Greek, Italian PMs to reiterate call for EU price cap on wholesale gas

The leaders of Greece and Italy will once again call for an EU-wide cap on wholesale gas prices, this time as an even more urgent measure given Russia’s latest gas-supply cuts to Europe, at a summit of EU leaders beginning today.

However, it remains unclear if Greek prime minister Kyriakos Mitsotakis and his Italian counterpart Mario Draghi can convince fellow EU member state leaders to join them for a wider European front favoring the cap.

The two leaders will not be entering the summit talks with high expectations as their cause has not been included on the summit’s agenda of topics to be discussed. Even so, the cap issue is expected to be discussed tomorrow, given the latest surge in energy prices.

The Greek and Italian leaders are expected to highlight the alarming rise of natural gas over the past ten days, up 50 percent, as well as yesterday’s dire warning by Fatih Birol, executive director of the International Energy Agency, telling Europe to prepare for a full disruption of Russian natural gas.

Mitsotakis, the Greek leader, had also called for a cap on wholesale gas prices in March.

Authorities in Italy, one of Europe’s most dependent countries on Russian energy sources, have announced that they are examining an emergency plan, including electricity and gas use restrictions for households, businesses and industry, if Gazprom does not resume regular gas supply to the country, cut by half just days ago.

Slovakia has also reported receiving less than half of the usual volumes. France has informed it had received no Russian gas from Germany since mid-June, but the country is getting supplies from elsewhere.

Bulgaria, Denmark, Finland, the Netherlands and Poland have already had their Russian gas deliveries suspended after refusing a demand to pay in Russian roubles.

 

Emergency measures for supply security through 2023

The government is rushing to approve a series of emergency measures aiming to protect energy supply security through 2023 following Russia’s latest reduction of natural gas to Europe.

Last Friday, Russia halved its natural gas deliveries to Italy and Slovakia and cut off France after previously disrupting all natural gas flow to Bulgaria, Denmark, Finland, the Netherlands and Poland.

An energy ministry draft bill carrying the emergency measures was submitted to parliament late last Friday night.

It includes articles for the installation of a floating storage unit at the LNG terminal on Revythoussa, the islet just off Athens; extended operation of power stations on Crete, until December 31, 2023; as well as mobilization of power stations on islands interconnected with the mainland as back-up facilities.

Further support funds sought, higher energy prices feared

The government is frantically searching for additional funds to keep supporting its energy subsidies program, fearing a further reduction in Russian gas and oil supplies to Europe in autumn and even higher fuel, natural gas and electricity prices.

Athens’ current support package for households and businesses, worth 3.2 billion euros, of which 1.1 billion has been drawn from the budget, will not suffice should energy prices continue rising.

The government is looking to make the most of all available European funding programs, such as the National Strategic Reference Framework (NSRF), the Recovery and Resilience Facility (RRF), and REPowerEU, the recent plan established by the European Commission to end the EU’s reliance on Russian fossil fuels.

Athens is examining whether support from these sources, combined with national budget money, would be enough to offer consumers ongoing protection from further energy price rises.

According to a worst-case scenario, the country’s overall electricity cost this year will reach between 14 and 15 billion euros, triple the pre-crisis and war level of 5 billion euros.

Also, every 10 euro rise in the price of natural gas decreases Greece’s GDP by 500 to 600 million euros and requires 300 to 400 billion euros in budget money for offsetting consequent electricity price increases.

RAE delivers grid emergency action plan, listing 16 dangers

RAE, the Regulatory Authority for Energy, has forwarded, for consultation, an emergency action plan for Greece’s electricity sector, listing a total of 16 possible danger scenarios, two of which, a disruption of Russian natural gas supply and cyberattacks at crucial energy infrastructure, are regarded as highly probable and intolerable.

The aforementioned dangers, along with natural disasters, such as extreme weather conditions, would prompt extended outages, putting lives at risk and resulting in a leakage of information crucial for national security, according to the action plan, which RAE prepared with support from power grid operator IPTO.

Other dangers included in this list include equipment failure, floods, heat waves, snow storms, forest fires and human error.

The action plan’s proposed responses, to avoid grid collapse or even destruction, include load reductions, pumped storage station and electricity export disruptions, activation of reserve solutions and consumption-reduction mechanisms, and, as a last resort, electricity supply disruptions for businesses and households.

PPC awaits Brussels energy strategy to decide on Ptolemaida V

Power utility PPC will wait for the European Commission’s finalized decisions on a strategic plan intended to end the EU’s reliance on Russian fossil fuels before it decides on the operating and conversion details of its prospective Ptolemaida V power station in northern Greece, to be launched as a lignite-fired facility before being converted to natural gas.

The PPC board is now expected to decide on Ptolemaida V’s conversion date towards the end of this year, according to sources.

Ptolemaida V, expected to undergo a trial run in the second half of the year before being launched late in the year or early in 2023, will be introduced as Greece’s last lignite-fired power station.

Early in April, prime minister Kyriakos Mitsotakis announced extensions to withdrawal dates for older lignite-fired power stations that were originally headed for closure prior to 2025. At the time, the prime minister also informed that Ptolemaida V could now operate as a lignite-fired unit until 2028.

Revisions to the country’s decarbonization plan have been prompted by energy security concerns following Russia’s invasion of Ukraine and the exacerbation of the preceding energy crisis as a result of this war.

The Greek government has decided to increase lignite mining output as a safety measure should Russia interrupt its natural gas supply.

A year ago, PPC had announced it intended to convert Ptolemaida V into a natural gas-fired facility as of 2025, but the latest energy security concerns froze this plan.

 

Shipping sector developing offshore wind farm interest

The shipping industry, domestic and foreign, is expressing growing investment interest for offshore wind farms and is awaiting the emerging sector’s regulatory framework to develop such projects in Greek sea territory, energypress sources have informed.

Though plans are still nascent, a considerable number of shipping companies and shipowners are already in talks with consultants for related feasibility studies.

Conditions for shipping industry players are favorable. Their earnings have skyrocketed amid abnormal market conditions, worldwide, ever since the outbreak of the pandemic in early 2020. These higher earnings have generated additional capital for investment, prompting shipowners to consider the potential of offshore wind farms.

Anticipating strong growth in this emerging sector, metals production group Viohalco plans to proceed with an investment estimated to be worth 70 and 100 million euros, which, through subsidiary Cenergy Holdings, will merge the knowhow of group members Hellenic Cables and Corinth Pipeworks for the establishment of the world’s first industrialized unit for floating wind turbines.

Norway’s Equinor, the world’s biggest developer of offshore wind farms, has already expressed interest to develop projects in Greece, proposing an area between the Cyclades islands of Tinos, Syros and Mykonos.

In addition, TERNA Energy has reached an agreement with Ocean Winds, a partnership between EDP Renewables and Engie, for co-development of offshore wind farms offering a 1.5-GW capacity. Also, Mytilineos has reached an agreement with Denmark’s Copenhagen Offshore Partners. Hellenic Petroleum (ELPE) is currently engaged in talks with a major foreign company and Motor Oil has signed an agreement with Abu Dhabi Future Energy Company (Masdar).

Power utility PPC is currently involved in talks with at least five foreign companies, including Australia’s Macquarie, which recently acquired a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, Greece’s distribution network operator. PPC is also believed to be in talks with American fund Quadum.

The Copelouzos group has joined forces with RF Energy to establish Aegean Offshore Wind Farms, a company planning to develop offshore parks offering an 850-MW capacity.

Greek shipowners own 5,514 ships, controlling 32 percent of the world’s tankers, 25 percent of bulk carriers and 22 percent of LNG carriers, the latter category being crucial for Europe’s effort to end its reliance on Russian natural gas.

 

Israeli power grid operator officials in Athens for grid link

The energy ministry and power grid operator IPTO seem determined to press ahead with two major grid interconnection projects, one to link Greece with Cyprus and Israel, the other Greece and Egypt, REPowerEU, Europe’s strategic plan aiming to end the continent’s reliance on Russian fossil fuels through energy-source diversification, being the driving force behind this action.

IPTO, according to sources, is just about ready to forward a proposal for participation in EuroAsia Interconnector, a consortium established for the development of the Israel-Cyprus-Greece grid interconnection.

Highlighting the activity concerning the project, officials of Israel’s power grid operator are in Athens for talks today with IPTO’s chief executive Manos Manousakis and other company officials.

The Israeli officials will also take part in an ensuing meeting with Greek energy minister Kostas Skrekas.

Israeli interest in the grid interconnection has grown following the European Commission’s decision to make available 657 million euros for the project’s Cyprus-Greece section.

The Israel-Cyprus-Greece grid interconnection will facilitate RES development in Israel, promising to contribute to the EU-27 aim for an end of Europe’s reliance on Russian fossil fuels.

The grid link, to measure 1,208 kilometers and offer a 1-GW capacity, will also end Cyprus’ energy isolation and offer energy security to Israel.

It is budgeted at 2.5 billion euros with completion slated for the end of 2025, if procedures go according to plan.

Manousakis, the IPTO chief executive, plans to visit Cairo during June for talks with officials at Egypt’s power grid operator, EETC. Progress on the prospective Greek-Egyptian grid link has been smooth. The two sides are now preparing for a feasibility study.

Skrekas, the energy minister, is expected to be in Egypt sooner, to take part in the East Med Gas Forum, scheduled for June 14 and 15. He is expected to meet with Egyptian energy ministry officials on the sidelines of this event, for talks on the Greek-Egyptian grid link.

This project, based on a proposal from the Copelouzos group, entails a subsea cable from Egypt to the Greek capital.

It is budgeted at 3.5 billion euros and will offer a 3-GW capacity for renewable energy, which will also be exported to other EU member states through grid interconnections linking Greece with neighboring countries.

NECP officials at odds over future gas role in Greece

Local authorities are at odds over the role of natural gas in the country’s National Energy and Climate Plan, to be revised, as well as on the decarbonization road map for the coming decades.

A second session just held by an energy ministry working group assembled for the NECP revisions has revealed contrasting views on the future plans for natural gas in Greece, energypress sources have informed.

One side of the working group’s members wants an end to the expansion of natural gas in Greece and containment of investments for new natural gas infrastructure, especially networks.

At the other end, a second group of officials supports that Europe’s intention to end the continent’s reliance on Russian natural gas highlights the need for diversification of energy sources in Greece, as the country’s system is designed based on the assumption of Russia being a key supplier of natural gas.

This group also noted that Greece, based on the new European energy plan, stands to become a main gateway for natural gas to the wider region and, as a result, is favorably positioned for related gas infrastructure investments worth 10 billion euros, through the REPowerEU plan, prompted by Russia’s invasion of Ukraine.

 

Greece envisioned as gas supply solution in Europe, Balkans

Greece is seen as a natural gas supply solution by Balkan and European countries, a Regional Task Force meeting in Sofia, staged within the framework of the EU Energy Platform –  formed to help establish common natural gas and hydrogen markets – has made apparent.

The Sofia meetings agenda focused on the search of natural gas supply solutions given an anticipated demand increase in Europe, including the continent’s southeast, Mihalis Thomadakis, Director of Strategy and Management at gas grid operator DESFA, who participated in the Sofia meeting, has told an ensuing industry event, Athens Energy Dialogues.

He was a member of the Greek delegation in Sofia led by Nektaria Karakatsani, an energy ministry expert on energy policy matters.

Delegations representing Ukraine, Bulgaria, Romania, Croatia and Moldova also took part at the Regional Task Force meeting in Sofia.

Thomadakis, the DESFA official, underlined that gas network upgrades need to be developed as quickly as possible in order to meet new needs emerging.

Besides the EU Energy Platform, established in April as part of Europe’s plan for a swift end to its reliance on Russian natural gas, the European Commission, in collaboration with the International Energy Agency, has also formed the Technical Support Instrument, a project already involving seventeen EU member states, for the same purpose.

The TSI project is promoting energy source diversification and transmission, biomethane production, international hydrogen trade, roof-mounted solar energy installations, energy efficiency measures, swifter RES licensing procedures, innovative hydrogen solutions, as well as RES projects for the industrial sector.

 

Key energy infrastructure included in new recovery fund

The government, intending to make the most of its favourable geographic location for diversified natural gas supply in the wider region, plans to seek EU funding support, through the REPowerEU package, for a series of natural gas and electricity grid projects awaiting development.

These projects are planned to be included in the country’s revised EU Recovery and Resilience Facility, to be submitted to by the government to the European Commission by early July.

The investments will aim to end Greece’s reliance on Russian energy sources by 2027, as planned by the REPowerEU package.

Besides the addition of natural gas infrastructure, absent from Greece’s existing recovery plan as a result of the European Commission’s unfavorable view on funding support for projects concerning natural gas, seen as a transitional energy source towards zero emissions, the country’s revised plan will also seek to incorporate electricity transmission projects that will contribute to the reinforcement of renewable energy sources in Europe’s energy mix.

The government is believed to have already prepared its catalogue of electricity and natural gas infrastructure project proposals to seek funding through the REPowerEU initiative.

An electricity grid interconnection project to link the Greek and Egyptian systems and transmit green energy, exclusively, to Greece and the EU has been included in the Greek catalogue, sources informed.

An additional central gas pipeline, to run 650 km from Komotini, northeastern Greece, to Elefsina’s Patima area, west of Athens, has also been included in the Greek catalogue, following a request by DESFA, the gas grid operator.

REPowerEU details unveiled, RES acceleration a key aspect

The European Commission has unveiled details of its REPowerEU plan, a road map intended to eliminate Europe’s reliance on Russian energy sources.

Brussels’ road map will aim to eliminate Russian gas, oil and coal imports into the EU by 2027. The renewable energy sector is planned to play a key role in this effort. The European Commission has increased the RES sector’s energy-mix target to 45 percent, up from 40 percent, by 2030 and will seek to accelerate RES investments.

Solar energy utilization will be a pivotal factor of this strategy, to be promoted through the European Solar Rooftop Initiative, part of the REPowerEU plan.

The wider plan will push for an energy savings increase of 13 percent by 2030, up from the present objective aiming for a 9 percent increase in savings.

The European Commission estimates investments totaling 210 billion euros will need to be made by 2027, as an addition to the previous Fit for 55 plan, which set a target for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

Russian gas payments by Greek companies due next few days

Greek companies that have imported Russian natural gas supplied by Gazprom and face installment payment deadlines expiring between May 20 and 25 are expected to accept Moscow’s ruble-currency demands as part of a wider EU approach that still remains unclear.

Even so, the European Commission, appearing set to revise EU directives concerning payment procedures by member states for Russian gas, is believed to be adjusting to Moscow’s ruble-currency demands.

Greek companies that have imported Russian gas believe the dispute will soon be resolved and are awaiting EU directives and related signals from the Greek government before proceeding with installment payments, sources informed.

The Greek government and the country’s energy players are continuing to observe emergency plans as energy supply security remains a threat as long as Russia’s war on Ukraine continues.

 

 

LNG order costs fall as much as 40% below TTF prices

The cost of LNG orders placed in recent days has fallen 10 to 40 percent below levels at the Dutch TTF exchange, driven lower by fine weather around Europe and subdued demand in Asia as a result of lockdown restrictions imposed over the past two months by authorities in China, insisting on a zero-Covid policy.

LNG price levels are also lower at the TTF exchange, easing to levels between 93.5 and 94 euros per MWh, the lowest since February.

Market pressure has also eased as a decision by Ukraine to disrupt a pipeline supplying Russian gas to Europe has had less negative impact than initially feared.

Ukraine’s decision, believed to have been taken to pressure the West for stricter sanctions against Russia, prompted Russia’s Gazprom to find a bypass solution through alternative routes to the EU.

These developments could lead to a significant reduction in wholesale electricity prices as a result of less price pressure faced by electricity producers.

The duration of China’s lockdown will greatly shape LNG market developments. For the time being, LNG orders that had been intended for China are being redirected to Europe.

Though supply to Asia has fallen considerably from high levels recorded just months ago, LNG demand typically increases in China, Japan and South Korea during summer.

 

ELPE, Motor Oil decide to cut Russian oil imports

Greece’s two refineries, Hellenic Petroleum (ELPE) and Motor Oil, are moving ahead with plans to replace Russian crude oil imports with orders from alternative sources.

Both energy groups have planned ahead of the EU’s proposal for a ban of all oil imports from Russia by the end of this year, company officials have informed. Reduced reliance on Russian oil imports has been a part of their strategies, whose implementation began last year, the officials added.

Neither energy group has been overexposed to Russian oil imports. Motor Oil’s Russian oil imports, over the years, have represented between 5 to 7 percent of its total oil imports, while ELPE’s Russian oil imports in 2021 reached 18 percent of the group’s total, according to its annual results.

Motor Oil’s deputy managing director Petros Tzannetakis informed a teleconference with analysts last month that the energy group had cut Russian oil imports in the fourth quarter last year.

ELPE’s leadership, which had joined a business delegation accompanying Greek Prime Minister Kyriakos Mitsotakis on a recent official visit to Saudi Arabia, reached an agreement with Aramco for bigger crude oil purchases, presumably to replace Russian oil.

Energy ministry officials in Sofia for EU’s first regional energy platform

A first regional taskforce for cooperation between EU member states on energy matters, as part of the EU’s Energy Purchase Platform, is scheduled to meet in Sofia tomorrow, as announced earlier this week by European Commissioner for Energy Kadri Simson.

The regional taskforce will concentrate on the year ahead and provide specific regional expertise and know-how to develop and implement the REPowerEU action plan to reduce dependency on Russian fossil fuels, fill storage ahead of next winter and further accelerate the decarbonization of the energy sector.

This meeting comes following Russia’s recent decision to disrupt natural gas supply to Bulgaria as well as Poland.

The Bulgarian government has also organized a coinciding meeting of regional ministers. Greece’s energy minister Kostas Skrekas (photo) and the ministry’s secretary-general Alexandra Sdoukou will participate.

The two Greek government officials will be visiting Sofia on the heels of yesterday’s official launch of work on the Alexandroupoli FSRU, an LNG terminal project intended to diversify the energy sources of Greece and the wider region. Yesterday’s official ceremony was attended by heads of state representing Greece, Bulgaria, North Macedonia and Serbia.

During their visit to Sofia, the Greek energy ministry’s two officials are also expected to take part in a bilateral meeting with Bulgarian energy minister Alexander Nikolov.

This session’s agenda will examine the progress of the IGB gas pipeline, set to be completed and launched in July, and an electricity grid interconnection upgrade between the two countries, whose completion is expected by the end of this year.

The IGB gas pipeline, promising to contribute to the EU’s effort for drastically reduced dependency on Russian energy sources, will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

 

 

Unclear EU stance on Moscow’s ruble payment demand for gas

The European Commission appears to be deliberately maintaining an unclear stance on Moscow’s demand for natural gas supply payments in the ruble currency, an in-between position that presently enables European companies to abide by Russian President Vladimir Putin’s related decree without breaching EU sanctions imposed on Russia.

Yesterday’s EU council meeting of energy ministers for a common European stance on Russia’s ruble-currency payment demand for Gazprom natural gas failed to produce an agreement, instead maintaining the ambiguity that has hovered in recent weeks.

European Commissioner for Energy Kadri Simson reiterated that payments for Russian natural gas in the ruble currency would represent a violation of European sanctions on Russia, and, as a result would not be accepted. However, she did not offer specific advice on how European companies should make their payments for Russian natural gas when the next round of payments are due. Simson ascertained that clearer directions would soon be issued, without specifying when.

Italian minister for Ecological Transition Roberto Cingolani has allegedly supported that European companies must be given the ability, at least temporarily, to conform to Russia’s payment demands, according to a Politico report.

However, the Italian government has denied that Rome is preparing to make ruble-currency gas payments to Russia, describing the Politico reports as misleading.

 

 

 

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

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

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

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

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

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

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

 

 

 

 

Athens awaiting EU outcome for Gazprom payment stance

The Greek government’s stance regarding Moscow’s demands for ruble-currency payments to Gazprom for natural gas supply will depend on decisions to be taken by fellow EU members, government officials have told energypress.

Athens is expected to push for greater clarity on the matter and a common European stance on the issue at an emergency meeting of EU energy ministers called by the French EU presidency for next Monday.

An imminent payment expected to be made by German company Uniper will be pivotal in decisions to be made by EU member states on Moscow’s ruble-currency payment demand for Russian gas supply.

According to German media, Uniper intends to make a euro-currency payment to Gazprom, but, rather than make the payment to a European bank, as the company has done until now, it will instead transfer the related amount to Russia’s Gazprombank, not on the sanctions list.

As has been widely reported, Russian president Vladimir Putin has ordered countries deemed as adversaries to make gas payments through a specific procedure involving two Gazprombank accounts, a foreign-currency account and a ruble-currency account. Gazprombank will convert foreign-currency sums to rubles before transferring the resulting amounts to parent company Gazprom.

Alexandroupoli FSRU project development launch on May 3

Development of the Alexandroupoli FSRU, in Greece’s northeast, a project promising to boost energy security and widen energy source diversification in Greece and the wider Balkan region, is scheduled to officially commence on May 3.

The Alexandroupoli FSRU, to be developed and operated by Gastrade, a project-specific consortium established by the Copelouzos group, has become particularly crucial given the energy market challenges faced by the EU following Russia’s invasion of Ukraine and the ongoing war.

The Alexandroupoli FSRU promises to initially offer a new gas transmission corridor to Greece and Bulgaria, and, at a latter stage, to Romania and North Macedonia, helping all these countries reduce their reliance on Russian natural gas.

Completion of the project’s second stage, expected in 2024, promises to double the unit’s capacity and enable natural gas transportation as far as Ukraine.

The Gastrade consortium is comprised of five partners, founding member Elmina Copelouzos of the Copelouzos group, Gaslog Cyprus Investments Ltd, DEPA Commercial, Bulgartransgaz, and DESFA, Greece’s gas grid operator, each holding 20 percent stakes.

All five partners have agreed to offer 2 percent each so that North Macedonia can enter the consortium with a 10 percent stake.

Prime Minister Kyriakos Mitsotakis and his Bulgarian counterpart Kiril Petkov will attend next week’s ceremony marking the start of work on the project.

All eyes on Germany’s ruble payment stance for Russian gas

Greece and the entire EU are waiting to see if Germany will agree to Russia’s demand for Gazprom gas supply payments in the ruble currency.

Berlin’s next payment to Russia’s state-controlled Gazprom is due tomorrow. To date, Chancellor German chancellor Olaf Scholz has refused to bow to Moscow’s recent payment-term demands.

The decision to be reached by Germany on this dispute with Moscow is expected to serve as a guide for most EU members.

Berlin has officially noted that Russian president Vladimir Putin’s payment demand violates the terms of an agreement signed between the two sides.

Besides creating artificial demand and, subsequently, greater value for the ruble, which has been impacted by sanctions on Russia, Moscow’s demand for natural gas payments in its currency is also seen as a Russian show of strength aiming to force the EU to succumb to Russian demands.

The EU’s refusal, so far, to bow to Russia’s ruble-currency pressure for natural gas payments has contributed to keeping gas prices at high levels.

Greek officials who took part in an energy-security meeting yesterday, called by Prime Minister Kyriakos Mitsotakis, reportedly stated that the EU made a mistake to reject Russia’s ruble payment demand, made in late March.

The ongoing political tension and market turbulence, resulting in higher natural gas prices, is benefitting Russia’s gas revenues.

 

PM calls emergency meeting after Russia gas cut to Bulgaria

Prime Minister Kyriakos Mitsotakis will hold an emergency meeting this afternoon at the government headquarters with the energy ministry leadership’s participation following Russia’s decision yesterday to disrupt gas supply to Bulgaria, following a disruption to Poland.

The Greek leader had a telephone discussion with his Bulgarian counterpart Kiril Petkov this morning, pledging Greek energy-supply support, within the framework of EU solidarity, following Russia’s decision to disrupt supply to the neighboring Balkan country.

This support will most likely stem from Greece’s LNG terminal at Revythoussa, the islet just off Athens, through a partial reservation of this facility’s capacity for Bulgaria’s needs.

Consumption in Bulgarian at this time of the year is low, meaning supply through the Revythoussa unit should help cover the neighboring country’s needs, at least temporarily.

Bulgarian-based MET Energy has already ordered a 142,500 m3 LNG shipment through the Revythoussa terminal.

Talks in progress for Italy’s East Med gas pipeline entry

Talks are in progress for Italy’s official entry into the East Med gas pipeline project, a prospective 2,000-km pipeline planned to carry natural gas to Europe via Greece, Cyprus, Israel and Italy, energypress sources have informed.

Greece, Cyprus and Israel signed an agreement for the project’s development in 2020, without Italy’s participation, as the country’s government at the time, citing environmental issues, had reacted against the project reaching its shores.

Italy’s current Prime Minister, Mario Draghi, recently stressed that the East Med gas pipeline needs to be pursued as a result of Russia’s invasion of Ukraine.

The project has now gained political support in Italy, through a resolution issued in parliament urging the government to co-sign the transboundary agreement, energypress sources informed.

Italy has revised its stance on the East Med project as a result of a recent EU-27 decision to drastically reduce Europe’s reliance on Russian natural gas.

Italy could officially announce, in May, its intention to co-sign the East Med agreement, sources informed.

Lignite extraction boosted as part of emergency plan

Power utility PPC has boosted its lignite mining output by an additional 5,000 to 6,000 tons a day for its Meliti and Agios Dimitrios power stations in northern Greece and by an extra 7,000 to 8,000 tons a day for its Megalopoli power station in the Peloponnese, in response to Prime Minister Kyriakos Mitsotakis’ call, early in April, for increased lignite reserves should Russia disrupt its natural gas supply to Europe.

The objective is to increase lignite extraction by 45 to 50 percent over a two-year period for reserves amounting to more than 15 million tons, up from the present quantity of 10.5 million tons, which would enable lignite-fired production to reach 6.5 TWh annually, up from 4.5 TWh projected in the current energy plan.

The majority of PPC’s seven lignite-fired power stations will need to be temporarily withdrawn if increased lignite quantities are to be accumulated at the yards of these power stations.

Of the country’s seven lignite-fired power stations, just one, Agios Dimitrios IV, is scheduled to operate today.

The additional 2 TWh of electricity generation that could be produced annually as a result of this initiative would still not suffice if Russia were to stop supplying natural gas to Europe.

Greece’s annual electricity consumption is estimated at 55 TWh. Last year, natural gas-fueled electricity generation covered 20 TWh of the country’s overall electricity demand, with 40 percent of the natural gas used supplied by Russia.

This means Russia’s natural gas was responsible for 8 TWh of Greece’s electricity generation last year. The Greek plan for an additional 2 TWh in generation through greater lignite production would only cover 25 percent of electricity currently produced using Russian natural gas.

Additional LNG shipments, accelerated development of RES projects, and an energy-saving policy for households, businesses and industry will also be needed to cover the gap.

Gov’t plan aims for electricity prices at first-half ’21 average

The government will pursue a strategic target aiming to reduce retail electricity prices to the average level recorded in the first half of 2021, through the implementation of a price ceiling in the wholesale electricity market and state compensation packages for electricity producers covering the price difference.

However, it remains unclear how this ambitious measure, worth at least 4 billion euros amid the current conditions, will be financed.

The government’s plan will be carried out in coordination with any proposals that may be announced by the European Commission.

Announcements, by the Greek government, are not expected before May 18, when Brussels could deliver energy-crisis proposals for member states.

The price of natural gas in coming weeks, an unknown factor, adds risk to the government’s support plan. Gas prices could further escalate if Russian president Vladimir Putin decides to disrupt supply; if Russia’s war in Ukraine intensifies; or if any other unfavorable factor comes into play.

At present, a best-case scenario would result in a price tag of at least 4 billion euros for the Greek government’s strategic plan to reduce electricity prices.

Three different financing sources could be considered: the Energy Transition Fund, currently financing monthly energy subsidies; a 900 million-euro surplus from a supplementary budget submitted to parliament a fortnight ago; and Recovery and Resilience Facility (RRF) money.

 

 

ExxonMobil, like Total, seems disinterested in Cretan blocks

American multinational oil and gas corporation ExxonMobil appears likely to follow the way of France’s TotalEnergies towards a possible withdrawal from two offshore blocks, west and southwest of Crete. The two companies each hold 40 percent stakes in these offshore licenses, Greece’s ELPE maintaining the other 20 percent.

Indications of a reduction in interest by the two corporations run contrary to  growing interest expressed by Greek officials for domestic exploration as a result of the EU’s decision to drastically reduce Europe’s reliance on Russian natural gas.

EDEY, the Greek Hydrocarbon Management Company, recently forwarded letters to these upstream companies, informing them of the Greek government’s intentions for a renewed, more ambitious hydrocarbon strategy.

EDEY officials declined to comment on the retreats by ExxonMobil and TotalEnergies but noted that a new round of talks for upstream investments is beginning. Other corporations are interested in Greece’s upstream sector, EDEY officials informed.

EDEY is determined to keep a tight schedule and secure seismic surveys at the two Cretan offshore areas this coming autumn and in spring, 2023.

Government in frantic search of €3-4bn for crisis measures

The government is frantically searching for solutions that would secure between 3 to 4 billion euros to compensate energy companies for planned price ceilings on wholesale energy prices.

Energy market conditions are adverse across the board. Consumers are struggling to meet costlier energy-bill payments, energy market companies and authorities fear an increase in unpaid receivables and its wider effects, while the government, seeing its approval rating fall by between half and one percentage point a month, is hoping for a European solution to the energy crisis, now exacerbated by Russia’s war on Ukraine.

A European solution to the energy crisis does not seem anywhere near. French president Emmanuel Macron is currently stranded by the French elections, while German chancellor Olaf Scholz appears undecided. For the time being, at least, the Greek government will need to seek a solution through the national budget.

Russian president Vladimir Putin is under no pressure to end his war on Ukraine and stop his energy-sector blackmailing of the EU as long as European energy payments for Russian gas, oil and coal, totaling 600 million dollars a day, keep flowing into Russia.

At this stage, Greek Prime Minister Kyriakos Mitsotakis’ proposal for a price ceiling at the TTF gas exchange appears to be the only promising solution, as this would strike at the root of the problem prompting exorbitant electricity prices around Europe.

Sanctions on Russia boost Greece’s upstream prospects

The EU’s revised natural gas strategy, seeking alternative solutions as a result of sanctions imposed on Russia, has created favorable conditions for Greece’s upstream sector as the Greek market could become a destination for upstream companies operating in Russia and now needing to shift.

EDEY, the Greek Hydrocarbon Management Company, has forwarded letters to upstream companies already maintaining interests in Greece, informing them of the government’s intentions for a renewed, more ambitious hydrocarbon strategy.

EDEY also intends to hold meetings with these upstream companies to determine their levels of interest in the Greek market and shape its actions accordingly.

Total and ExxonMobil maintain hydrocarbon interests in Greece as co-members of a consortium holding two offshore licenses, west and southwest Crete. The two companies each have 40 percent stakes in this consortium, Greece’s ELPE holding the other 20 percent.

The consortium, it is believed, aims to conduct seismic surveys next winter at the offshore Crete licenses, still at early exploratory stages.

Besides these two licenses, a further four licenses have been granted in Greece. Energean maintains an onshore block in the Ioannina area, northwestern Greece. The company also holds a 75 percent stake at Block 2, northwest of Corfu, with ELPE as its partner. Also, ELPE holds two offshore licenses in the west, Block 10 and Ionio.

These six licenses could generate total turnover of 250 billion euros by 2030, assuming a 20 percent success rate during exploration, according to a conservative forecast made by EDEY.

Solar, wind energy facility installation costs up over 30%

Solar and wind energy park installation costs have risen considerably, internationally, since early 2021, driven higher by the pandemic’s impact on the global economy, supply chain and labor,  unfavorable market developments now exacerbated by the impact of Russia’s ongoing war in Ukraine.

According to a new study conducted by LevelTen Energy, monitoring RES sector transactions worldwide, installation costs last year rose by 28.5 percent in North America and by 27.5 percent in Europe, and have continued rising this year, up 9.7 percent and 8.6 percent, respectively, taking the average RES installation cost to 57 euros per MWh.

These unfavorable developments have wiped out RES sector gains achieved over the past decade or so, during which RES installation costs have fallen.

Steel prices in Europe skyrocketed to 1,650 euros per ton in March, up from 1,100 euros per ton last October, and have since eased slightly to levels of around 1,400 euros per ton.

The increased RES costs come as a challenge to the EU’s objective for major RES growth as a means of achieving climate-change targets and drastically reducing Europe’s reliance on natural gas.

Despite these price increases, the cost of RES-based electricity generation still remains far lower than that of fossil fuel-generated electricity.

 

Egyptian grid operator team in Athens for Greek grid link talks

A team of highly ranked officials from the Egyptian Electricity Transmission Company (EETC), headed by president and CEO Sabah Mashali, is in Athens for two days of talks, beginning today, on the development of the Greek-Egyptian grid interconnection.

The EETC officials are scheduled to meet today with a team of Greek power grid operator IPTO officials, headed by president and CEO Manos Manousakis, for a discussion on technical details concerning the grid interconnection.

Tomorrow, the EETC team is scheduled to meet with Greece’s energy minister Kostas Skrekas as well as development and investment minister Adonis Georgiadis.

A first step for the project was taken last October when the Greek and Egyptian energy ministers signed a related Memorandum of Understanding. As part of the agreement, the power grid operators of both countries have assembled a working group to conduct necessary preliminary work.

The group’s responsibilities, according to the MoU, include technical coordination to ensure the grid interconnection’s compatibility; facilitating the project’s licensing matters; as well as providing support for the project’s classification as an EU Project of Common Interest, which would ensure EU funding support.

The Greek-Egyptian grid interconnection is planned to exclusively transmit green energy from Egypt to Greece as a means of increasing the energy-mix share of renewables in Greece and the wider region and also bolstering energy security in Europe, prioritized following Russia’s invasion of Ukraine.

Prime Minister Kyriakos Mitsotakis, during a recent meeting with European Commissioner for Energy Kadri Simson, stressed the importance of the Greek-Egyptian grid link, noting it should receive European backing.

 

Revythoussa FSU purchase advantageous over rental

The purchase of a floating storage unit (FSU) for installation at the Revythoussa islet LNG terminal just off Athens, to boost the unit’s capacity for the country’s protection against a further supply crisis, is financially advantageous compared to a one-year rental of an equivalent floating storage system, officials at gas grid operator DESFA, operating the terminal, have determined following their analysis of a related cost-benefit analysis.

The analysis, forwarded for consultation by RAE, the Regulatory Authority for Energy, last Friday, compares the costs of purchase and rent solutions over a five-year period.

Taking into account depreciation over the five-year period, the purchase of an FSU works out to be 48.4 million euros cheaper than a rental solution, DESFA officials have calculated.

An FSU rental for one year would cost a net amount of 110.6 million euros, whereas a purchase would cost 172.8 million euros, ultimately beneficial over a five-year period, according to the DESFA officials.

A capacity boost at the Revythoussa LNG terminal is seen as crucial in the effort to protect the country’s energy supply security should Russia disrupt its natural gas supply to Europe.

If Moscow does decide to cut supply to the continent, Greece, it is estimated, will need to order an additional 50 or so LNG shipments over the next 12 months.