Bulgaria gas pipeline explosion highlights need for local projects

Yesterday’s Bulgarian gas pipeline explosion in Bulgaria, prompting a supply cut into Greece from a northern route, yet again highlights how vital it is for Greece to develop two gas infrastructure project plans in Alexandroupoli, northeastern Greece, and Kavala, in the north.

The explosion of this pipeline, carrying Russian gas into Greece via Bulgaria, has not affected Greece’s energy security as supply from the alternate Kipoi route remains uninterrupted, while the contribution of high LNG reserves at the Revythoussa terminal, just off Athens, has also been crucially important.

However, a Greek energy crisis could have resulted if this accident were more serious, or if the Revythoussa facility did not exist, or, worse still, the accident coincided with even greater Greek-Turkish tensions than at present, which could have meant a cut in gas supply from Turkey, hosting one of Greece’s key gas import corridors.

The intensifying geopolitical instability of the wider region, which includes Turkey, an extremely troubling neighbor, makes imperative the existence of sufficient gas storage facilities to safeguard Greece’s energy security. Despite the precarious conditions in the region, Greece remains one of the European countries without sufficient energy storage infrastructure.

In addition to the existing Revythoussa LNG terminal, Greece’s infrastructure definitely needs to be reinforced by projects such as the Alexandroupoli FSRU and an underground gas storage facility at a virtually depleted offshore deposit south of Kavala.

 

Long-standing DESFA northern Greece pipeline plan scrapped

Gas grid operator DESFA has scrapped plans for a natural gas pipeline that had been envisioned to run across northern Greece, from Komotini in the northeast to Thesprotia in the northwest, after maintaining the project in the company’s business plans for about a decade.

DESFA reached this decision as Russian President Vladimir Putin is supporting Gazprom’s development of a second branch for the wider Turkish Stream gas project, deviating Ukraine, to supply the Balkans and central Europe via Bulgaria, not Greece, as was initially considered.

A first Turkish Stream branch supplying Russian gas to Turkey is already operating.

“The project remained on the business plan for approximately ten years without progressing to the construction stage, while there is no sign of conditions leading to its construction in the immediate future,” DESFA announced.

The Komotini-Thesprotia pipeline project was budgeted at 1.8 billion euros.

The total cost of projects included in DEFSA’s development plan for 2021-2030 is now budgeted at 545.5 million euros.

Fuel price plunge pressuring refineries, opportunities seen

The plunge of international crude oil prices is impacting Greek refineries and local fuel trade, while, worse still, market forecasts are impossible to make, even for the short term.

Hellenic Petroleum (ELPE) and Motor Oil, Greece’s two refinery groups, are being tested by the fall of Brent prices to levels of around 30 dollars per barrel. Highlighting this challenge, unleaded 95 octane fuel prices have dropped to less than 1,000 euros per cubic meter (including surcharges before VAT) for the first time in many years.

This represents a drop of more than 100 euros compared to prices on March 9, dubbed “Black Monday” as it was the worst day in markets since the financial crisis, a result of the outbreak of the oil price and output level war between Russia and Saudi Arabia, along with the coronavirus spread’s impact on demand.

The drop in prices is seen continuing. Domestic fuel demand is falling as a result of the Greek government’s broadened enforcement of restrictive measures aiming to contain the coronavirus spread. Local transportation needs have subsequently dropped dramatically, while the only other viable option left for Greek refineries, exports, has been canceled out by plunging fuel demand internationally. Borders have closed and airlines are limiting flights.

The cost of fuel stocks, purchased at far higher prices, is a big concern for both ELPE and Motor Oil. This cost, however, can be partially offset by opportunities currently available for lower-cost production.

On a more positive note, both refineries reduced their loan servicing costs prior to the crisis. This is particularly so for ELPE as the petroleum group was pressured by high borrowing costs. Motor Oil has traditionally pursued a more conservative borrowing policy.

Both refineries will need to take extremely cautious steps amid these highly unpredictable market conditions, analysts agree.

Lower-cost oil, gas an obstacle for RES growth, electric cars

Lower-cost oil and gas, as well as solar module supply chain irregularities caused by the coronovarirus spread in China, the world’s dominant supplier of solar energy systems, have emerged as obstacles for RES sector growth and investments.

Numerous solar energy projects around the world are being delayed or postponed as a result of the solar module supply problems in China.

The recent plunge of oil and gas prices, prompted by the impact of the coronavirus spread on economies and a simultaneous oil-price war between Russia and Saudi Arabia, has suddenly made RES investments less competitive against conventional technologies in terms of electricity generation, energy efficiency or electrification of sectors such as transportation or shipping.

The duration of lower oil prices remains unknown.

Natural gas prices have fallen as a result of idle LNG shipments in China and forecasts for weaker demand worldwide.

Under the current conditions, market forces will turn against green energy technologies, which had just begun establishing themselves as competitive options against conventional technologies.

Questions are also being raised about the growth prospects of the electric vehicle market, still at an embryonic stage.

 

Lower-cost gas may save PPC an estimated €100m this year

The sharp drop in energy product prices, pressured by the coronavirus outbreak and an oil price war between Russia and Saudi Arabia, promises major and unexpected financial relief for power utility PPC.

The plunge of gas prices, alone, should benefit the Greek power utility by an estimated 100 million euros this year – assuming this drop is not ephemeral.

In the first half of 2019, PPC’s total purchasing cost for natural gas reached 222.5 million euros, a 57.1 percent increase.

In the liquid fuels category, PPC’s purchase expenses were also elevated, reaching 319.7 million euros, as a result of higher prices paid for mazut and diesel used by the utility at power stations on non-interconnected islands. To the delight of PPC, mazut and diesel prices are also tumbling.

Electricity tariff hikes made by PPC last September as well as a revised payback plan offering consumers greater incentive to service electricity-bill arrears through monthly installments are both producing favorable results.

A series of memorandums of cooperation, such as an agreement signed this week with Germany’s RWE, all promising dynamic penetration into Greece’s renewable energy market, offer further potential for PPC.

However, the power utility still faces an uphill struggle along its road to recovery. PPC’s financial results for 2019 will be announced in April.

 

Natural gas, LNG, CO2 right, wholesale power prices down

Besides lower oil prices in international markets over the past few days as a result of the coronavirus spread and price war between Saudi Arabia and Russia, energy commodities across the board are under great pressure, which has led to price reductions for natural gas, CO2 emission rights and electricity.

Lower oil and gas prices are offering relief for the economy and enterprises. However, there are two sides to this story, positive and negative. On the one hand, the price drops are creating opportunities for suppliers and consumers, while, on the other, natural gas futures indicate a decline until the end of the third quarter this year, meaning markets anticipate a downward trajectory in Chinese consumption and no sign of an economic rebound until at least September.

Prices at the Dutch trading platform TTF, a key index for LNG, slid to a three-month low on Monday, registering 8.627 dollars per MMBTU, before edging up to 8.993 dollars per MMBTU yesterday. This index has fallen 39.4 percent since the end of December’s three-month peak of 14.2 dollars per MMBTU.

Besides shaping LNG prices, according to new pricing formulas adopted at Gazprom, the TTF also greatly influences the rise of Russian pipeline gas.

CO2 emission right prices have fallen by 13.6 percent between December and early February, from 26.74 euros per ton to 23.11 euros per ton. A slight rise has been registered this week, to 23.25 euros per ton on Monday and 24.07 euros per ton on Tuesday. Lower prices on this front are favorable for lignite-fired power stations as well as energy-intensive industries.

Prices have also fallen in Greece’s wholesale electricity market. In the day-ahead market, the System Marginal Price (SMP) fell from 49.2 euros per MWh on Friday to 41.42 euros per MWh on Monday before edging up to 43.12 euros per MWh yesterday. A rise to 50.44 euros per MWh is expected today.

 

PPC expects major LNG tender turnout for 2.7 million MWh

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.

 

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

Three major energy projects of international dimension, the East Med and IGB natural gas pipelines, as well as the Alexandroupoli FSRU (Floating Storage Regasification Unit), all once seeming distant prospects, are now gradually turning into a close reality.

Their development promise to transform Greece into an energy hub and upgrade the country’s geopolitical standing in the fragile southeast Mediterranean and Balkan regions.

The leaders of Greece, Cyprus and Israel are set to sign a trilateral agreement for East Med, to carry natural gas to Europe via these countries and Italy, at a meeting in Athens on January 2. The transmission capacity of this project, measuring 2,000 km, will range between 10 to 20 billion cubic meters. Italy is also expected to eventually join the partnership for this project.

Its development prospects have been further propelled by a decision from Poseidon, a 50-50 joint venture involving Greek gas utility DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

The trilateral agreement promises to further bolster ties between Greece, Cyprus and Israel amid a period of heightened regional intensity. Turkish provocation has escalated. An East Med Gas Forum to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority should help expand the alliance.

The Greek-Bulgarian IGB gas pipeline is expected to have begun operating far sooner, in July, 2021. DEPA holds a 25 percent stake in ICGB, the consortium overseeing the IGB project, whose initial capacity will be 3 bcm. Through this pipeline, DEPA plans to supply the Bulgarian market with Azeri gas hailing from the TAP route, and, as a result, break, for the first time, the existing Russian monopoly in the neighboring market.

The IGB will not only be fed by TAP, running westwards across northern Greece for Azeri supply to Europe. The Alexandroupoli FSRU to be anchored off coastal Alexandroupoli, northeastern Greece, will also feed the IGB, enabling an alternative gas supply source for Bulgaria, other east European countries, and Ukraine.

DEPA is also involved in this project. The gas utility has just decided to acquire a 20 percent stake in Gastrade, the company developing the FSRU project in Alexandroupoli.

Leading Washington officials have expressed their support for the East Med, IGB and Alexandroupoli FSRU projects. Prime Minister Kyriakos Mitsotakis will be seeking confirmation of this backing on an upcoming official trip to the US from President Donald Trump himself.

 

Officials to examine domestic gas supply security, Ukraine route a concern

The indefinite outcome of ongoing negotiations between the EU and Russia for a renewal of a gas supply agreement facilitating supply to the continent via Ukraine will be a major concern for Greek energy market officials at a meeting scheduled for Monday to examine domestic energy security matters for the forthcoming winter, including alternatives in the case of emergencies.

An existing gas supply agreement between the EU and Russia expires on December 31. It remains unclear when a new agreement could be reached and what terms it could carry. Talks between Brussels and Moscow have been difficult so far.

Officials representing Greece’s energy ministry, RAE, the Regulatory Authority for Energy, gas grid operator DESFA, power grid operator IPTO and the Greek energy exchange, amongst others, will participate in Monday’s meeting, at the RAE headquarters.

In a recent report, ENTSOG, the European Network of Transmission System Operators for Gas, tasked with facilitating and enhancing cooperation between national gas transmission system operators (TSOs) across Europe, pointed out two gas supply security concerns for Greece.

The country, along with central and other southeast European countries, would face problems if Russian supply via Ukraine were to be interrupted during high-demand periods.

Any disruption of LNG supply from Algeria, providing Greece with significant quantities, was also pointed out as a concern in the ENTSOG report.

The European Commission has requested all EU member states to provide respective gas-related energy security plans, given the uncertainty of the EU’s talks with Russia, so that Brussels may establish an overall picture.

Officials in Athens remain confident the Greek energy plan will effectively deal with gas needs in Greece this coming winter. An upgrade in the storage capacity of Greece’s Revythoussa LNG terminal close to Athens, as well as an increase in LNG imports, has helped reinforce this confidence.

 

 

Jetoil placed on the comeback trail by new owner Centracore

Bankruptcy-struck oil trading company Jetoil, now controlled by Austria’s Centracore and on the rebound, has reclaimed approximately 15 percent of the fuel-station network it controlled prior to the rescue plan.

Jetoil now operates 83 fuel stations (DODO, dealer-owned, dealer-operated), primarily in northern Greece, as well as the Thessaly, Epirus and other mainland regions.

At the peak of Jetoil’s crisis in the summer of 2016 – when founder Kyriakos Mamidakis committed suicide, aged 84, not long after the company had filed for bankruptcy – the company’s retail network had shrunk to just 34 outlets.

A Jetoil rescue plan was approved Iast year. Strategic investor Centracore agreed to take on the company’s liabilities following a partial haircut.

Besides a purchase price of 107 million euros, the new Jetoil shareholder has invested 10 million euros to upgrade the company’s storage facility in Kalohori, on the outskirts of Thessaloniki.

Jetoil has increased its sales in Greece and achieved significantly higher exports since its takeover. Total sales for the first financial year since Centracore’s entry reached 420 million euros generated by a trading volume of 350,000 metric tons.

In a year, the company has achieved 35 percent of its business plan’s target, set at one million metric tons of trading volume, or a 10 percent Greek market share, including exports.

The strategic investor, maintaining access to Russian refineries, has admitted the decision to invest in Greece was based on export potential to Balkan markets. Centracore obtained a Greek trading license in July, 2018.

Centracore is a Vienna-based trading company headed by Luxembourg’s UFG Europe Holding, holding an 80.1 percent share and comprised of private equity funds. Russian Petroleum company Rosneft holds the other 19.9 percent.

Balkans-focused energy forum on eve of Thessaloniki fair

Two key regional gas pipeline projects involving Greece and backed by the US, the Greek-Bulgarian IGB gas grid interconnection and a pipeline to link Greece and North Macedonia, will be at the center of attention in talks between energy minister Costis Hatzidakis and peers at the Southeast Europe Energy Forum in Thessaloniki on September 6, a day ahead of the opening of this year’s Thessaloniki International Fair.

Hatzidakis and the US Ambassador to Greece, Geoffrey R. Pyatt, will be key speakers at the forum, where speeches will also be delivered by the energy ministers of Bulgaria, Cyprus, Israel, North Macedonia, Romania and Serbia.

Besides the prospective gas pipeline from Greece to North Macedonia, the talks between Hatzidakis and his North Macedonian peer will also focus on an upgrade of the electricity grid interconnection linking the systems of the two countries, as well as an upcoming relaunch of the Okta oil pipeline, stretching from an ELPE (Hellenic Petroleum) facility in Thessaloniki to the company’s Okta refinery and storage facility in North Macedonia.

The gas pipeline is the most important project of the three as an interconnection of the Greek and North Macedonian gas systems does not exist.

The Greek-Bulgarian IGB gas interconnection, along with TAP, to carry Azeri natural gas through northern Greece, Albania and across the Adriatic Sea to central Europe via Italy, are Greece’s two most significant international energy projects.

They promise to further diversify Europe’s energy sources and weaken Russia’s dominance in the region.

Meanwhile, Russia is promoting its own energy and geopolitical interests in the region. Last month, Greece was excluded from Turkish Stream, a Russian-Turkish gas pipeline plan whose second segment is now planned to run through Bulgaria, not Greece.

The first segment of this gas pipeline project is planned to supply Russian natural gas to the Turkish market and the second to Europe’s south and southeast.

 

New effort for East Med agreement at Athens energy summit

Greek gas utility DEPA and Italian energy giant Edison, collaborating on a plan to develop the East Med pipeline, envisioned to link the Greek, Cypriot and Israeli natural gas systems, are looking to take a crucial technical step ahead of construction.

Their YAFA Poseidon joint venture – spearheading the ambitious project, a 1,900-km pipeline stretch with an investment cost of between 6 and 7 billion euros – is gearing up for the launch of FEED (Front-End Engineering Design), environmental and detailed underwater research studies.

The European Commission has approved 34.5 million euros from the EU’s Connecting Europe Facility (CEF), a funding instrument, for these studies. The CEF amount will cover half the cost of the aforementioned preliminary studies, which will push the plan ahead to a mature stage.

The pipeline project is planned to carry southeast Mediterranean natural gas, primarily deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan”, along a route stretching from Israel to Europe.

An agreement between Greece, Cyprus, Israel and Italy, where the pipeline is planned to conclude, is still needed.

East Med plans have been at a standstill ever since the current Italian government announced it was stalling the project.

According to sources, the Greek, Cypriot and Israeli energy ministers will seek to restart procedures and also send out a message of encouragement to the Italian government when they meet at an Athens energy summit tomorrow. US Assistant Secretary Francis Fannon will also participate.

East Med, still at a theoretical stage, promises geostrategic might for Greece, Cyprus and Israel, as well as the USA, on southeast Mediterranean energy matters, especially against Turkey’s opposition to hydrocarbon exploration within Cyprus’ Exclusive Economic Zone (EEZ).

The pipeline plan also promises to break Russia’s dominance of gas supply to the EU.

 

 

Greek-Cypriot-Israeli energy summit highlights US interest

Washington’s supportive interest in the energy partnership between Greece, Cyprus and Israel has grown, driven by the prospect of hydrocarbon exploration in the southeast Mediterranean region as well as the East Med natural gas pipeline, planned to carry Cypriot, Israeli and, possibly, Egyptian natural gas to the EU via Greece and Italy.

Highlighting this interest, an upcoming Athens energy summit, scheduled to take place on August 6 and 7, comes as a US initiative, energypress sources informed.

It will follow a meeting just days ago, at the East Med Gas Forum in Egypt, that brought together Greek energy minister Costis Hatzidakis with his Cypriot and Israeli peers, Giorgos Lakkotrypis and Yuval Steinitz, respectively. In addition, Greek Prime Minister Kyriakos Mitsotakis recently met with Cypriot leader Nicos Anastasiades.

US Assistant Secretary Francis Fannon, head of the Bureau of Energy Sources, will also take part in the Athens energy summit. Fannon is scheduled to meet with Hatzidakis, Greece’s energy minister, and the country’s deputy foreign minister Konstantinos Fragogiannis on the eve of the event.

The summit highlights the US-fostered partnership between Greece, Cyprus and Israel, united against escalating Turkish tension concerning offshore hydrocarbon exploration plans within Cyprus’ Exclusive Economic Zone (EEZ).

The event’s participants are also expected to discuss the East Med pipeline. An agreement between the three countries and Italy remains pending. Last spring, Italian Prime Minister Giuseppe Conte claimed he sees no benefits for Italy in the project, effectively bringing the country’s effort in the matter to a standstill.

Washington openly supports this natural gas pipeline as it promises to establish an alternative supply route to Europe that would restrict Moscow’s energy dominance on the continent, through Gazprom.

Sideline efforts are being made to alter Italy’s negative stance, sources informed. A message could be projected to Rome through the imminent Athens event.

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

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.

Ministry, DG Comp talks on PPC sale terms not over yet

Negotiations between the energy ministry and the European Commission’s Directorate-General for Competition for an agreement on the revised terms of the main power utility PPC’s follow-up effort to sell lignite units will continue this week but are not expected to exceed it as a crucial Eurogroup meeting of eurozone finance ministers is scheduled for next Monday, March 11.

PPC’s lignite disinvestment is a pending bailout requirement. It is one of the key commitments for the release, by the country’s lenders, of a one-billion euro tranche.

Throughout the previous week, the talks between the energy ministry and the DG Comp were said to be nearing a deal. The fundamentals of the new sale’s revised terms, to feature improved conditions for investors following the initial effort’s failure, have been set but participation details concerning new entrants still need to be clarified, sources explained.

“The main objective of the two sides is to resolve whatever pending issues remain in a way that will maximize the sale’s chances of success this time around,” one source informed.

PPC is also making a committed effort for a successful follow-up sale. Last week, the utility’s chief executive Manolis Panagiotakis provided the European Commission with a letter listing a series of factors he sees as crucial to the disinvestment’s success.

Panagiotakis drew attention to an EU law limiting investment activity of non-EU investors, which he views as an obstacle for the sale. Russian, Chinese and American players of repute are interested in the PPC sale, according to the PPC boss, currently in Beijing for talks with Chinese firms.

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

Gas utility DEPA and US energy exporter Cheniere have reached an advanced stage in negotiations for a long-term LNG supply agreement that could result in a five-year deal, according to sources.

A 150,000-cubic meter spot-market purchase made by DEPA from the Texas-based company towards the end of last year kindled the current negotiations for a longer-term agreement between the two sides, energypress sources informed.

The US has made clear its interest to establish Greece as a gateway for American LNG into Balkan markets. The US Ambassador to Greece, Geoffrey R. Pyatt, has often made reference to the prospect.

A supply agreement between DEPA and Cheniere would further diversify the Greek gas utility’s sources, currently dominated by Russian natural gas and LNG from Algeria.

DEPA has reserved a one-billion cubic meter capacity through the TAP route as of 2020, when the new gas pipeline carrying natural gas from Azerbaijan is expected to begin operating. The prospect should enable DEPA to offer domestic-market customers more competitive prices and further penetrate Balkan markets, via the IGB Greek-Bulgarian pipeline, to connect with TAP.

The ongoing DEPA-Cheniere talks have not swept Algeria’s Sonatrach out of the picture, sources stressed. DEPA’s current supply agreement with Sonatrach expires in 2020 and the two sides are already discussing a renewal.

DEPA agreements with Cheniere and Sonatrach, combined with Azerbaijani gas supply through TAP, promise to place the Greek gas utility in a more favorable position opposite Russia’s Gazprom, its main supplier.

IGI Poseidon gas pipeline prospects on PM’s Moscow visit agenda

The development prospects of an IGI Poseidon gas pipeline though Greece’s north and across the Adriatic Sea to Italy as a supply route for Russian gas to Europe, a plan opposed by the US, is expected to be on the agenda of a meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin scheduled for December 7 on Moscow.

The majority of license-related procedures needed by Greek gas utility DEPA and Italy’s Edison for the IGI Poseidon gas pipeline have been completed, the two European firms informed Russia’s Gazprom at a recent three-way meeting in Moscow.

The IGI Poseidon gas pipeline is envisaged to serve as an extension of Turkish Stream.

DEPA and Edison officials are confident a gas pipeline route through Greece, rather than Bulgaria, as suggested by Moscow on occasions, carries definite advantages.

The Greek-Italian pipeline is technically mature as 80 percent of studies have been completed, while license applications have been submitted to energy sector regulatory authorities and Brussels, DEPA and Edison officials informed during their Gazprom meeting.

However, as was made apparent at this three-way meeting, all sides remain concerned as to whether the European Commission will raise objections against the pipeline plan. Washington is pressuring EU member states to find alternative natural gas supply sources not involving Russia.

In Greece, US ambassador Geoffrey Pyatt is taking every opportunity to express America’s opposition to any further penetration by Gazprom of Greece’s energy sector.

Greek energy minister Giorgos Stathakis recently appeared hesitant on the prospect of a new pipeline to transmit Gazprom gas.

Much will depend on the outcome of an upcoming official US visit by Greece’s Alternate Minister of Foreign Affairs Giorgos Katrougalos between December 11 and 14. He will be joined by the energy ministry’s secretary general Mihalis Veriopoulos. DEPA and Edison will be waiting for political decisions concerning their Greek-Italian pipeline investment plan.

 

PM: Greece still working on Turkish Stream extension plan

Greece has not stopped working on the prospect of extending the Turkish Stream gas pipeline westward through northern Greek territory – for an Adriatic Sea crossing and gas supply to southern and central Europe – Prime Minister Alexis Tsipras noted during a speech delivered at the recent Thessaloniki Summit.

The Russian pipeline’s development all the way to Turkey’s European tip in the country’s northwest has been completed, thereby linking the gas systems of both nations, and will be marked by a ceremony today to be attended by Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan.

Its 15.75-billion cubic meter capacity is 50 percent bigger than the TAP project.

Turkish Stream constitutes an alternative route for Russia following EU objections and the eventual debacle, in 2014, of South Stream, another gas transmission project that was planned to reach Bulgaria. The follow-up Russian plan anticipates a westward stretch from Turkey’s European tip to the Greek border, followed by an Adriatic Sea crossing. Officials are contemplating combining the pipeline with the IGI project.

US reacts to Russian LNG in Boston, European shale battle rising

The delivery of Russian LNG to freezing Boston, a psychological blow for US authorities, has prompted American officials to highlight the country’s major shale gas and oil production prospects for 2018.

Pundits noted that Washington is finding it increasingly difficult to remind European countries such as the UK, Portugal and France, which have already purchased Russian LNG from the Yamal station in northern Siberia, that they cannot only use ecomomic criteria in their dealings with Russsia and, as a result, breach sanctions imposed on the country.

Walter Peeraer, president of TAP, the Trans Adriatic Pipeline project, whose development is now approaching completion, intervened by stressing the pipeline’s plans do not entail transmitting Gazprom gas, despite an interest expressed by the Russian giant to do so.

In preceding remarks, French and Dutch officials noted that incoming Russian LNG is not being used in their countries but, instead, was reloaded on tankers to be sold to other markets offering greater profit. These destinations were not specified.

According to Bloomberg, it is not certain whether the aforementioned Russian LNG shipment to Boston represents the order’s final destination. The order was shipped from the UK by French firm Engie.

Responding to this delivery, the US International Information Adminstration, which has spearheaded the wider American reaction, declared that US oil production is expected to reach an average of 10.3 million barrels per day in 2018, a 970,000 bpd increase compared to 2017. Such a performance would easily surpass the previous US record of 9.6 million bpd, set in 1970 under the Nixon administration. American shale oil production is expected to reach 11 million bpd in 2019.

The major US oil production level forecast for 2018 promises to undermine efforts by OPEC and Russia to reduce oil production by 1.8 million bpd in an effort to boost prices levels.

Last night, the price of Brent crude reached 69.24 dollars a barrel in New York, its highest level since 2014.

The International Information Adminstration believes Brent prices, which averaged 54 dollars a barrel in 2017, will reach an average of 60 dollars a barrel in 2018 and 61 dollars a barrel in 2019.

Though American shale oil and gas prospects appear rosy, the cross-Atlantic prospects in the UK are far less promising. Efforts made by petroleum firms to convince the UK government and public of the need to exploit shale gas deposits, which could offer energy supply to Great Britain for the next 25 years, continue to face major obstacles.

The Scottish government has already banned fracking as a means of extracting shale gas while the UK public’s environmental concerns are particularly acute.

Ineos, the petrochemicals group headed by Jim Ratcliffe, is preparing to file a legal case against the Scottish government for abuse of ministerial power. Further south, in central England, companies such as Cuadriilla, Third Energy and IGas Energy, are preparing to launch campaigns in 2018 with the aim of convincing the UK public that shale gas extraction is not environmentally hazardous.

‘Turkish Stream’ supported if in line with EU law, minister says

Greece will support a Russian energy investment plan concerning “Turkish Stream”, a natural gas pipeline plan that would transmit Russian gas to Europe via Turkey, Greece – it is dubbed “Greek Stream” for its Greek segment – and Italy, as long as the plan complies with EU law, energy minister Giorgos Stathakis appears to have told his Russian counterpart, Alexander Novak, at a meeting on the sidelines of Russian Energy Week 2017, an ongoing conference in Moscow and St Petersburg.

Acknowledging the Russian project’s significance, Stathakis discussed its next steps with Novak and relayed the Greek government’s support through the development and incorporation of IGI Poseidon pipeline, an older plan envisaged to transport Russian natural gas from Greece to southern Italy via a submarine Adriatic Sea crossing. IGI Poseidon is fully licensed for development.

The Greek energy minister reportedly underlined that, ultimately, it would be up to Brussels to decide on whether the pipeline plan can proceed.

 

 

Italy persisting with Poseidon plan despite US objections

Despite US concerns, Italy, citing the support of Brussels, is persisting with a plan aiming for the development of the IGI Poseidon pipeline, an older plan envisaged to transport Russian natural gas through Greece to southern Italy via a submarine Adriatic Sea crossing. This project would also incorporate Greek Stream, a pipeline option planned to run from the Greek-Turkish border. It is also referred to as Turkish Stream for its Turkish segment.

Highlighting Italy’s interest, the IGI Poseidon pipeline was included in a Greek-Italian declaration of cooperation signed yesterday between Prime Minister Alexis Tsipras and his Italian counterpart Paolo Gentiloni at a meeting on Corfu.

Italy, which has reached a series of agreements in recent times in support of the Poseidon pipeline – beginning with a memorandum of understanding signed in March between Eni and Gazprom for Russian gas supply via the Southern Corridor – contends that the project will not increase Russian gas supply to Europe. The objective, Italian officials support, is to relocate the delivery point of Russian natural gas from Italy’s north, via Austria, to the country’s south, seen as a lower-cost route.

The US may not favor this Russia-linked option but Italian officials are adamant as they believe that the TAP pipeline – currently being constructed to transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe via Greece’s north, Albania and across the Adriatic Sea to Italy – cannot satisfy Italy’s energy needs, both in terms of quantity and cost. In addition, the submarine IGI Poseidon plan is already fully licensed from the past.

Just days ago, the US Ambassador to Greece, Geoffrey R. Pyatt, speaking at a conference in Alexandroupoli, northeastern Greece, criticized Russia for increased meddling in the Balkans. The US is increasingly viewing Greece as crucial in its effort to counter Moscow’s dominance in southeast Europe.

 

Greece crucial in west’s effort to limit Russian energy influence

The US is increasingly viewing Greece as a platform capable of supporting American energy interests in the wider region, a development that would stifle Russia’s current energy-related dominance. This outlook ultimately upgrades Greece’s geostrategic role in the region.

This American perception of the wider region was made clear yet again yesterday by the US Ambassador to Greece, Geoffrey R. Pyatt, during a speech delivered at the “1st Oil & Gas Forum” in Alexandroupoli, northeastern Greece. The event was organized by the American-Hellenic Chamber of Commerce.

Signs of growing intervention by Russia in the domestic affairs of Balkan countries have prompted US officials to increase their monitoring of the region.

Closer ties being established between Balkan countries and the west, combined with the development of energy projects supporting western interests, promise to reduce the Balkan region’s energy dependence on Moscow, currently as high as 90 percent.

Pyatt, during yesterday’s energy conference in Alexandroupoli, noted that an attempt made last year to prevent Montenegro from becoming a NATO member – the accession process was completed just months ago, in June – was propelled by Russian concerns over Russia’s  potential loss of influence in energy regions. This remark reiterated a recent comment made on the issue by US Vice President Mike Pence.

Montenegro is now a NATO member, the new Fyrom (Former Yugoslav Republic of Macedonia) government appears to be distancing itself from the previous administration’s pro-Russian position, while Albania, Bosnia, Kosovo and Serbia all find themselves at different stages along the EU accession course.

Energy projects of western interests, which, once completed, promise to reduce the region’s reliance on Russia, are now in full progress. Many of these projects carry Greek dimensions.

One of these, the TAP natural gas pipeline, to pass through Greece’s north, Albania and the Adriatic Sea across to Italy, promises to reform energy security in southeast Europe, Pyatt, the US Ambassador to Greece, told yesterday’s energy conference.

Pyatt expressed concerns over delays holding back the development of the IGB Greek-Bulgarian gas grid interconnection and extolled the roles to be played by a prospective FSRU in Alexandroupoli and extension of the existing LNG facility on Revythoussa, an islet just off Athens.

 

Russian tycoon behind license bid for Greece-Fyrom gas link

A recent license application submitted to Greek authorities by Windows International, discreetly placed behind various interests, for a propective interconnection project planned to link the Greek and Fyrom (Former Yugoslav Republic of Macedonia) natural gas networks, a key part of the government’s intention to establish Greece as an energy hub, has raised eyebrows and questions.

Windows International does not have a past in Greece’s energy sector. Interestingly, following research, it was determined that Alexander Lebedev, a Russian businessman referred to as one of the Russian oligarchs, is behind the initiative.

Windows International submitted a request to RAE, the Regulatory Authority for Energy, late in March for a 50-year license concerning the Greek-Fyrom gas network interconnection, planned to offer an annual capacity of 1.5 bcm and cover roughly 50 kilometers within Greek territory.

DESFA, Greece’s natural gas grid operator, recently signed an MOU with MER, its Fyrom counterpart, for the construction of a 160-km gas pipeline linking northern Greece with Stip in Fyrom. This project would provide Fyrom with direct access to Greece’s existing LNG terminal on the islet Revythoussa, just of Athens, and could also be linked with other projects, including the TAP pipeline.

The interest expressed by Windows International is believed to be linked to this plan. According to sources, the Greek Prime Minister’s office had been informed of Western International’s interest before the company submitted its license bid to RAE.

The application was submitted by Windows International Hellas SA, a subsidiary of Windows International, based in Luxembourg, RAE has informed.

The company’s Greek subsidiary is an unknown entity, while, surprisingly, obtaining information on its parent company proved difficult. The parent company does not maintain a company website. Besides its Luxembourg address, little other information is on record.

However, deeper exploration showed that Christian Tailleur, a member of the Ordre des Experts-Comtables (OEC), a professional organization of chartered accountants who possesses an extensive banking and investment past, and Toni Baev, the executive director at Balkan Utilities, active in Balkan energy-sector ventures, are both listed as Windows International representatives on the EU Transparency Register.

Furthermore, Tailleur is the head representative in Luxembourg for Cyprus’s Totalserve, active in specialized accounting, finance and other related services. Totalserve and Windows International share the same Luxembourg address. Totalserve also maintains an office in Athens.

Returning to Lebedev, the Russian tycoon, his corporate base is in London, where he publishes The London Evening Standard and The Independent newspapers. In 1995, Lebedev took over Russia’s then-troubled National Reserve Bank (NRB), which, under his leadership, was not only saved but grew.

Through NRB, Lebedev maintains a big energy-sector portfolio that includes a major stake in Russian electricity company RAO and Gazprom interests.

 

Last winter’s OPEC production cutback falling short of objectives

It may be too soon to measure the impact on the international crude market of an OPEC decision reached last winter to cut back on output, but current indications suggest the move’s objectives are not been reached.

OPEC, backed by Russia, decided to lower output with the objective of diminishing increased international crude reserves and offering support to oil price levels. The OPEC initiative also had another strategic objective in mind, to maintain long-term control for the cartel, or, more specifically, Saudi Arabia, over the international market, now subject to changing forces.

Several months on, output has been restricted by 1.2 million bpd and oil reserves have been reduced at a slower-than-expected rate, as higher prices ended up prompting the US to reinforce its output.

Two days ago, the Brent index stood slightly above 50 dollars, the level it was at on November 29, 2016, a day before the OPEC agreement was signed. Yesterday, the Brent index fell to just under 50 dollars.

Latest data has shown a rise in the number of oil drilling projects being conducted in the US. This is not good news for Riyadh, especially given the support being provided by the USA’s newly elected Republican administration, already moving to dismantle environmental restrictions as a means of boosting American output.

OPEC members are scheduled to meet next month to decide on whether to extend the cartel’s current output cutback, a six-month agreement. Analysts confidently forecast a renewal of the deal as, otherwise, oil prices could collapse.

From a wider perspective, the overall market conditions of recent times have served Saudi Arabia’s interests well. Low oil prices of the past two years or so have restricted international oil industry investments in new production to historic lows.

Even so, Riyadh cannot draw any conclusions for a few more years. Saudi Arabia needs a further boost amid a changing environment in which the role and impact of OPEC in the international oil market has clearly changed. Long-term prospects suggest the cartel will need to try and salvage whatever it can from a glorious past.

 

 

Trump’s stance could reshape Europe’s foreign and energy policies

The election of Donald Trump to the US presidency may bring about changes to Europe’s energy and foreign policies if the new American leader insists on pursuing a path leading to isolationism and warmer ties with Russia.

As for the Russian part of the equation, speculation of Trump’s close personal and business associations with the Kremlin has become widely known. The disclosure of Russia’s alleged intervention in the US elections, the objective being to push Trump to power, has stunned the political landscape worldwide.

If these developments are transformed into foreign policy then major shifts in balances of power can be expected in regions such as Eastern Europe, the Middle East and central Asia.

Trump’s ongoing disparagement of NATO is not an encouraging sign for countries of the former eastern bloc. They view Russia with hesitancy and need allies, Ukraine being an obvious example.

A change of energy market roles for Russia and Ukraine would severely impact Europe’s energy policy. For many years now, Ukraine’s extensive pipeline network has been used by Russia to transmit its natural gas to Europe. However, as a result of troubled relations between Moscow and Kiev, the Kremlin has sought strategic independence from Ukraine over the past decade or so. Russia has been promoting the development of new gas supply lines to Europe such as Nord Stream 1 and 2, South Stream and Turkish Stream, all of which bypass Ukraine.

Russian wants to establish itself as a gas supplier to Europe via a seamless network, which would enable the country to increase its supply and control both networks and the market.

The European Commission claims it wants reduce its Russian energy dependence, despite the fact that consumption has increased, as highlighted by market data for 2016.

Brussels essentially does not want Russia to develop new pipelines as it fears Europe’s influence on energy issues will diminish. Another European fear is that Ukraine will be completely abandoned to Russian intentions. Ukraine’s pipeline network is its most powerful bargaining tool opposite Russia. If Trump insists on a pro-Russia policy, prompting a US-Ukraine split, then Europe will be Ukraine’s only remaining ally.

 

 

 

 

 

Greece must back US in Europe’s energy battle, ambassador tells

Greece will need to pursue its energy policies in accordance with American regional priorities and interests or else be viewed as a rival force, the Barack Obama-nominated US ambassador to Greece Geoffrey R. Pyatt noted yesterday at a local industry event, the Athens Energy Forum. The US and Russia are currently maneuvering natural gas supply control in Europe.

Though expressing support for Greece’s aspiration to become a regional energy hub, as indicated by his firm backing for the development of projects such as the TAP and IGB pipelines, as well a floating LNG unit in Alexandroupoli, northeastern Greece, all of which will help boost non-Russian gas supply, including American, to Europe, Pyatt made clear the US’s opposition to the development of the ITGI pipeline, planned to transmit Russian natural gas to Europe via Greece and Italy.

The ITGI project is being discreetly supported by the Greek government, DEPA, the Public Gas Corporation, and Edison, along with Russia’s Gazprom.

Pyatt also reminded, in a less direct fashion, that the US possesses a number of alternatives to get its LNG to European markets. He made reference to a new LNG terminal in Lithuania, one of the gateways available to the US, along with Turkey – as highlighted by a recent LNG delivery to the country by US LNG trader Cheniere – and Poland, receiving strong US support for a major LNG terminal.

Greece will need American support to develop its LNG terminal plan in Alexandroupoli, part of the strategy that would help transform the country into a regional energy hub.

Not surprisingly, the US ambassador devoted a significant part of his speech at yesterday’s Athens conference to explaining why America believes Russia’s natural gas transmission plans for Europe should not be reinforced by third parties.

Pyatt made numerous references to the EU’s intention to end its heavy reliance on Russian natural gas, noting that this represents a golden opportunity for the US to ship in LNG tankers to the continent. Despite the high expectations, the results have been subdued so far.

Gazprom has already made a move to reserve TAP capacity as part of its natural gas transmission plans to Europe. This initiative has been met with cautious optimism, and, in some cases, approval by TAP consortium members. The Russian energy giant’s initiative has, as expected, provoked a negative US reaction.

 

 

 

Trump challenges OPEC in bid for US energy independence

Two opposing forces are currently impacting the global oil market but offsetting each other’s impact to maintain prices at slightly over 52 dollars per barrel.

On the one hand, an agreement between OPEC members to curb output is being successfully implemented as 1.5 million barrels are already being withdrawn on a daily basis. The agreement’s objective is to reduce production by 1.8 million barrels per day. If fully implemented, the agreement will lead to a global oil production reduction of around 2 percent. On the other hand, the just-inaugurated President Donald Trump’s energy policy promotes increased US shale oil output as a means of ending the US’s dependence on OPEC for energy.

Trump’s “An America First Energy Plan”, just published on the White House website, promises to support a shale oil and gas revolution, which, besides offering energy independence, would boost energy sector employment. According to the plan, the US, sitting on oil and gas reserves worth 50 trillion dollars, will utilize this potential.

Trump’s plan for US energy independence is widely regarded as being overambitious. US production will need to replace current imports amounting to three million barrels per day.

The new US president’s energy plans are not new. A previous Republican administration had sought to reduce US oil imports from the Middle East by 75 percent by 2025. OPEC reacted, crucial geopolitical balances were placed at risk, and the plan ultimately failed. A rift between USA and OPEC in the current era is made even more complicated by the need for a partnership to combat terrorism.

In recent weeks, US production has increased by 40,000 barrels per day. If US output continues rising, it will end up offsetting the market impact of OPEC’s policy to curb production. Prices will begin dropping again.

These contravening policies could lead to new war for greater oil market shares. If US output continues to increase, OPEC members could reconsider their decision to limit production and begin pumping out more, which would prompt price reductions.

Analysts forecast a stabilization of prices at a level of between 50 and 60 dollars as the likeliest scenario.

Russian energy minister Alexander Novak yesterday reiterated his support for Trump’s energy policy, noting that Moscow is satisfied by the Trump administration’s elevation of energy matters as a top priority. Novak expressed hope that the US and Russia will soon meet again at the negotiating table.

Gazprom a prime European gas factor, including for DESFA sale

It has become clear that virtually no gas transmission developments in Europe, including the collapsed effort to privatize Greece’s natural gas grid operator DESFA, can be assessed without factoring in the role of Russian energy giant Gazprom.

All companies linked to the DESFA sale ordeal – the candidate buyers Azerbaijan’s Socar and Italy’s Snam, as well as Belgium’s Fluxys, an early candidate whose interest waned before apparently rebounding more recently – are associated with the Southern Corridor, Gazprom’s natural gas supply plan for the European market’s south.

Gazprom is promoting the prospects of “Turkish Stream” and making plans for an additional route, via Greece, for natural gas supply to the EU. The Russian company is making careful and decisive moves to establish agreements for the first route through Turkey and is also engaged in talks with the European Commission for the route’s extension through Greece.

The significance of today’s three-way meeting in Moscow between Gazprom, Edison and DEPA, Greece’s Public Gas Corporation, for talks on the pipeline route through Greece, not long after the DESFA sale’s collapse, cannot be overlooked.

The three sides had signed a Memorandum of Understaning in Rome last Ferbruary and could now sign a more specific agreement featuring greater commitments for the Southern Corridor plan. This project would carry Russian natural gas through the Black Sea, Greece and Italy and would utilize work already carried out by DEPA and Edison as part of the sidelined ITGI Poseidon project.

DEPA and Edison had originally established Poseidon as a joint venture in the previous decade to develop the ITGI pipeline, planned to carry Azeri natural gas from Turkey to Greece and then Italy, via a submarine crossing through the Adriatic Sea. However, the the plan was abandoned after Azerbaijan opted to develop the TAP (Trans-Adriatic Pipeline) project instead for this purpose.

Following the recent collapse of the DESFA sale, Socar rushed to announce that the development would not affect its involvement in the TAP project. The Azeri firm holds a 20 percent stake in the TAP consortium. Socar has not ruled out the possibility of expressing renewed interest in DESFA once a new sale attempt is launched.

Ties between Gazprom and Socar are highly complicated. On the one hand, they are the prime players in rival gas pipeline plans, while, on the other, the two are linked by high-level associations concerning Russian government officials and Socar’s president as well as exchange. Gazprom, for exchaneg, supplies gas to Socar with the aim of bolstering the latter’s cash reserves to avoid technical problems that interrupt Russian gas flow.

Europe taking precautionary measures to avoid cold winter

The European Commission is taking precautionary measures to avoid any natural gas supply issues this winter, expected to be particularly cold.

Last week, Maros Sefcovic, the European Commission vice president responsible for Energy Union, met in Moscow with Russia’s energy minister Alexander Novak. The two officials decided to hold a follow-up meeting, with Ukraine represented, to focus on natural gas and its transportation to Europe.

Sefcovic has stressed that Russia and EU depend on each other when it comes to energy matters. “The EU is a basic export destination for Russian fuels and payments are made on time with hard currency,” Sefcovic pointed out. “The EU wants to continue buying Russian natural gas in the future,” he added.

Just days ago, on November 24, the EU and Ukraine signed a ten-year memorandum of cooperation for a strategic energy alliance, which reinforces an agreement reached between the two sides in 2005.

Greece finds itself at the core of the wider region’s energy developments. Various scanarios being contemplated and discussed include Greek territory or activity by the country’s borders.

The Southern Corridor and LNG supply are high-priority items on the US agenda for the southeast European region. Studies have shown that LNG transportation will eventually overshadow gas pipelines, internationally, in terms of importance. The US is seeking the lion’s share of the LNG transportation market. US President-elect Donald Trump has promised to place emphasis on US exports.

The natural gas market was also a key matter during a recent meeting in Athens between Greek Prime Minister Alexis Tsipras and US President Barack Obama. Subjects covered by the two leaders included the TAP, IGB and Alexandroupoli LNG terminal, as well as deposits in the eastern Mediterranean.

PPC eyeing ‘partnerships, deals in Russia, Turkey, Middle East’

The main power utility PPC’s international aspirations were highlighted during a speech delivered today by the utility’s CEO, Manolis Panagiotakis, at a Greek-Russian energy conference in Athens.

Panagiotakis, while addressing various European and international developments, pointed out that they stand as challenges of strategic dimension for PPC and “need to be confronted positively and creatively” so that the utlility can make swift achievements in areas where it has failed over many years.

Commenting on the domestic electricity market, PPC’s chief executive stressed that maintenance of a significant proportion of lignite-fired electricity production is necessary for supply security and protection against any international oil price increases.

On the utility’s international presence, the CEO said PPC is seeking partnerships with both local and foreign enterprises, including Russian firms.

He pointed out that PPC’s international aspirations stretch beyond the EU. Neighboring Turkey, whose market is experiencing rapid growth, is a key aspect in this expansion plan, Panagiotakis noted. He added that Iran, a country where opportunities are currently being sought by the utility, as well as Middle East countries are also being looked at for market opportunities.

The conference was held within the framework of the 4th Greek-Russian Social Forum, which, in turn, is part of the wider “2016 – Year of Greek-Russian Friendship” series of events.