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.

Greece, Cyprus, Israel look to push ahead with key projects

The prospective East Med gas pipeline and a subsea electricity grid interconnection, projects that would link Israel with Cyprus and Greece and which are being heavily promoted as a result of the EU’s new energy policy, aiming to end the continent’s reliance on Russian gas as soon as possible, are expected to dominate the agenda of today’s trilateral meeting in Jerusalem between the energy ministers of Greece, Cyprus and Israel.

Energy company representatives will, for the first time, also be participating in a trilateral meeting of energy ministers involving the three countries, highlighting the determination of all three countries, and the EU, for swift progress on projects and agreements that would contribute to greater energy diversification for Europe.

Greek energy minister Kostas Skrekas will be accompanied by Kostas Xifaras, chief executive of gas company DEPA Commercial; Mathios Rigas, CEO of upstream company Energean; and Manos Manousakis, CEO of Greek power grid operator IPTO.

Representatives of corresponding Cypriot and Israeli companies will also be taking part in today’s trilateral meeting.

Prospects for the development of the EuroAsia electricity grid link promising to connect the three countries have grown considerably as Israel appears to have swept aside previous reservations. Israel has wanted the completion of the Crete-Cyprus link as a prerequisite ahead of further development.

 

 

Revythoussa FSU 12-month rental or permanent solution

Greek authorities are making comparisons in preparation for a choice between an FSU one-year rental and a permanent floating storage unit at the Revythoussa LNG terminal as part of a plan to boost the country’s gas storage capacity ahead of next winter.

A decision for a capacity boost at the Revythoussa LNG terminal, with the addition of a fourth unit, has already been reached, highly ranked energy ministry officials have informed. A competitive procedure will be staged for the contract.

The option of renting an FSU for the Revythoussa LNG terminal, a facility operated by DESFA, the gas grid operator, would take approximately two months to complete, sources said.

This solution would make operations at the Revythoussa LNG terminal more flexible as it would enable unloading of two LNG orders simultaneously, instead of just one, as is the case at present.

A disruption of Russian gas supply to the EU would force all member states to try and secure additional LNG shipments.

The second alternative, entailing the installation of a permanent floating storage unit at the Revythoussa LNG terminal, would require more time to complete without offering any additional advantages, compared to the FSU rental, energy ministry officials noted.

Officials at RAE, the Regulatory Authority for Energy, are comparing market data such as domestic gas demand projections, and also considering Revythoussa’s prospects for a bigger role as a natural gas gateway for neighboring countries. Bulgaria and Romania are already using the Revythoussa terminal for LNG imports.

DESFA calls for doubled gas network capacity, PPPs

The country’s changing energy policy, especially following an EU decision aiming to drastically reduce Europe’s reliance on Russian natural gas, will require far greater gas transmission capabilities, inevitably prompting the need for a major network capacity boost, double the current capacity, with project participation from private-sector investors through public-private partnerships, DESFA, the gas grid operator, has informed RAE, the Regulatory Authority for Energy.

The EU’s energy policy, steering Europe towards energy-source diversification, promises to establish Greece as a southeastern transit country handling far bigger quantities than at present.

Speaking at the recent energypress Power & Gas Fourum, Michalis Thomadakis, DESFA’s Director of Strategy and Development Division, noted: “Certain projects need to be developed so that we can fully utilize the new role the Greek gas transmission system is being called upon to adopt in the wider region. This can only be done with investments. It basically means that the system’s capacity needs to be doubled.”

A disruption of Russian natural gas supply to Europe would create a need for approximately 40 bcm to the Balkan region. Much of this quantity would pass through Greek territory.

New infrastructure promising to greatly increase Greece’s LNG importing capacity is already in the making. Projects include the Alexandroupoli FSRU in the country’s northeast, the Dioryga Gas FSRU planned for the Korinthos region west of Athens, as well as an additional storage tank at Greece’s only existing LNG terminal on the islet Revythoussa, just off Athens.

Given these prospects, DESFA is currently looking to develop new pipelines and make network revisions that would facilitate greater quantities to other European markets.

 

 

Lignite re-emphasis temporary measure for security, PM says

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

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

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

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

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

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

Updated NECP raises RES capacity target to 25 GW by 2030

The updated National Energy and Climate Plan is expected to increase the country’s RES installation target for 2030 to 25 GW, up from the existing edition’s 18.9 GW.

The NECP’s greater ambition for increased RES installations and a bigger green-energy share of the country’s energy mix is based on the Fit for 55 agreement reached by the EU last April for a carbon emissions reduction of at least 55 percent by 2030, compared to 1990 levels, revised from the previous reduction target of 40 percent.

Given the latest developments concerning Russia’s war on Ukraine, the EU is now determined to achieve even faster RES development to greatly reduce its reliance on Russian gas imports long before 2030.

The Repower EU plan, recently designed for this purpose, is aiming for an average 20 percent increase in new green projects that would cut natural gas consumption by a further 3 bcm. The Repower EU plan has also raised green hydrogen targets.

Greece’s RES units operating in 2020 totaled 10.1 GW, a capacity that will need to be increased by a further 10 GW by 2030, if the Fit for 55 target is to be met. This ambitious target increases the urgency of the energy ministry’s plan for further RES project licensing simplification.

Network upgrades already planned more than cover the country’s ambitious green targets. Power grid operator IPTO estimates that planned transmission network upgrades will enable RES units with a total capacity of 28.5 GW to operate by 2030.

Ongoing war, new EU sanctions on Russia, spark price fears

The ongoing war in Ukraine, as well as a fifth round of EU sanctions against invading Russia, have prompted further energy-shortage fears that could drive natural gas and electricity prices even higher.

A growing number of consumers struggling to cover energy bills are resorting to installment-based payment arrangements, up 60 to 70 percent since the beginning of the year.

One major energy supplier received some 6,000 applications for installment-based payments in March, up from 4,500 in February.

Though the EU has found consensus on imposing sanctions against Russia, it has struggled to reach agreement on support measures for consumers and enterprises. A gap between the EU’s north and south continues to exist, each member state more or less left to seek solutions alone.

None of the south’s proposals, intended to ease the effects of the energy crisis, including a price ceiling on natural gas, and a detachment of gas prices from electricity prices, have yet to be adopted. Instead, decisions have been postponed until May. Decisions could ultimately be shaped by the degree of pressure felt by the north.

The EU’s fifth round of sanctions on Russia, announced yesterday, include a ban on coal imports from Russia, worth four billion euros annually; a total ban of banking transactions with four main Russian banks; as well as export bans for products required by Russia, such as semiconductors. The USA has also increased its pressure on Russia.

Wholesale electricity prices in Greece may be 30 percent lower than a peak of 427 euros per MWh registered in early March, but levels of between 280 and 330 euros per MWh registered in recent days are equivalent to those of November and December.

Even if the war were to end now, the good scenario for energy prices would still be bad. Natural gas prices would remain at levels of between 50 and 60 euros per MWh throughout 2022, compared to yesterday’s level of 106 euros per MWh, for a wholesale electricity price of 160 euros per MWh, up 160 percent compared to last year and 130 percent over 2019 levels.

As for the worst-case scenario, maintenance of natural gas price levels at the present level of 100 euros per MWh would result in wholesale electricity prices of 255 euros per MWh, meaning between 130 and 150 euros in monthly electricity bills for average households, not including subsidies.

 

EU’s Fit for 55 revisions to include reduced gas use

The European Commission is preparing to present, in May, details of its Repower EU program, a strategy aiming to greatly reduce Europe’s reliance on Russian energy. Until now, the plan has been limited to objectives, without specifics on how these targets could be achieved.

Further revisions of the EU’s energy and climate policy – as presented in the recent Fit for 55 package, which set a target of a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels – will be needed, through legislative revisions and directives.

The revisions could include greater tolerance for lignite and gas infrastructure, until recently treated strictly, as well as measures for an acceleration of RES and energy storage development.

As was pointed out at the recent energypress Power & Gas Forum by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, the EU’s energy policy, concurrently managing economic, energy security and environmental concerns, is now shifting towards greater emphasis on energy security as a result of Russia’s invasion of Ukraine and the move’s wider repercussions.

Even so, the Fit for 55 objectives for 2030 are expected to be maintained, while RES targets may be raised to more ambitious levels.

The EU will also look to reduce natural gas consumption for electricity generation and heating through the use of biomethane quantities in excess of 35 billion cubic meters by 2030, green hydrogen quantities of 20 million tons by 2030, as well as energy storage system development, noted Professor Kapros, one of the architects of the EU’s energy policy.

The EU’s Fit for 55 package had originally planned for 164 bcm of Russian gas imports in 2025 and 131 bcm for 2030, but these quantities are now expected to be greatly reduced to 74 bcm and 33 bcm, respectively.

Greece, Cyprus, Israel prepare to discuss East Med, power grid link

The East Med gas pipeline and a subsea electricity grid interconnection to link Israel with Greece and Cyprus, projects whose prospects have grown as a result of the EU’s new energy policy, aiming to end the continent’s reliance on Russian gas as soon as possible, are expected to dominate the agenda at an upcoming trilateral meeting between the energy ministers of Greece, Cyprus and Israel.

The session is planned to take place in a fortnight’s time or immediately following the Greek Easter period, culminating on April 24.

Italian Prime Minister Mario Draghi recently stressed that development of the East Med gas pipeline, a prospective 2,000-km pipeline planned to carry natural gas to Europe via Greece, Cyprus, Israel and Italy, needs to be pursued as a result of Russia’s invasion of Ukraine.

A consortium formed by Greek gas company DEPA and Italy’s Edison is continuing its studies on the East Med project plan.

As for the subsea electricity grid interconnection, Cyprus and Israel have pushed for its development to end their energy isolation. The European Commission has already approved funding worth 657 million euros for the prospective project’s section to run from Greece to Cyprus.

Greek prime minister Kyriakos Mitsotakis and energy minister Kostas Skrekas will be involved in two key meetings in Athens today, to focus on energy matters as a result of Russia’s war on Ukraine, with Israel’s alternate prime minister and foreign affairs minister Yair Lapid, as well as US under secretary of state for political affairs Victoria Nuland.

 

PPC capable of boosting lignite extraction by 43%, utility tells

Power utility PPC has the capacity to increase its lignite extraction to as much as 15 million tons annually, from 10.5 million tons at present, for a 43 percent increase to full-capacity lignite-fired generation, in the event of a Russian disruption of natural gas supply to Europe, according to an updated annual mining plan submitted by the utility to the energy ministry.

Even so, this increased production could still not be enough to fill the enormous gap that would be left by a Russian cut in natural gas supply.

The country’s lignite-fired electricity generation can increase to 6.5 TWh annually from the present plan of 4.5 TWh, according to the utility plan. However, PPC would need to hasten the development of a series of projects to boost productivity at its lignite mines and increase the amounts of lignite stocks at the yards of its seven lignite-fired power stations – five Agios Dimitrios units, as well as Meliti and Megalopoli.

The annual plan’s objective is to increase lignite stocks at each of the five Agios Dimitrios facilities to 1.75 million tons from 1.2 million, while also increasing the amount at Meliti to 300,000 tons from 220,000 tons this month, as well as the lignite stock at Megalopoli to 500,000 tons from 270,000 tons.

Prime Minister Kyriakos Mitsotakis is expected to comment on Greece’s lignite alternative, given the Russian threat, at the official launch, tomorrow, of a major-scale solar energy farm developed by Hellenic Petroleum ELPE at Livera, close to Kozani, northern Greece. Offering a 204-MW capacity, this facility is one of Europe’s biggest.

Emergency steps taken for FSU at Revythoussa LNG terminal

The energy ministry appears to be pushing ahead with an emergency plan for swift installation of a floating storage unit (FSU) at the country’s only existing LNG terminal, on the islet Revythoussa, just off Athens, for increased LNG storage capacity ahead of next winter, sources have informed energypress.

Gas grid operator DESFA, the Revythoussa facility’s operator, has already researched the market for an appropriate vessel, which will need to be equipped with modern technology and recently built.

The FSU to be moored at Revythoussa will need to offer an LNG storage capacity of between 130,000 and 140,000 cubic meters to satisfy the Greek market’s needs, the sources noted.

Under normal conditions, procedures concerning this specific project would take over 12 months to complete and enable installation, but authorities are now moving fast as a result of the extreme impact Russia’s war on Ukraine has had on the energy market.

DESFA will present a cost-benefit analysis to the energy ministry by this Wednesday, according to sources.

 

 

 

FSRU at LNG terminal, Italy storage, lignite use decided

Energy minister Kostas Skrekas has staged an emergency meeting with the country’s crisis management team to establish measures that would need to be implemented should Russia decide to disrupt its natural gas supply to Europe.

Gas grid operator DESFA will need to deliver a cost-benefit analysis to the ministry by tomorrow on a plan entailing the addition of an FSRU at the Revythoussa islet LNG terminal, just off Athens, as a capacity-boosting move.

In addition, the operator has until Tuesday to report back to the ministry on the progress of its talks with Italy’s SNAM aiming to reserve storage capacity at the neighboring country’s underground gas storage (UGS) facilities.

DESFA must also update its estimate on additional LNG shipments that would be required in Greece if Russia disrupts its natural gas supply to Europe.

Gas company DEPA Commercial, Greece’s biggest gas importer, is closely monitoring the availability of LNG shipments in international markets in order to secure additional shipments, if this is deemed necessary.

Furthermore, power utility PPC will forward, by Tuesday, to the energy ministry, its annual lignite extraction plan for continual operation of its available lignite-fired power stations.

 

 

 

 

Europe on edge, tested by Putin’s ruble payment demand

Tension in Europe has risen with signs of disorientation emerging over Russian president Vladimir Putin’s demand for ruble-currency payments to cover Russian natural gas supply.

German chancellor Olaf Scholz, according to Moscow, initially agreed on this payment term for Russian gas supply, but this was swiftly denied by the chancellery.

Italian prime minister Mario Draghi abruptly rejected Putin’s ruble-based payment plan for Russian gas supply, while Polish prime minister Mateusz Morawiecki has called on Europe to impose an embargo on Moscow and follow his country’s example by stopping all Russian energy imports until the end of the year.

Europe is on high alert. Reliance on Russian energy reaches as high as 80 percent in Austria. Germany’s dependence on Russian energy is also high, at 55 percent.

Both countries have taken steps for gas rationing over the payment stand-off with Russia, fearing, like all of Europe, a halt in energy deliveries from Russia because of the dispute over payments.

Robert Habeck, Germany’s federal minister for economic affairs and climate action, has called on citizens to use electricity as moderately as possible.

Should Putin take the dreaded step and cut energy supply to Europe, distribution of existing natural gas reserves, as well as supply from non-Russian sources, will need to be prioritized, with preference for hospitals, power stations and crucial industries, needed to avoid economic collapse.

If European governments are forced to announce a state of emergency, an electricity rationing plan will need to be implemented for all households. The UK was forced to adopt such an extreme measure, for fuel, during the oil crisis in 1973.

In Greece, a halt in Russian natural gas supply would stop economic activity in just a few days. The country’s daily gas consumption reaches approximately 200,000 MWh, of which 115,000 MWh is supplied by Russia.

Additional LNG shipments in April; the mooring of an FSRU at the Revythoussa islet LNG terminal, just off Athens, for a capacity increase; full-capacity generation at the country’s lignite-fired power stations; as well as an agreement with Italy to ensure storage capacity at the neighboring country’s gas storage facilities, for strategic reserves, are all necessary steps ahead of next winter.

It remains to be seen if Russia’s war on Ukraine will carry on into summer and require extreme measures, or end soon, to the relief of all.

The TTF gas exchange ended trade yesterday at 118 euros per MWh. Wholesale electricity prices in Greece today are at 222.38 euros per MWh.

In comments offered during yesterday’s opening day of the two-day Power & Gas Forum staged by energypress, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, estimated that natural gas prices, even if the war were to end now, will average between 50 and 70 euros per MWh this year.

 

 

 

War, energy crisis hastening plans for new LNG facilities

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

EU states without gas storage must use facilities of fellow members

EU member states without natural gas storage facilities, such as Greece, will be required to store gas quantities representing 15 percent of annual consumption at existing gas storage facilities maintained by fellow member states by November 1, the European Commission has just announced.

In the lead-up, Brussels had issued an order requiring all EU member states with gas storage facilities to fill these at 90 percent of full capacity by November 1, in preparation for next winter. The EU is now taking steps to drastically reduce its reliance on Russian gas.

Governments in respective member states are responsible for the achievement of this objective and can impose fines and sanctions, according to the announcement.

The European Commission has notified it will conduct inspections to determine whether intermediate storage-capacity goals have been achieved. Warnings will be issued if discrepancies are found to be over two percent, followed by related talks with the respective member states. Lack of action a month after these talks have taken place will result in decisions from the European Commission, which the member states in question will need to adopt.

 

South Kavala UGS tender’s final round not until early summer

The final round of privatization fund TAIPED’s tender for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north will not be held until early this summer following a latest deadline extension by RAE, the Regulatory Authority for Energy, on consultation regarding the facility’s business pricing framework, sources closely following the project’s developments have informed energypress.

Prior to this deadline extension, the overall procedure was delayed by several months as a result of a disagreement between RAE and gas grid operator DESFA over supplementary investments that would enable the country’s grid to cater to the needs of the UGS.

Consultation for UGS pricing framework proposals and other details, including DESFA’s ten-year development plan, was to expire on March 14, but RAE has offered participants an extension until March 30.

It is believed RAE’s text forwarded for consultation has been deemed far from satisfactory by prospective investors. If no changes are made, the tender could fail to produce a result, despite its long duration.

Such a prospect threatens to leave Greece as Europe’s only country without a single UGS for many years to come.

Elsewhere, EU member states are rushing to fill their UGS facilities ahead of next winter, following an order issued by the European Commission as part of a plan to drastically reduce Europe’s reliance on Russian gas.

The EU has a total of 170 UGS facilities, offering a total capacity of 4.2 trillion cubic metres. Germany tops the list with 60 facilities that represent 42 percent of the continent’s UGS capacity. France follows with 16 UGS facilities, Italy has 13 functional facilities and 7 under construction, while Romania has 8 UGS facilities and Bulgaria one.

 

 

Athens, Europe’s south hoping for brave crisis decisions

Athens, along with other EU administrations, especially in Europe’s south, will be hoping for a brave European response to the energy crisis’ exorbitant prices at this week’s summit of EU leaders, scheduled for March 24 and 25.

Prime Minister Kyriakos Mitsotakis has joined forces with his counterparts from Italy, Spain and Portugal ahead of this week’s summit. The four leaders are hoping action, rather than just good intentions, as expressed by Europe’s north during an unofficial meeting a fortnight ago, will be taken.

That session highlighted a lack of agreement on the issue of a Eurobond as a common solution to help consumers in Europe cope with extremely higher energy prices.

Some analysts believe long negotiations could be needed at the forthcoming summit, as was the case in 2020, when European leaders worked for five days to eventually approve the Recovery and Resilience Facility as a means of helping economies bounce back from the impact of the pandemic.

Other analysts fear US president Joe Biden’s participation in the concurrent EU-NATO conference will overshadow talks for energy market intervention, postponing needed action for a next session.

 

 

Revythoussa LNG terminal to acquire fourth storage facility

Gas grid operator DESFA is preparing to upgrade its Revythoussa LNG terminal on the islet close to Athens by adding a fourth LNG storage unit at the facility as a means of further reinforcing the country’s energy system for greater energy-crisis protection.

According to sources, the operator has finalized its decision on the plan, to be developed as a floating storage unit (FSU), or permanently moored LNG tanker.

The FSU’s storage capacity is planned to exceed 100,000 cubic meters, almost half the Revythoussa facility’s current 225,000 cubic-meter capacity offered by three existing LNG storage tanks installed on the islet.

Besides bolstering the Greek energy system, the Revythoussa LNG terminal upgrade also promises to create supply opportunities for Balkan markets.

In the event of a disruption of Russian gas to the Balkans, the Revythoussa LNG terminal, as it stands, could cover basic energy needs of the Bulgarian market. The Revythoussa LNG terminal is already supplying Bulgaria.

The terminal was last upgraded in 2018 with the construction of a third LNG tank, a 148 million-euro investment that has enabled transmission of gasified LNG quantities amounting to five billion cubic meters annually.

 

Nation’s power cost massive, even in best-case scenario

Worth 1.1 billion euros, the government’s triple-dimensioned support package designed to help consumers deal with exorbitant energy prices is not negligible. The big question at this stage is how many more times will such support need to be offered to consumers in 2022?

Energy price projections are frightening as Russia’s war on Ukraine enters its fourth week. The political world will need to intervene and set market rules, as noted by Greek Prime Minister Kyriakos Mitsotakis. Smaller EU member states with less fiscal leeway, such as Greece, face serious danger should the European Commission not intervene and offer a central European solution.

If the situation unfolds favorably and the war ends soon, wholesale electricity prices could average 100 euros per MWh in 2022, well below today’s level of 240.32 euros per MWh, but nearly double Greece’s pre-crisis wholesale electricity average of 55 euros per MWh.

At a wholesale electricity price average of 100 euros per MWh in 2022, the country’s annual electricity consumption, totaling 55 TWh, would cost 5.5 billion euros.

This figure is 2.2 billion euros more than the 3 billion euros, or so, for Greece’s pre-crisis annual electricity cost, resulting from a wholesale electricity average of 55 euros per MWh.

To put this additional 2.2 billion-euro amount for electricity into perspective, it is just below the 2.58 billion euros collected by the state in 2021 through ENFIA property tax.

Government now fully encouraging upstream activity

The Greek government is now fully encouraging foreign and domestic upstream companies to continue their hydrocarbon exploration activities at licenses held in the country for discovery and production of natural gas deposits.

In comments offered yesterday, Prime Minister Kyriakos Mitsotakis, while referring to the government’s latest energy-crisis support package for households and businesses, spoke of the country’s need to utilize its natural gas deposits as part of a national effort to achieve energy sufficiency.

Europe’s need to drastically reduce its reliance on Russian natural gas, as highlighted by the repercussions of Russia’s invasion of Ukraine, has prompted the Greek government to reassess its energy policy and, once again, turn to the country’s hydrocarbon potential.

The European Commission has prioritized swifter development of renewable energy sources in the EU, but cover will be needed from other energy sources during the transition, expected to last many years.

Brussels is now backing the further maintenance of European nuclear and coal-fired power stations, as well as extraction of oil and natural gas for a longer period.

Aris Stefatos, chief executive at EDEY, the Greek Hydrocarbon Management Company, has, on a number of occasions, estimated that Greece’s natural gas deposits could be worth 250 billion euros.

Brussels draft backs urgent gas storage refill for next winter

EU member state leaders are expected to back a European Commission draft calling for an immediate refill of gas storage facilities throughout the EU, in preparation for next winter, when they meet at a summit next week, scheduled for March 24 and 25.

“Refilling of gas storage across the Union should start now. Member States and the Commission will urgently coordinate measures necessary to ensure adequate levels of gas storage before the next winter”, notes a draft prepared for the imminent summit, Reuters has reported.

The European Commission will propose rules by next month requiring EU countries to collectively ensure gas stores are at least 90 percent full by October 1 each year. The EU’s current gas storage facilities are currently 26 percent full.

The European Commission plans to present, in May, a detailed roadmap to EU member states for a drastic reduction of Russian natural gas, oil and coal imports by 2027.

A preliminary plan announced last week includes measures such as an increase of LNG imports, as well as tripled wind and solar energy capacity, installed, in the EU by 2030.

 

 

Smaller, bigger solar energy investors face differing prospects

Smaller and major-scale solar energy investors face differing prospects amid RES investment opportunities offered by extremely higher wholesale electricity prices as these opportunities are being largely offset by higher equipment costs.

Sharply higher wholesale electricity prices have generated stronger investment opportunities for bigger RES investors, while, for smaller players, these prospects are being dampened by higher RES equipment costs, severely diminishing their more modest profit margins.

Demand for solar panels has surged around Europe in recent times, pushing up prices. The cost of solar panel mounting systems has also risen as a result of recent sanctions imposed on Russian steel exports, which have driven steel prices higher.

Solar panel prices had begun falling early in 2022 following a period of pandemic-related increases, but are now rising again with no price de-escalation seen in the short term, RES sector officials have projected.

 

IGB nearing completion, Bulgarian PM to visit Komotini

The Greek-Bulgarian IGB gas pipeline, whose construction is expected to be completed by mid-April, promises to contribute to the EU’s effort for drastically reduced reliance on Russian gas.

The IGB gas pipeline, a 50-50 joint venture of the ICGB consortium, involving Greek-Italian company IGI Poseidon (DEPA and Edison) and Bulgaria’s BEH, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria and be linked with the TAP pipeline that runs across northern Greece for supply of Azerbaijaini gas to the region.

The IGB pipeline will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

Last week, EU officials announced a new energy strategy, Repower EU, aiming to reduce Russian gas imports to the continent by two-thirds. The establishment of alternative energy supply routes into Europe is now a priority on the Brussels agenda.

Bulgarian prime minister Kiril Petkov is scheduled to visit the IGB project contactor AVAX’s construction site in Komotini this Friday. His Greek counterpart Kyriakos Mitsotakis has been forced to miss the occasion after being sidelined by the Covid-19 virus. Energy minister Kostas Skrekas will fill in.

Electricity suppliers dread new round of unpaid receivables

A rising wave of overdue electricity bills, highlighted by a sharp rise in the number of applications lodged by consumers for installment-based payments, is generating anxiety in the energy market as consumers face steep energy cost increases and suppliers battle against tightened cashflows while fearing a reemergence of unpaid receivables.

Consumers are now feeling the accumulative effect of an energy crisis that has lasted seven months and deteriorated since Russia’s recent invasion of Ukraine.

Consumer applications for installment-based payments have risen by more than 200 percent since September, 2021, generating fears of a new round of unpaid receivables, which would have a wider impact on the energy market’s stability.

The extent of the problem will become clearer in April when electricity bills are issued for consumption in March, a month during which wholesale electricity prices have skyrocketed to levels of approximately 300 euros per MWh as Russia’s war on Ukraine rages.

Many energy consumers who have so far managed to remain punctual with their payments could struggle to meet risen energy costs, energy company officials have informed energypress.

Prior to the energy crisis, the country’s annual electricity consumption of 55 TWh cost a total of nearly 3 billion euros, based on an average wholesale electricity price of 50 euros per MWh, several times below the current level of roughly 300 euros per MWh. If sustained throughout 2022, this price level would result in a national electricity bill of nearly 14 billion euros for the year.

Strategic reserve procedure for PPC lignite units hastened

The energy ministry, driven by the EU’s decision to end its reliance on Russian natural gas as soon as possible, is striving to hasten procedures aiming for European Commission approval of a strategic reserve mechanism concerning power utility PPC’s lignite-fired power stations.

The ministry is now completing certain required studies and pending procedures in preparation for Athens’ official application to Brussels.

Even so, government officials remain adamant that Athens’ decision to end all lignite-based electricity generation by the end of 2028 does not need to change, and must not change, even though the EU now appears more tolerant towards the use of coal.

The government officials also believe that no revisions are needed for an even more ambitious lignite phase-out plan set by PPC, according to which all the utility’s lignite facilities will be withdrawn by 2023, except for a new unit, Ptolemaida V, planned to switch from lignite to natural gas in 2025.

Power grid operator IPTO plans to deliver an energy sufficiency study to the energy ministry within the next ten days, while the ministry may be ready to submit its package of prerequisites to Brussels by the end of the month.

This would pave the way for Athens to lodge an official application for a strategic reserve mechanism, as well as a capacity remuneration mechanism.