring the shape of the legislative proposal as close as possible to completion, having taken into account the views of market officials. A similar route was followed to update the National Energy and Climate Plan.

Investment support for the biomethane sector will be sought through the REPowerEU facility, introduced by the European Commission, in response to the 2022 Russian invasion of Ukraine, to end the EU’s reliance on Russian fossil fuels before 2030.

Electricity prices projected to rise 15-20% in November

A recent rise in the Dutch TTF index, a European gas benchmark, as a result of the Middle East crisis and a rupture on the Baltic-connector undersea gas pipeline between Finland and Estonia, which has raised suspicions of Russian involvement, will result in significantly higher November gas delivery contracts, which, in turn, will push up domestic wholesale electricity prices, market officials have projected.

Wholesale electricity prices are seen rising between 15 and 20 percent next month, which suppliers would relay to consumers.

Electricity suppliers are expected to announce monthly nominal tariffs – not including subsidies – of at least 18 cents per KWh for November.

The country’s electricity suppliers, under current law, are required to announce price levels for every forthcoming month by the 20th of each preceding month. This requirement will be terminated at the end of the year, when emergency energy-crisis measures are to be lifted.

The energy ministry is currently finalizing a plan that will introduce – as of January, for 12 months – a single variable tariff formula for all electricity suppliers, who will apply it and then set respective tariff levels depending on their profit-margin strategies.

The plan’s objective being to intensify competition and subdue prices, while also offering consumers price-comparing clarity.

All electricity consumers will be automatically transferred to the new single variable tariff as of January 1, unless they opt, prior to this date, for any other supply deals offered by suppliers.

 

Ministry’s single variable tariff intended to boost competition

A decision by energy minister Thodoris Skylakakis to introduce – as of January, for 12 months – a single variable tariff formula for all electricity suppliers, whose level they will set depending on respective profit-margin strategies, is intended to intensify competition leading to lower prices, or at least, price containment at reasonable levels.

The application of a single pricing formula, to be made available to all electricity suppliers, will enable consumers to make instant price comparisons with the push of a button, not possible under the current complicated system.

“If I were to ask you who the lowest-price supplier is would you know? The problem is that we don’t have a common tariff offered by all suppliers. A common tariff will now exist. All details will be announced within the next ten days,” Skylakakis, the energy minister, told local radio station Parapolitika yesterday.

All electricity consumers will be automatically transferred to the new single variable tariff as of January 1, unless they opt, prior to this date, for any other supply deals offered by suppliers.

The energy ministry estimates over 4 million consumers, or at least 70 percent of 5.7 million in total, will favor an automatic transferal to the new single variable tariff over any of the new products to be made available by suppliers.

Some market officials believe consumer preference for the new single variable tariff will be even greater.

Authorities are preparing for the Greek electricity market’s return to normality as of January 1, when subsidies are planned to end and indexation clauses reintroduced.

However, market conditions are currently adverse and challenging given last week’s outbreak of the Israel-Gaza war as an addition to Russia’s ongoing war in Ukraine.

A continuation of current market trends and conditions, which have pushed natural gas prices up 36 percent since the beginning of October, to 49 euros per MWh, would inevitably result in higher domestic electricity prices in January.

Latest events prompt energy market turmoil ahead of winter

Last weekend’s outbreak of the Israel-Gaza war, undermining any attempt at peace in the Middle East and the process of normalizing Israel’s relations with the Arab countries, and, in addition, the suspected sabotage of the Baltic-connector gas pipeline, used by Finland and Estonia for access to an underground gas storage facility in Latvia, are two developments that have come at the worst possible time for European energy security and cost concerns, right before winter and following an EU decision to end energy crisis-related support measures for consumers all over Europe.

The two developments would have impacted energy markets any time of year, but their pre-winter emergence makes them even more critical. This is the time of year when demand for natural gas and oil increases in Europe, along with prices. In Greece, the heating oil trading season is set to begin October 13.

Markets around the continent have not been appeased by the fact that European storage facilities are 95 percent full, but instead, are being driven higher by the unease brought about by the latest events.

Besides the Israel-Gaza war, the Baltic-connector pipeline has just been shut down after a sudden drop in pressure, raising fears of Russian sabotage as retribution for Finland joining Nato in April this year.

The damage to this infrastructure has revived concerns about energy security following the Nord Stream pipeline blasts last year.

According to macroeconomic research consultancy Capital Economics, the combination of events could raise oil prices to levels well above 100 dollars a barrel for some time.

Wholesale natural gas prices rose 12.3 percent in a day, to just under 50 euros per MWh at the Dutch TTF hub.

The Greek government may need to reconsider its decision to end energy subsidies for all consumers. Supply companies may need to hedge prices and factor in the new risk factors. Also, refineries and gas importers may need to secure loads before prices escalate.

With Israel preparing for a ground attack on Gaza, it has become clear that decisions such as the choice of route for Israeli gas exports to Europe; promotion of Israel’s energy cooperation with Greece and Cyprus; and the development of projects such as the Israel-Cyprus-Greece electricity grid interconnection, are, for the time being, not a top priority.

 

Major east Mediterranean projects brought to a standstill

The Brent crude price began trading today 5 percent up, over 88 dollars a barrel, as markets have not ruled out stricter US sanctions by the US against Iran, which supports Hamas, responsible for the weekend’s shock attack on Israel.

European and US markets are also expected to rise today, reflecting anxiety over an escalated conflict that would be brought about by an Israeli ground military operation in Gaza and the involvement of the powerful Hezbollah from the Israel’s north, with the support of Iran and Syria.

Should the US impose stricter sanctions on Iran, global oil supply would be reduced, creating an opportunity for Russia to increase its share, analysts have noted.

Washington, since late 2022, has turned a blind eye to an increase in Iranian exports circumventing US sanctions, on the basis of an informal détente with Tehran, analysts have reminded. The US has pursued such a course knowing it would hurt Russia.

Israel’s energy-related interests in the eastern Mediterranean, including talks with Cyprus and other regional players for gas exports to Europe, will now be put on hold following the Hamas attack on Israel.

Earlier today, Israel’s energy ministry ordered US oil giant Chevron to halt operations at the Tamar gas field, off the coast of Israel. The company stated it is complying with the ministry’s request.

The development of a Cypriot LNG terminal, planned to receive Israeli pipeline gas, and, even more crucially, a recent push by Israeli Prime Minister Benjamin Netanyahu for decisions promoting exports from east Mediterranean fields within the next three to six months, are now being brought to a standstill.

As for the role of Turkey, statements made yesterday by President Recep Tayyip Erdogan, who called for restraint from both sides without condemning the Hamas attack on Israel and spoke again of a Palestinian state with Jerusalem as its capital, probably reinforce Israel’s reservations against Turkey.

At a recent meeting in New York, Netanyahu and Erdogan agreed to schedule an exchange of visits aimed at restoring relations between the two countries. Erdogan, at that meeting, had proposed the transportation of Israeli gas to Europe via a subsea pipeline running alongside the Turkish coast.

Operations by Greece’s Energean Oil & Gas, listed on the London Stock Exchange, at licenses within the Israeli EEZ have not been disrupted by the conflict, company officials informed, noting the Energean Power FPSO and all other company facilities are not situated close to the battle zone.

 

 

Hamas attack on Israel raises energy security questions

The weekend’s shock attack by Hamas on Israel, which has cast doubts over the capabilities of Israel’s secret services while also proving the country’s Iron Dome air defense system inadequate as it failed to respond to thousands of rockets launched from Gaza, has, inevitably, also spilled over into the energy sector, raising security fears about Israel’s Exclusive Economic Zone.

Israel’s defense shortcomings, combined with the likelihood of an escalation of the current situation involving other Arab organizations, raise concerns about the country’s ability to protect critical infrastructure such as platforms and gas pipelines.

Upstream companies operating within Israel’s EEZ need to feel secure about the safety of their personnel and investments in the region.

For the time being, production at facilities operated by Greece’s Energean have not been disrupted.

The developments also extend into the political sphere. Earlier this year, Israel and Lebanon reached an EEZ delimitation agreement that enabled Lebanon to begin hydrocarbon exploration on its side. Total, Eni and QatarEnergy took on the project and are expecting initial results a few weeks from now.

The agreement between Israel and Lebanon, a politically sensitive one, gives Israel a 17 percent share of revenue from the Qana gas field.

Israel has also been considering the prospect of conducting drilling efforts off Gaza in collaboration with the Palestinian Authority and Egypt.

As for Europe, which saw in the Middle East an opportunity to escape from the dangers associated with Russian natural gas, this latest escalation comes as a reminder that energy security remains a difficult equation.

 

 

Energy crisis brings fossil fuels back to the forefront

The energy crisis has brought about a revival of the hydrocarbons sector, as highlighted by a growing number of energy companies that have decided to reactivate exploration and production projects that had been put on hold as a result of climate-target pressure. Much of this reignited upstream activity is occurring in Europe. Greece must not be left behind.

Yesterday, French oil and gas giant TotalEnergies announced it would boost fossil fuel output over the next five years, a contrast to its reduced production in recent years.

Earlier in the week, on Wednesday, the UK’s North Sea Transition Authority approved plans for production at the new Rosebank oil and gas field in the North Sea, estimated to contain approximately half a billion barrels of oil.

Norwegian upstream giant Equinor, holding the biggest stake in the Rosebank field, estimates production will begin in 2030, with initial investments seen reaching roughly 3.8 billion dollars before totaling approximately 10 billion dollars by 2051.

Two two months earlier, UK Oil & Gas Plc had announced it would recommence production at its Avington oil field, estimated to contain 60 million barrels. Production at this field had been disrupted at an embryonic stage six years ago, with output having reached just several hundred thousand barrels.

In late August, Norway, which has captured the biggest share of Russia’s lost natural gas supply to the EU, announced that a latest round of tenders for licenses at 92 locations, 78 in the Barents Sea and 14 in the Norwegian Sea’s northwest, had attracted interest from 25 companies, including majors such as Shell, ConocoPhillips, Equinor and Aker BP.

The heightened interest expressed by majors highlights a turnaround of their green-focused investment policies of recent years. Shell, for instance, has announced it will disrupt an investment cutback plan of between 1 and 2 percent, annually, until 2030, adding it will increase investments in natural gas.

The hydrocarbons sector is also making a comeback in regions closer to Greece, Italy being a prime example. Italy had stopped issuing new licenses for many years but took a turn in November, when officials announced the country will be holding tenders offering ten-year licenses that offer total production potential of 15 bcm in natural gas from deposits in the Adriatic Sea.

Quite soon, companies operating in Greece will receive results from seismic surveys conducted west and southwest of Crete (ExxonMobil – HelleniQ Energy); Gulf of Kyparissia (Helleniq Energy); Ionian Sea (HelleniQ Energy); and Northwest Ionian (Energean – HelleniQ Energy).

In addition, Energean is awaiting an environmental permit to proceed with exploratory drilling in the Zitsa area, close to Ioannina, northwestern Greece.

Given the international developments and Greece’s energy needs – 6 bcm of natural gas a year and 300 barrels of oil per day – imported at lofty prices, the Greek State must facilitate, it has become clear, the endeavors of companies seeking to move ahead with their projects.

PPC chief to take part in Romanian Three Seas meeting

Greece aims to bolster its geopolitical influence in the Balkans through energy, power utility PPC’s takeover of Italian group ENEL’s Romanian subsidiary ENEL Romania being a key part of this strategy.

In addition to PPC’s takeover of ENEL Romania, Helleniq Energy recently invested in Romania and had been preceded by Mytilineos – both in renewable energy projects.

PPC’s ENEL Romania takeover has prompted an announcement from Romanian president Klaus Iohannis, who named Greece as a new member of The Three Seas, a diplomatic initiative taken by Romania’s political leadership to bring together EU member states and candidates located between the Baltic, Adriatic and Black Seas for collaboration in the fields of energy, infrastructure and the digital economy.

Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia, Slovenia, and Ukraine are the other members of The Three Seas initiative.

Iohannis, Romania’s president, will host a two-day meeting in Bucharest on September 6 and 7 for talks on collaboration in these domains. Ministers and entrepreneurs representing the aforementioned countries, including PPC’s chief executive officer Giorgos Stassis, energypress sources have informed, will take part at the upcoming Bucharest meeting.

Romania has become a geopolitical focal point as a result of the country’s close proximity to war-entangled Ukraine. In addition, Bucharest has established a pivotal role as a result of its support of Ukraine in the war with Russia and Moldova’s EU membership quest. Romania has also facilitated the movement of grain across its borders.

Revised Nabucco pipeline hopes fade, Sofia drops pro-Turkish stance

A Russian initiative to establish Turkey as a central gas hub, through a revival of a revised version of the old Nabucco project plan, as the transitional government in Bulgaria had attempted to do last spring, appears to have hit an impasse and is unlikely to progress further.

Under the leadership of Bulgarian Prime Minister Nikolai Denkov, who assumed office in June, the new government in Sofia has veered away from the pro-Turkish stance of its predecessor. Instead, it has embraced a more pro-Western orientation in the realm of energy policy.

Also, the European Commission has not shown any interest to financially support the project, dubbed Solidarity Ring.

The ambitious plan had received the backing of certain political circles in Bulgaria keen to exploit Azerbaijan President Ilham Aliyev’s intention to more-than-double his country’s gas exports to the EU from 11 to 27 bcm by 2027.

Bulgaria, Romania, Hungary and Slovakia signed an MoU in Sofia in early May, in the presence of Aliyev, for increased gas supply to central Europe via the Solidarity Ring route.

However, talks in support of this gas pipeline project have ceased, despite its supposed intention to help end Europe’s energy reliance on Russia, EU sources have informed.

Athens, along with other major international energy players, contributed to this impasse. In a letter forwarded to the European Commission in May, Athens noted the project would degrade Greece’s role on the international energy map, upgrade Turkey’s, and serve Russia’s efforts to regain access into the European market, indirectly, by supplying Russian gas as Azeri gas.

This is possible as the Solidarity Ring would bypass Greece and follow a Turkish-Bulgarian-Romanian-Hungarian-Slovakian route into central Europe, meaning Ankara could use Turk Stream, the Russian pipeline running through Turkey, to feed Solidarity Ring.

 

DESFA posts significant revenue, profit gains for 2022

Gas grid operator DESFA has posted impressive financial results for 2022, including a 37.6 percent year-on-year revenue increase to 278.3 million euros from 202.6 million euros, as well as a 29 percent rise in profit, to 81.6 million euros from 63.1 million euros a year earlier.

Analyzing its financial results, DESFA’s administration mainly attributed last year’s significant revenue increase, up by over 75 million euros, to higher regulated earnings, which grew by 69.2 million euros.

In her message to shareholders, DESFA’s chief executive officer Maria Rita Galli, made note of the business model followed by the company. “In conditions of great instability and huge volatility, DESFA’s business model has proved resilient, with the company occupying a strong position at the forefront of initiatives launched at national and European level to enhance security of supply in Greece and southeastern Europe,” DESFA’s CEO noted.

“The speed with which DESFA reacted to the interruption of Russian gas flow to Bulgaria, transforming the Greek gas grid into a transit corridor, led to a gas exports increase of approximately 300 percent compared to the previous year, supported by 78 LNG cargoes unloaded at the Revythoussa terminal, whose storage capacity increased by more than 60 percent in record time with the installation, in June 2022, of a floating storage unit,” she continued.

DESFA also announced it is currently looking to separate regulated and non-regulated activities, through the formation of a new company, following a request by RAAEY, the Regulatory Authority for Waste, Energy and Water.

Eurogas: Energy crisis threat not yet over for Europe

The energy-crisis threat on the continent has not yet passed, despite lower prices, according to Didier Holleaux, chairman of Eurogas and vice-president of France’s Engie, who has warned that the risks will remain for at least the next four winters, and, in doing so, advised authorities, governments and organizations to avoid complacency.

EUROGAS is a European organization involving the participation of a significant number of major energy companies from all over the EU.

Europe managed to overcome the threat of energy shortages last winter, while a sharp fall in natural gas prices over the past six months has provided a welcome respite for consumers.

European contracts at the Dutch TTF hub are currently being established at levels of between 20 and 30 euros per MWh, just a fraction of last August’s peak of 340 euros per MWh, prompted by a drastic cutback in supply of Russian pipeline gas.

Over the past year, EU officials have adopted a series of measures to reduce natural gas prices. Holleaux, in comments to Natural Gas World, warned that last year’s unusually mild winter was the catalyst behind the price reductions.

He acknowledged the European Commission’s gas storage requirements for EU member states also played a role in subduing prices in Europe, adding, however, that current prices remain considerably higher than levels that were regarded as normal prior to the pandemic.

Collective gas orders increase in second purchasing round

A second round of collective European gas purchases, through a platform similar to one established for vaccine orders during the pandemic, has resulted in natural gas orders totaling nearly 12 bcm, well over a quantity ordered during the procedure’s first round in May.

However, the EU initiative fell short of attracting full participation. Second-round orders were delivered to twenty European grid entry points, the majority of quantities at entry points in the Netherlands, France, Italy, Bulgaria and Germany, as well as Ukrainian storage facilities, Sefcovic noted.

“The positive results of this second round illustrate that there is a need and clear added value to join forces, pool our demand and work together to guarantee stable and affordable gas supply to the EU market,” noted the European Commission’s Vice President Maros Sefcovic, who oversees the platform, named AggregateEU.

It was established by the EU following Russia’s invasion of Ukraine to prevent bidding wars between fellow member states and utilize their collective bargaining power potential for competitively priced energy supply as an alternative to Russian natural gas.

Approximately 5.5 bcm, or 45 percent, of the second round’s orders, totaling 11.98 bcm, were made for LNG, well over this energy source’s share of orders in the first round, below 20 percent of the total. Pipeline gas represented all other collective orders made through the platform in the second round.

A third round is expected to be staged in September and is planned to be followed by two further rounds before the end of the year.

EuroAsia Interconnector funds threatened by project delays

EU authorities appear to have issued a strict warning to Cyprus over major delays in binding scheduling terms for EuroAsia Interconnector, a project of strategic importance planned to interconnect the Greek, Cypriot and Israeli power grids.

According to sources, the EU has warned the Cypriot government that if appropriate decisions are not taken immediately to ensure that the project can be put back on track, then a decision offering 657 million euros worth of Connecting Europe Facility (CEF) funding for the PCI-listed project would need to be reviewed.

In response, Cypriot president Nikos Christodoulides held an emergency meeting last Friday with Nasos Ktorides, CEO of the EuroAsia Interconnector consortium, and the country’s energy minister George Papanastasiou.

Though no official announcements have been made, Cypriot press has reported that the government intends to engage directly and vigorously at the highest political level to secure the planned funding for the project.

Delays include Greek power grid operator IPTO’s entry into the EuroAsia Interconnector consortium with a 25 percent stake. A strategic agreement was announced at the end of June but the matter has not progressed further as due diligence remains unfinished.

The EU has insisted on IPTO’s participation as, on the one hand, the project will be connected to the Greek operator’s networks in Crete, and on the other, IPTO, it is believed, would ensure the project’s technical integrity and operational viability.

EuroAsia Interconnector has also been held back by the consortium’s delay in signing a contract with Norwegian company Nexans, to manufacture the project’s subsea cable.

This delay threatens to deprive EuroAsia Interconnector of its intended production slot at Nexans because the manufacturer faces high demand for cables from countries such as Germany and the Baltic countries as a result of Russia’s war in Ukraine.

 

 

 

Crucial OPEC meeting Sunday, amidst Moscow-Riyadh dispute

OPEC +, the Organization of the Petroleum Exporting Countries, plus allies led by Russia, are scheduled to hold a crucial meeting this Sunday, just days after Saudi Arabia’s stern warnings to market players involved in short-selling activity, as well as amidst an output policy row that has broken out between Riyadh and Moscow.

Journalists have not been invited to the forthcoming meeting, a development that has surprised global media outlets.

The latest OPEC meeting comes after the organization caught the internationally community off guard by announcing, in April, it would make further cuts in oil production.

At the time, the move drove up oil prices by approximately 9 dollars per barrel, to levels over 87 dollars per barrel. Prices eventually eased off, the Brent oil price falling as low as 70 dollars per barrel.

The oil market’s volatility makes it impossible to predict what OPEC’s next move could be. Signs offered by major producers as to what may follow remain ambiguous and could be interpreted in a number of ways.

Also, Saudi Arabia and Russia are currently embroiled in a dispute over the organization’s output policy. Riyadh has expressed disappointment over Moscow’s breach of an OPEC agreement to cut output. Saudi Arabia wants oil prices to rise to between 80 and 81 dollars a barrel.

Riyadh has also been angered by the short-selling practices of speculators, seeking to manipulate markets for lower oil prices and profitable selling.

 

Brussels backs TAIPED tender relaunch for South Kavala UGS

The European Commission has endorsed Greek privatization fund TAIPED’s intention to relaunch a failed tender for the development of “South Kavala”, an almost depleted natural gas field in the Aegean Sea’s north, as an underground natural gas storage facility (UGS) that would, under the new plan, also be equipped to store hydrogen.

Brussels’ decision on the South Kavala UGS has been included in a just-published European Commission post-program surveillance report covering the state of the Greek economy and its developments.

TAIPED declared that the South Kavala UGS had ended without a result in March. At the time, the privatization fund also noted it would assess international gas market conditions, taking into account circumstances created by Russia’s invasion of Ukraine, as well as the European Commission’s REPowerEU decisions, to decide on whether it would relaunch the South Kavala UGS tender in the short term.

As previously reported by energypress, TAIPED has submitted an application to Brussels to have the UGS included on the European Commission’s project-supporting PCI list, as a facility also equipped to store hydrogen.

Emergency measures expiring, Athens seeks extension

The energy ministry has forwarded an official request to the European Commission seeking an extension, until the end of the year, of emergency electricity market measures that were introduced last summer to combat energy price rises and are set to expire on July 1. Brussels has yet to respond to Athens’ request.

Over the past nine months, the extraordinary measures have proven effective in subduing electricity prices for households and businesses at levels well below those created by the energy crisis.

The energy ministry imposed a wholesale price cap on electricity, interrupted indexation clauses concerning retail tariffs, and has been subsidizing electricity. Also, in an effort to stimulate competition, the ministry set a rule requiring power suppliers to announce their nominal tariffs – not including subsidies – for each forthcoming month ten days in advance, and has given electricity users the freedom to switch suppliers without any penalty costs.

The Greek request forwarded to the European Commission wants this entire package of measures extended until the end of 2023, as protection against any new wave of energy price rises.

Though energy prices have deescalated over recent months, analysts have not ruled out a rebound and reemergence of energy sufficiency issues in Europe next winter.

Russia’s ongoing war in Ukraine and Europe’s inconclusive plan regarding alternative energy sources are the main factors nurturing these concerns.

Europe favorably placed ahead of next winter’s gas storage refill

Favorable conditions last winter have placed Europe in an advantageous position of being able to fill, to full capacity, its natural gas storage facilities even if Russian supply is completely cut off.

Europe needs to store away approximately 35 billion cubic meters of natural gas between now and the end of October, well below the average figure of roughly 55 bcm over the past decade, in order to fill its energy storage facilities at 90 percent of capacity, the European goal set for next winter.

A year ago, Europe needed to purchase approximately 70 bcm of natural gas to fill its storage facilities. This was one of the factors that pushed prices up to all-time highs.

Fortune went Europe’s way last winter as temperatures remained mostly mild, significantly subduing energy usage, while China’s zero-Covid policy enabled the continent to import substantial LNG quantities which, otherwise, would not have been available.

As a result of these factors, Europe’s gas storage facilities were left 55 percent full by the end of last winter, well above the previous decade’s average of 33 percent.

Despite the favorable news for Europe, the market remains susceptible to dangers as a result of increased natural gas usage in the industrial sector and revitalized demand in Asia, factors that have led analysts to forecast a wholesale gas price rebound that could exceed 100 euros per MWh.

Also, the milder weather conditions could have negative impact in the long run. Low rainfall and snowfall in many parts of Europe could lead to a hot and dry summer, increasing energy demand for cooling purposes, and prices. This could make Europe’s energy-storage refilling effort slightly more challenging.

IEA: Greece needs to hold back on central role of natural gas

Elevated natural gas prices combined with Greece’s effort to end its dependence on Russian supply raise questions about the central role Athens is placing on gas as a transitional fuel, the International Energy Agency IEA has noted in a special report on Greece.

Greece’s current dependence on natural gas can be considered incompatible with the country’s climate policy, the reported notes, adding that investments in gas network expansion would be better directed towards energy efficiency, renewables and storage.

The government needs to reexamine and rationalize the role of natural gas in the energy sector and related policies to avoid projects that will come to nothing, the IEA report warned.

Until now, competition has remained limited in the Greek electricity and gas markets, with large players in dominant positions, the reported noted, adding that both the government and RAE, the Regulatory Authority for Energy, must continue their efforts to ensure a high degree of liquidity, transparency and competition.

RAE, according to IEA, is severely understaffed and faces difficulties in offering appropriate remuneration to attract competent and experienced staff.

Necessary experience and capacity for performing tasks may be lacking at RAE, shortcomings which could jeopardize further market reforms, the IEA report noted, while also expressing concerns about a lack of independence at RAE restricting its ability to perform.