saudi arabia

Saudi Greek Interconnection study focused on Egypt route

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A feasibility study to be conducted by Saudi Greek Interconnection, an SPV established by Greek power grid operator IPTO and Saudi Arabia’s National Grid for a prospective electricity interconnection linking Greece and Saudi Arabia, is widely expected to be based on a longer route via Egyptian territory, bypassing Israel, as a result of frosty relations between Saudi Arabia and Israel that have not shown any signs of improvement for the foreseeable future.

Though a joint announcement released by IPTO and National Grid earlier this week makes no reference to the project’s route or transit countries to be included in the feasibility study, Israel’s exclusion from the plan has become a common secret.

Egypt’s inclusion as an alternative route to Israel makes the project more complex, but it remains feasible from a technical point of view, experts ascertain.

The project’s feasibility studies, expected to be completed in the first quarter of 2025, will be based on HVDC technology, considered ideal for long-distance grid interconnections.

HVDC technology, ensuring consistent power, voltage, and frequency, while enhancing grid stability efficiency, is being used for the Athens-Crete grid link.

It is still too early to make any estimates on the cost of the Saudi Greek Interconnection as the project’s capacity has yet to be specified.

This will depend on the volume of sales agreements Saudi Arabia can establish with end buyers in Europe for the country’s production of renewable energy. Saudi Arabia’s sunny weather conditions all year round promise great solar energy production potential at relatively low prices.

PPAs at levels of roughly 10.4 dollars per MWh, unheard of in the international solar energy market, were signed in Saudi Arabia just months ago, according to recent reports.

Saudi Arabia aims to establish itself as a major exporter of low-cost solar energy to Europe and achieve net zero emissions by 2060.

Greek PM’s India visit to once again raise IMEC corridor plan

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The war in Gaza may have stalled India’s ambitious project for a trade and energy corridor to the Middle East and, from there, to Europe, but the world’s most populous country has not stopped looking for trade routes to the West.

The prospect of Greece playing the role of European gateway for India, as geographically, Greece is the EU’s closest member state to India, is expected to be raised once more during meetings between Greek Prime Minister Kyriakos Mitsotakis and his Indian counterpart Narendra Modi in New Delhi this Wednesday and Thursday.

India’s PM had discussed the matter at a meeting with the Greek leader in Athens last August, and is expected to do so again, even though the plan’s prospects have weakened as the war in Gaza has changed the geopolitical balance and ruptured crucial Israel-Saudi relation without any signs of normalization in the foreseeable future.

Everything concerning the India-Middle East-Europe Economic Corridor (IMEC) will depend on the outcome in Gaza and the stance of Israel, refusing to discuss an independent Palestinian state, as Saudi Arabia is demanding in order to establish diplomatic relations with Israel.

India’s envisaged trade and energy corridor, a 4,800-km corridor planned to link the ports of Mumbai and Haifa, already controlled by Indian investors, remains on the table, but is at the mercy of geopolitical developments due to Gaza.

 

Further step taken for Greek-Saudi grid link, routing an issue

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Greek power grid operator IPTO and the National Grid Saudi Electricity Company have taken a further step for the development of an electrical interconnection linking Greece with Saudi Arabia by establishing a special purpose company.

The Greek-Saudi project, to stretch over 2,000 km, is planned to serve as a segment of a bigger corridor for transportation of renewable energy from the Middle East and Africa to central Europe.

As a next step, Saudi Arabian Greek Electrical Interconnection, the special purpose company just established by IPTO and National Grid, is expected to conduct environmental, technical and feasibility studies for a High Voltage Direct Current (HVDC) interconnection. However, a series of Greek and Saudi Arabian ministerial approvals are still needed.

The two sides had reached a preliminary agreement in Athens last autumn, following a visit to Greece in the summer of 2022 by Crown Prince Mohammed bin Salman Al Saud, Crown Prince of Saudi Arabia, for talks with Prime Minister Kyriakos Mitsotakis.

The formation of a special purpose company indicates that both sides are eager to push ahead with a Greek-Saudi electrical interconnection, despite fears that the Israel-Gaza war could lead to delays and revisions.

The Greek-Saudi interconnection’s eventual route, a crucial factor in the outcome of the project’s feasibility study, stands as a major challenge and will greatly depend on the condition of bilateral ties between Saudi Arabia and Israel.

Though this relationship appeared to be improving, the Hamas attack on Israel on October 7 and its resulting Israel-Gaza war has impacted ties between Saudi Arabia and Israel.

If current conditions do not change, Saudi Arabia, a Sunni Islam kingdom, will choose a longer route for the project that bypasses Israel and instead runs through Egypt’s Suez Canal to Greece. Should Saudi-Israeli ties improve, the Greek-Saudi interconnection will take a route running from Saudi Arabia to Jordan, Israel and on to Greece, possibly via Cyprus.

Greece, Cyprus, Israel grid link attracting wider interest

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The Cypriot State, Israeli fund Aluma, as well as investors from Saudi Arabia and the United Arab Emirates are among a growing list of parties showing interest to secure stakes in a power grid interconnection project plan to link the Greek, Cypriot and Israeli systems.

Players from both Saudi Arabia and UAE view this grid interconnection project as a European gateway for their green-energy production, and also envisage it becoming part of a bigger network of such projects in the region.

Athens and Riyadh warmed their bilateral ties in September, agreeing on a Saudi-Greek Interconnection and establishing a joint venture, an uncommon practice for the Saudis.

The involvement of such players in the Greek-Cypriot-Israeli grid interconnection promises to increase its geopolitical weight and help secure the required capital. The budget for the project, which has been upgraded, has now increased to an estimated 1.9 billion euros.

UAE plans to invest up to 54 billion dollars in RES projects over the next few years with the aim of achieving zero carbon emissions by 2050.

UAE involvement in the Greek-Cypriot-Israeli grid interconnection could tie in with the country’s broader plan for a green export corridor to Europe.

IPTO seeks Green Aegean grid link’s entry into ENTSO-E plan

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Greek power grid operator IPTO intends, within the next few days, to submit a Green Aegean grid interconnection plan, envisaged to run from Greece to Germany’s south, to the ten-year development plan of ENTSO-E, promoting closer cooperation across Europe’s TSOs to support the implementation of EU energy policy and achieve Europe’s energy and climate policy objectives.

The project’s inclusion in the development plan of ENTSO-E, representing operators from all of the EU’s 27 member states, would represent a significant first step towards PCI/PMI status for the project, securing EU funding, as planned by IPTO.

The Green Aegean grid interconnection project is seen as vital for channeling, further north in Europe, huge quantities of green energy that are expected to enter Greece in the coming years from the Middle East and Asia through projects such as the Saudi Greek Interconnection. The project would also allow Greece to export some of its excess domestically-produced energy.

Greek and Saudi delegations met yesterday to establish a 50-50 joint venture for the Saudi-Greek Interconnection, with IPTO and Saudi Arabia’s National Grid as shareholders.

The Greek-German Green Aegean grid interconnection; the Saudi-Greek interconnection; along with Euroasia Interconnector, planned to connect the Greek, Cypriot and Israeli grids; as well as the Greek-Egyptian GREGY grid link, all represent parts of a green-energy intercontinental axis running several thousands of kilometers and involving many individual interconnections and special purpose companies. All these initiatives share one common goal, to transport, via Greece, renewable energy from Asia and the Middle East to green energy-hungry markets of Europe’s north.

 

Crucial OPEC meeting Sunday, amidst Moscow-Riyadh dispute

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

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

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

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

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

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

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

 

Framework established for energy cooperation with Saudi Arabia

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Greece and Saudi Arabia have reached an agreement for the installation of a subsea data cable that will connect Europe with Asia and also discussed the prospect of linking their power grids to supply Europe with lower-cost green energy.

A memorandum of understanding for cooperation related to the energy sector was signed during an official visit of Crown Prince Mohammed bin Salman Al Saud with his delegation.

The MoU was signed by Prince Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy, and Nikos Dendias, Greece’s Minister of Foreign Affairs.

It establishes a framework for cooperation between the two countries in fields including renewable energy, electrical interconnection, exporting electricity to Greece and Europe, clean hydrogen and its transfer to Europe, energy efficiency, and the oil, gas and petrochemical industry.

ELPE, Motor Oil decide to cut Russian oil imports

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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.

Oil prices rise sharply, time running out for oil-rich countries

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Petroleum-rich countries, seeking to end the reliance of their economies on oil trade through investments in new domains as they prepare for the diminished role of fossil fuels in the new era, currently have a golden opportunity to boost output and make the most of elevated oil prices, especially if other producers remain disciplined in accordance with OPEC rules.

The UAE, a pertinent case, have invested heavily over the past decade in facilities boosting output, the objective being to maximize oil-export revenues for the financing of the country’s economic transition.

However, OPEC will first need to accept this increased production ability before the UAE can implement it. This is a tricky issue as if OPEC accepts the UAE plan, the cartel will then also face similar-minded requests by other members, which would hammer oil prices to low levels.

The UAE seem adamant on their national plan, considering it a matter of existential significance. Saudi Arabia and Russia face a difficult mission as the two countries will need to quell the UAE intention without instigating its withdrawal from OPEC.

In general, oil producers are now striving to sell as much oil as they can, for as long as they can, taking into account that the global decarbonization effort is gaining momentum.

Fuel price plunge pressuring refineries, opportunities seen

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

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

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

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

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

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

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

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

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

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

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

The duration of lower oil prices remains unknown.

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

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

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

 

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

Bioethanol, Iran tension lift gasoline prices by four cents per liter

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Motorists, in recent days, have faced the prospect of gasoline price hikes of as much as three to four cents per liter, compared to December 31 levels, escalating tension in the Middle East following the assassination of Iranian military commander Qasem Soleimani in a US drone attack ordered by President Donald Trump and the event’s impact on the international oil market being a key factor.

Another – less publicized and possibly more important – factor also leading to fuel price rises concerns an EU law requiring greater use of bioethanol, produced from a renewable source. Over the past year, a new EU law for cleaner energy has obligated refineries to include biofuels in their fuel mix.

As a result, the percentage of bioethanol included in conventional gasoline mixes has increased as of January 1, increasing gasoline production costs.

Subsequently, the price of gasoline at local refineries has risen from 1,173.59 euros per cubic meter on December 31 to 1,198.59 euros in prices registered January 1 and 2. This represents an overnight price increase of 25 euros per cubic meter or 2.5 cents per liter. The price rise will begin taking effect at petrol stations today, the end of the extended festive season in Greece.

The rising concerns in the Middle East combined with the cleaner auto fuel initiative will result in a retail price increase of approximately four cents per liter.

Worse still, a retaliatory attack by Iran on Saudi facilities, or an effort by Tehran to block the Strait of Hormuz, a corridor through which 20 percent of global oil is transported, would prompt far sharper price hikes. The latter scenario would lift oil prices to over 150 dollars a barrel, according to a report by research company Capital Economics.

 

 

Last winter’s OPEC production cutback falling short of objectives

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

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

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

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

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

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

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

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

 

 

Saudi Aramco chief sees future oil shortages, higher prices

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Though lower international oil prices over the past two years have led to a drop in sector investments, conditions for higher prices in the next few years are gradually ripening, according to Amin Nasser, president and chief executive officer of Saudi Arabian oil company Saudi Aramco.

Highlighting the subdued activity of recent times, Nasser, in comments reported by Bloomberg, noted that investments in the oil sector plummeted by one trillion dollars between 2014 and the present.

New production capacity and investment needed in the future are lagging, Nasser told an event at Columbia University in New York.

“While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind,” he noted.

Nasser forecast that a production level of 20 million barrels per day will be needed to cover increasing oil demand and offset shortages prompted by depleted older reserves.

New investments being made are primarily small-scale, short-term moves and therefore will not cover future production needs, Nasser noted.

The Saudi Aramco head said his company forecasts a continual rise in demand during 2018 and 2019, contrary to the current year, for which the International Energy Agency (IEA) expects a slowdown.

Saudi Arabia output cut aiming to boost earnings, finance future investments

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Saudi Arabia, as part of an agreement reached between OPEC members and Russia, has limited its oil production over the past few months, the move’s objective being to support crude prices, reduce international oil reserves and ultimately bolster oil producer revenues.

The national budgets of major oil producing countries, heavily reliant on oil revenues, have been negatively impacted as a result of low oil prices supressed by an oversupply in the market.

It is believed that Saudi Arabia and fellow OPEC members are striving to boost oil prices up to a level of as much as around 60 dollars. If this level is exceeded, US shale production promises to benefit at the cost of OPEC members, whose global oil market share would consequently contract.

Saudi Aramco, the state-owned Saudi Arabian national petroleum and natural gas company, is pushing for an international oil market share of 5 percent by 2018 and earnings of as much as 100 billion dollars.

The country plans to invest its additional earnings in the development of ambitious projects aiming to greatly reduce and eventually eliminate Saudi Arabia’s hydrocarbon dependence.

Saudi Aramco’s market value is currently estimated at close to 2 trillion dollars, equal to that of Google and twice the market value of Apple.