TAP

‘DEPA key to Greece’s leading Balkan role, energy diversification’

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Greek gas utility DEPA chief executive Konstantinos Xifaras met earlier today with the U.S. Ambassador to Greece, Geoffrey Pyatt (photo), for a meeting focused on the recent energy-related developments in Southeast Europe as well as on the progress of significant projects in the wider region, currently under way or in design phase, such as the IGB pipeline, the Alexandroupoli FSRU and the EastMed pipeline, a project of strategic importance.

Following the meeting, Ambassador Pyatt remarked: “Greece is a leader in the Balkans in providing energy security and diversification of energy sources, and DEPA is key to its strategy. The U.S. therefore strongly supports DEPA’s participation in major projects that advance this strategy, particularly the Alexandroupoli FSRU, the IGB, TAP and potential EastMed pipeline, which are literally changing the energy map of Europe. These projects are critical for regional peace and security and will make Greece a regional energy hub.”

The DEPA chief commented: “We discussed, with the Ambassador, the course of significant energy projects currently under way in our region, in which DEPA has a leading role.  Over the past months, our company has striven to strengthen its position in the regional energy market, achieving notable cost reductions as well as expanding its activities in new sectors and products. At the same time, we remain focused on the double privatization [DEPA Trade, DEPA Infrastructure] and we are upgrading our participation in these international projects developing Greece into a regional energy hub, safeguarding, at the same time, the diversity of supply sources to the benefit of the country and consumers.”

 

PPC, seeking gas market role, wants 500 bcm at FSRU in Alexandroupoli

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Power utility PPC, seeking a strategic role in Greece’s natural gas market, intends to submit a capacity reservation offer to an ongoing Alexandroupoli FSRU second-round market test for approximately 500 million cubic meters per year.

PPC has reached a decision and is preparing to submit its offer within the next few weeks, energypress sources informed.

A capacity reservation at the prospective Alexandroupoli FSRU in Greece’s northeast is crucial for PPC following its recent failure to secure slots in 2020 for the LNG terminal on the islet Revythoussa, just off Athens.

PPC’s Alexandroupoli FSRU interest is driven by two objectives, firstly, to cover natural gas needs at its gas-fueled power stations, and secondly, to trade gas in the wholesale market, like the sector’s other major players. Besides the Greek market, PPC also sees gas trading opportunities in the wider region of southeast Europe.

PPC is determined to establish its place in a sector being transformed by the development of major trans-boundary projects, namely TAP and IGB. Domestically, the Alexandroupoli FSRU and an underground gas storage facility at a depleted offshore gas field in the south Kavala region also offer major potential for PPC.

The Alexandroupoli FSRU market test has generated considerable interest – unofficial until now – seen easily covering terms set to ensure the project’s sustainability before any finalized investment decision is made for development.

Greek gas utility DEPA, now holding a 20 percent stake in the Alexandroupoli FSRU consortium, will definitely seek to reserve capacity. Bulgaria’s Bulgargaz, also a 20 percent shareholder, will participate in the second-round market test seeking an annual capacity of between 300 to 500 million cubic meters, according to a Reuters report.

Many of the first-round market test’s 20 participants, plus a number of new faces, have emerged for the procedure’s binding second round, sources informed.

First round Alexandroupoli FSRU offers more than doubled a total capacity of 5.5 bcm to reach 12.2 bcm.

 

Operator DESFA seeks role in Greek infrastructure projects

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Greek gas grid operator DESFA, driven by the three-member consortium of Snam, Enagas and Fluxys now controlling the company with a 66 percent stake, appears determined to stretch beyond its operator role and become one of the biggest and most pivotal players in the domestic energy market, judging by its interest in major Greek-related natural gas projects now in progress.

According to energypress sources, DESFA’s administration is looking to acquire stakes in three key energy infrastructure projects: the prospective floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece; the planned underground gas storage facility at a depleted natural gas field in the offshore south Kavala region; and DEPA Infrastructure, one of gas utility DEPA’s two new corporate entities heading for privatization.

The chief executives of Snam, Enagas and Fluxys, major European operators also holding respective stakes in the TAP project, met yesterday with Greek Prime Minister Kyriakos Mitsotakis.

The officials requested first-hand information on the government’s energy market decisions following the delivery of a new and more ambitious National Energy and Climate Plan and the signing of a trilateral agreement between Greece, Cyprus and Israel for the East Med gas pipeline.

The Greek operator’s controlling consortium also presented investment plans supporting the country’s decarbonization strategy and aspirations to become a regional energy hub.

Drastic changes to reshape energy sector by end of 2020

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Major developments in Greece’s energy sector, from lignite to natural gas, renewable energy, energy efficiency, as well as the geopolitical effects, promise a drastic reshape of the sector over the next year.

A first batch of power utility PPC’s existing lignite-fired power stations will have ceased operating as part of a plan for a full withdrawal by the end of 2023. PPC will have a reduced number of employees on its payroll. This will have positively impacted the utility’s profit figures.

Also, a first round of major renewable energy projects expected to be launched by PPC subsidiary PPC Renewables through partnerships, as part of the parent company’s wider turn to green energy, will intensify competition in the renewable energy market.

Furthermore, this time next year, assets currently belonging to gas utility DEPA, both in trade and infrastructure, may have been transferred to new owners. This development promises to reshape the entrepreneurial map as the private sector’s dominance will be absolute.

In the retail market, the number of players is expected to have diminished as a result of a new round of takeovers and mergers, amid heightened competition, as was also the case in telecommunications in the recent past.

In addition, Greece’s energy exchange will have clocked up several months of operations by the end of the year. Its arrival will intensify competition, remove market distortions and allow dormant potential to be realized through coupling with neighboring markets.

By the end of 2020, the TAP gas pipeline will have begun delivering its first orders of Azeri gas to Europe, the Greek-Bulgarian IGB gas pipeline will be nearing completion, while procedures leading to the development of the Alexandroupoli FSRU and an underground gas storage facility in the offshore area south of Kavala will have made progress.

Without a doubt, Greece’s energy sector appears to be waking up to the new reality, leaving behind anachronistic perceptions and embracing the green energy revolution. The country is now adopting new ways implemented by the overwhelming majority of European territories two decades earlier.

 

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

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

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

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

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

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

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

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

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

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

 

DEPA, pivotal for Greek energy plan, pushing ahead internationally

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Through its strategic involvement in an array of pipeline and infrastructure projects, Greek gas utility DEPA is becoming a key driver of Greece’s geopolitical upgrade and the diversification of supply sources for the wider region of South-East Europe.

DEPA is establishing its position in the region through a series of significant international projects such as the acceleration of IGB pipeline construction, participation in the IGI Poseidon pipeline  interconnecting Greece and Italy, and, surely, booking capacity in TAP which, from 2020 onwards, will transport Caspian gas to Europe.

Developments around East Med Pipeline are also rapid, with the most recent being IGI Poseidon’s (the 50% – 50% JV between DEPA S.A. and Edison S.p.A ) BoD decision to fast-track the completion of all pending stages that will bring the project to maturity.  The €70 million Feasibility Study is being accelerated, along with every other stage, to complete the East Med pipeline’s design, which will also pave the way for the final investment decision.

All the above are just one part of DEPA’s multifaceted international activity. Prior to that, in October, a bilateral agreement was signed in Sofia for the start of IGB pipeline construction, a project overseen by ICGB AD, in which DEPA has a 25% stake.

The project is expected to go into operation in July 2021, with an initial capacity of 3 billion cubic meters. At first, the entire load of gas will come from TAP that will go into operation within 2020, delivering Azeri gas to European markets, in which DEPA has booked capacity of 1 billion cubic meters. Thus, through IGB, the company will supply the Bulgarian market with Caspian gas, “breaking” for the first time the existing Russian monopoly.

Another major development took place just yesterday, when the company’s Board of Directors approved the participation of DEPA, with a 20% stake, to the equity of GASTRADE, the company developing the FSRU project in Alexandroupolis.

The Terminal is complementary to the IGB pipeline and consists of an FSRU (Floating Storage Regasification Unit), anchored 10 km off the coastal area of ​​Alexandroupolis, with storage capacity up to 170,000 cubic meters of LNG and 22.7 million cubic meters daily regasification capacity, per day (8.3 billion m3 / year), as well as a 28 km long onshore and subsea pipeline system.

The international presence of the company is also enhanced by the Greek-Italian energy interconnection through the IGI Poseidon pipeline, as well as the CYNERGY program that “breaks” Cyprus energy isolation by establishing a natural gas supply chain in the country.

Apart from its participation in international projects, equally important are the company’s long-term supply contracts with Russian Gazprom, Turkish BOTAS, Algerian Sonatrach, IGSC (Azerbaijan) through the TAP pipeline, as well as the procurement of significant quantities of LNG through the global SPOT market, at competitive prices.

DEPA’s CEO, Konstantinos Xifaras, summed up the company’s international role:

“For thirty years, DEPA has been a leading player in the Balkan energy sector, as well as an integral part of the European strategy for energy diversification and security of supply both of Greece and Europe.

At the same time, by deploying multilayered energy diplomacy and participating in major international projects, DEPA establishes Greece as a regional energy hub and upgrades its economic and geo-strategic importance.”

DEPA’s footprint is solid in the domestic energy market as well, where it recently prevailed in a tender process for natural gas supply to PPC in 2020. The company acknowledged as one of the two bidders, with the ability to supply PPC with 2 million MWh.

Gas supply for post-lignite west Macedonia added to grid plan

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A natural gas outlet – stemming from the TAP project – for supply to Greece’s west Macedonian region intended to help cover the region’s energy needs in the post-lignite era is one of the few new features added to a gas grid operator DESFA ten-year development plan covering 2020 to 2029, slightly revised compared to its previous version.

The aim is to supply natural gas through pipelines to the region’s provincial cities of Kozani, Ptolemaida, Florina and Amynteo for use at telethermal facilities, currently operating through heat produced at power utility PPC’s lignite-fired power stations.

These PPC units, however, will soon be withdrawn as part of the government’s plan for a decarbonized Greece by 2028, incorporated into a new National Energy and Climate Plan.

The national gas grid’s 10-year development plan, prepared by DESFA, is undergoing public consultation for the second time since August for feedback on its minor changes, including the gas supply plan for west Macedonia.

The first round of public consultation was staged by DESFA while the second round is being held by RAE, the Regulatory Authority for Energy.

A total of 49 projects budgeted at over 2.5 billion euros, overall, are included in the ten-year plan. Responses to the latest public consultation procedure face a January 10 deadline.

Italian energy firms eyeing array of local investments, PM in Italy

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Italian investors are displaying widespread interest for energy investments in the Greek market, including possible stakes in distribution network operator DEDDIE/HEDNO, power grid operator IPTO, gas utility DEPA’s two new entities DEPA Trade and DEPA Infrastructure, as well as joint ventures in wind energy stations, electric vehicle projects and smart grids.

Deputy energy minister Gerassimos Thomas, joining Prime Minister Kyriakos Mitsotakis on an official visit to Rome today, is expected to be informed of this Italian investment interest. Thomas is scheduled to meet with Italian economic development minister Stefano Patuanelli.

The Greek Prime Minister, to meet with his Italian counterpart Giuseppe Conte, can also expect to hear of this Italian investment interest during talks which, besides the refugee crisis, will also address cross-border energy projects such as TAP and East Med.

Snam maintains the most emblematic of Italian investments in the Greek market at present with a 66 percent stake in gas grid operator DESFA, including control of the country’s natural gas transmission and storage infrastructure.

Italian firms are regarded as pioneers in a number of green-energy domains, including smart grids, electric vehicle recharging station installations along highways, even wave power projects.

Just days ago, a consortium comprising Eni, Fincantieri and Terna announced it would commercially develop its pilot project Inertial Sea Wave Energy Converter (ISWEC) for wave energy generation, initially at small Italian islands, followed by projects abroad.

The Greek Prime Minister and his energy deputy will also meet with Italian entrepreneurs, including Eni gas e luce chief executive Alberto Chiarini.

Italy’s Terna, one of Europe’s biggest transmission system operators, is believed to be interested in acquiring a stake of IPTO and its Ariadne subsidiary, project promoter of the submarine Crete-Athens grid interconnection.

Enel is considering moves into networks, renewable energy investments and the electric vehicles sector.

Italgas, Italy’s biggest gas distributor and the continent’s third biggest, appears interested in DEPA Infrastructure. Italgas is believed to have reached a preliminary agreement to acquire fellow Italian company Eni gas e luce’s 49 percent stake and management rights in EDA Thess, covering the Thessaloniki and Thessaly areas.

Eni, increasing its involvement in pioneering projects, including wave energy, is believed to be looking to increase its Greek market presence, possibly through acquisitions.

 

 

Elpedison makes dynamic gas market move for 2020, Balkans also eyed

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Elpedison’s strong turnout for gas grid operator DESFA’s annual reservation of LNG slots at the Revythoussa terminal just off Athens highlights the company’s strategic decision aiming for a leading role in the wholesale gas market, which it entered last year.

Elpedison has reserved 22 slots, roughly one-third of a total of 65 slots offered by DESFA for the terminal in 2020.

Mytilineos, the country’s biggest LNG importer, also booked 22 slots. Gas utility DEPA reserved 14 slots, while Heron booked seven slots.

Elpedison considers its involvement in the wholesale and retail gas markets just as important as its activities in the electricity market, chief executive Nikos Zahariadis underlined in comments to energypress. Elpedison will bolster its gas market presence in 2020, he added.

Storage and gasification capacity increases at the Revythoussa LNG terminal have played an instrumental role in helping liberalize Greece’s gas market. This development, along with lower-priced LNG, compared to pipeline gas, has created market prospects and opportunities. Elpedison operates two gas-fueled power plants.

Besides the Greek market, Elpedison, just like all other corporate groups importing and trading gas, also sees opportunities in Balkan markets. The company already sells modest gas quantities in Bulgaria and Romania but is aiming for a significant increase in 2020.

Greece is developing into a gas hub for supply to the wider southeast European region, Zahariadis, Elpedison’s chief executive, noted. Major international gas infrastructure projects such as the TAP, IGB, Alexandroupoli FSRU and underground gas storage facility in the offshore South Kavala region are expected to be completed within the next few years, he stressed.

 

TAP outlets for lignite-dependent north included in DESFA 10-year plan

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Gas grid operator DESFA has added to its 10-year development plan a construction and management plan for three TAP outlets covering energy needs in the country’s west Macedonia region, energypress sources have informed.

This region in northern Greece is currently heavily dependent on lignite but requires an energy source adjustment as a result of the planned closure of power utility PPC’s coal generators and mines.

Prime Minister Kyriakos Mitsotakis has pledged full decarbonization in Greece by 2028.

Last year, RAE, the Regulatory Authority for Energy, had asked DESFA to include a natural gas supply plan for west Macedonia in its updated 10-year development plan, running from 2020 to 2029, as regional energy cover during Greece’s transition period leading to a green-energy future.

According to initial estimates, the TAP outlets, looking likely to be developed in the Ptolemaida, Kastoria, Naoussa and Edessa locations, will cost between 3 and 4 million euros.

TAP, the international consortium behind the TAP project, to bring Azeri gas to European markets via a route that includes a pipeline section running through northern Greece, has offered its consent for supply to the aforementioned Greek regions.

If DESFA submits its updated ten-year plan within the current month, RAE should be ready to offer its approval by the beginning of 2020, following public consultation.

Initial TAP market test justifies capacity boost to 20 bcm

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The results of a non-binding, first-round market test concerning a possible capacity boost of the TAP pipeline, to bring Azeri natural gas to Europe via a northern Greece crossing, justify an increase from 10 bcm to 20 bcm.

The TAP consortium, along with Greek gas grid operator DESFA and Italy’s Snam, issued the market test’s results yesterday, as was scheduled.

Procedures for a second-round market test, whose result will determine whether a pipeline capacity increase will be carried out, and if so, its extent, are already underway. A final decision is expected within the first half of 2020.

The TAP consortium, SRG (Snam Rate Gas) and DESFA are launching a Coordinated Design Phase today as part of the second-round procedure.

During this phase, expected to last 12 weeks and be completed by January 13, 2020, TSOs (operators) will prepare further technical studies related to the capacity boost so that the project’s budget and construction schedule can be revised.

Interested parties will then be invited to declare capacity reservations.

The TAP project, approaching completion, promises to directly meet transportation needs for Azeri natural gas towards southern Europe and also offer reverse-flow capabilities from Europe.

 

IGB agreement, target model on agenda of minister’s Sofia visit

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The signing of a Greek-Bulgarian bilateral agreement for the IGB gas grid interconnector, a project of major geopolitical significance, may be at the top of the agenda of the energy ministry leadership’s official visit to Sofia tomorrow and Thursday, but the target model, also on the agenda, is just as crucial.

The target model is vital as it entails the coupling of the Greek and Bulgarian electricity markets, needed for the establishment of regional electricity market, a key EU energy policy.

Given the Sofia trip’s demands, energy minister Costis Hatzidakis will be joined by his deputy Gerassimos Thomas.

Hatzidakis, on this trip, is expected to sign a bilateral agreement for the IGB gas pipeline’s construction and operation. A shareholders’ agreement and a European Investment Bank (EIB) loan agreement for the project are also planned to be signed.

The Greek-Bulgarian gas pipeline project, measuring 182 kilometers, will link Komotini, in Greece’s northeast, with Stara Zagora, creating a second interconnection point for the Greek and Bulgarian gas systems, in addition to an existing station in nearby Sidirokastro.

The new project, to offer an annual capacity of 5 billion cubic meters, will begin operating at a lower capacity level of 3 billion cubic meters.

The IGB pipeline is planned to be linked to the TAP project, running across northern Greece. Combined with the Bulgaria-Romania and Bulgaria-Serbia interconnections, the IGB will contribute to the establishment of a vertical corridor through the Balkans and connect central Balkan countries with Caspian gas supply.

IGB bilateral agreement for construction start to be signed in Sofia

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A Greek-Bulgarian bilateral agreement enabling the commencement of construction work on the IGB gas grid interconnector is set to signed in Sofia during a two-day meeting scheduled for October 9 and 10.

Complementary agreements concerning the project, the most significant of these being a shareholders’ agreement and a loan agreement with the European Investment Bank (EIB), will also be signed by officials over the two days.

The Greek-Bulgarian pipeline project, measuring 182 kilometers, will link Komotini, in Greece’s northeast, with Stara Zagora. It will serve as a second interconnection point for the Greek and Bulgarian gas systems, in addition to an existing station in nearby Sidirokastro.

The new project, to offer an annual capacity of 5 billion cubic meters, will commence operating at a lower level of 3 billion cubic meters.

The IGB pipeline is planned to be linked with TAP, running across northern Greece. Combined with the Bulgaria-Romania and Bulgaria-Serbia interconnections, the IGB will contribute to the establishment of the vertical corridor through the Balkans and connect central Balkan countries with Caspian gas and the TAP pipeline.

IGB’s planning, construction and operation has been taken on by ICGB, the project’s Sofia-based consortium, a 50-50 joint venture representing the state-controlled Bulgarian Energy Holding (BEH) and IGI Poseidon, involving Greek gas utility DEPA and Edison.

Balkans-focused energy forum on eve of Thessaloniki fair

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

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

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

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

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

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

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

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

 

Greek, Cypriot, Israeli officials seeking Italy’s East Med return

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Greek, Cypriot and Israeli officials are working on details of a plan aiming to win back Rome’s support for the East Med pipeline, an ambitious 1,900-km pipeline to carry southeast Mediterranean natural gas from Israel to Europe via  Italy.

Efforts by Washington and Brussels to lure back Italy, whose coalition government has withdrawn the country’s support for the project, are pivotal.

Part of the overall diplomatic effort may be unveiled at an Athens energy summit today.

The Greek, Cypriot and Israeli energy ministers, Costis Hatzidakis, Giorgos Lakkotrypis and Yuval Steinitz, respectively, as well as US Assistant Secretary Francis Fannon, are taking part in the summit.

Fannon held successive meetings in Athens yesterday with Greece’s energy minister and the deputy foreign minister Konstantinos Fragogiannis. The East Med project’s promotion was a key subject of these meetings, especially Fannon’s talks with Hatzidakis, Greece’s energy minister.

Last May, Italian Prime Minister Giuseppe Conte, heading Italy’s right-wing populist coalition, declared Rome does not want the East Med pipeline to land on Italian territory. Instead, he proposed the pipeline’s link to TAP, another gas pipeline project being developed to carry Azerbaijani natural gas to Europe, via Italy.

East Med is envisioned to primarily carry deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan” along a route stretching from Israel to Europe, also via Italy.

In response to Italy’s stance, Israel now appears to favor an alternate route for East Med that would avoid ending up on the Italian coast. Experts regard this prospect as difficult but not impossible as the pipeline project is still at the planning stage. Greece and Cyprus prefer Italy’s incorporation into the pipeline route.

 

 

Continuation of energy strategy minister’s guide at Cairo forum

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Recently appointed energy minister Costis Hatzidakis will formally commence work on promoting Greece’s international energy relations at his first meetings abroad, today and tomorrow, at the East Med Gas Forum in Cairo.

The minister, in recent speeches, has already made clear his interest in supporting a national strategy shaped to bolster the country’s energy security, elevate its geopolitical role and fuel economic growth.

Strategic partnerships with Cyprus, the USA, Israel and Egypt will play a pivotal role in this effort.

Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority will all be represented at the Cairo forum.

Hatzidakis, Greece’s energy minister, is also expected to discuss energy partnerships and regional security with US energy secretary Rick Perry, who is in the Egyptian capital as part of a tour of the east Mediterranean.

Development of the submarine East Med gas pipeline, a project promising security and stability for the wider region, is a leading priority  for Greece.

On a wider level, the minister can be expected to carry on supporting a national strategy pursued over the past decade to establish Greece as a pivotal energy player in the region and key problem solver of regional energy partnership issues.

As for other major energy infrastructure projects, the new Greek government will continue to provide national support for the swift completion of the Trans Adriatic Pipeline (TAP), planned to transport Caspian natural gas to Europe, and the Greek-Bulgarian IGB gas grid interconnector. Other investment plans such as the Alexandroupoli FSRU and the Kavala underground gas storage facility will also keep receiving the support of Greece’s administration.

RAE set to approve market test terms for TAP capacity boost

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RAE, the Regulatory Authority for Energy, plans to approve, this week, the terms of a market test designed to explore whether TAP (Trans Adriatic Pipeline) users would be interested in reserving greater capacities.

The current overall capacity of the project could increase from its current level of 10 bcm to as much as 20 bcm.

The market test’s platform will be opened on July 1 for participants to submit first-round expressions of non-binding interest.

If interest is expressed, the TAP consortium, as its next step, will examine the investments required for a capacity boost, offer schedule and tariff updates, and proceed with a binding second-round test for capacity reservations.

Current market factors indicate that companies could be interested in a capacity increase but may not require the entirety of the additional 10 bcm offered.

The TAP project promises to directly meet transportation needs for natural gas towards southern Europe and also offer reverse-flow capabilities from Europe.

Now 87.5 percent complete, the project’s commercial launch is planned for 2020, the TAP consortium noted in a recent statement.

 

 

Greek, North Macedonian operators working on gas, power links

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Greek gas grid operator DESFA and its state-controlled North Macedonian counterpart MER plan to upgrade a memorandum of cooperation signed in 2016 for the construction of a 120-kilometer gas pipeline from Thessaloniki’s Nea Mesimvria area to the northern neighbor.

Heading a Greek delegation, Prime Minister Alexis Tsipras and his North Macedonian peer Zoran Zaev have agreed to sign a series of bilateral agreements and memorandums of cooperation in Skopje today.

The project, to interconnect the Greek and North Macedonian gas transmission systems, is regarded as one of the most significant energy investments being prepared by the two countries.

It is planned to offer an annual transmission capacity of about 3 billion cubic meters and also enable an interconnection with the TAP route – to supply Azerbaijan gas to European markets via Greece – for a diversification of sources.

The DESFA-MER association promises to be further enhanced by the North Macedonian operator’s moves for gas system interconnections with Kosovo and Montenegro.

Subsequently, the Greek-North Macedonian natural gas pipeline, once constructed, promises to offer a new supply route to Balkan markets.

DESFA is preparing to stage a market test for the Greek-North Macedonian pipeline during the second half of this year, sources have informed.

Meanwhile, Greece’s power grid operator IPTO and its North Macedonian counterpart MEPSO are discussing preliminary studies intended to lead to an upgrade of electricity interconnections between the two countries.

Offers soon for IGB gas pipeline project tenders, nearing completion

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Three tenders offering contracts for Greek-Bulgarian IGB gas grid interconnector’s project manager, pipeline procurement and construction are approaching completion.

Offers for the tender to appoint a project manager, to monitor development on behalf of shareholders, are expected this month.

Greece is well represented in the tender concerning the construction of the IGB pipeline, planned to cover a 182-km stretch and budgeted at 145 million euros. A total of five consortiums with three Greek firms on board have advanced to this tender’s second round.

Germany’s Max Streicher has teamed up with Greece’s Terna; China Petroleum Pipeline Engineering has joined forces with Aktor; and J&P Avax is the third local qualifier. Their bids are expected next week.

ICGB, the IGB project’s consortium, a joint venture involving YAFA Poseidon – a Greek gas utility DEPA half-owned subsidiary – and the state-controlled Bulgarian Energy Holding (BEH), plans to have appraised these offers within a month before announcing a preferred bidder at the end of April.

The IGB is planned to be linked with the TAP route, offering Bulgaria and the wider southeast European region access to Caspian gas as well as LNG.

 

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

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

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

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

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

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

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

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

RAE, DESFA owners at odds over tariff, cost, revenue figures

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RAE, the Regulatory Authority for Energy, and the new DESFA board appointed by the Snam-Enagás-Fluxys team that acquired a 66 percent stake in Greece’s gas grid operator last year have yet to find common ground on tariff revisions for a four year-period that already commenced on January 1.

The Greek energy authority has yet to endorse Revenue Requirement (RR) and Weighted Average Cost of Capital (WACC) figures for this four-year period, which is generating uncertainty for the new owners.

RAE insists costs associated with additional amenities that have been provided to full-time staff over the years  should not be factored into the calculations, according to sources.

RAE is obviously seeking to restrict the operator’s officially recognized costs in order to keep tariffs low now that the gas grid operator’s privatization has led to an annual total of 14 monthly paychecks for staff on the payroll, as is the case for all private sector enterprises,  from the previous 12 applying to public sector firms.

DESFA’s new administration is pushing for the opposite. The operator’s new ownership does not want to cease offering DESFA employees their customary amenities but wants to recover these through tariffs.

As for revenue matters, the current gap between the two sides appears to be wider. For example, DESFA’s new administration regards a recent gas pipeline maintenance contract signed by the operator and TAP as a supplementary entrepreneurial activity whose resulting revenues should not be factored into the tariff calculations.

 

TAP completes successful €3.9 billion project financing

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TAP, one of Europe’s most strategic projects, has successfully completed financial close in December 2018, securing 3.9 billion euros, the largest project finance agreed for a European infrastructure project in 2018, the TAP consortium has announced in a statement.

TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 878 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

Luca Schieppati, TAP’s Managing Director, noted: “With the financial close now achieved, TAP has reached another major milestone of the project’s progress. TAP has voluntarily committed to comply with environmental and social standards required by the international financial institutions. As such, all necessary assessments to substantiate this commitment have been undertaken and met by TAP. This also included a thorough environmental and social assessment. With project financing now concluded, TAP can progress to the final completion of the project and delivery of Shah Deniz II gas in 2020.”

Andrew McDowell, European Investment Bank Vice President responsible for energy, commented: “As the EU Bank, the European Investment Bank recognizes the important contribution to improving security of energy supply in Europe that the Trans Adriatic Pipeline will bring and has provided 700 million euros for this, the largest energy project in Europe currently being built. The EIB is pleased to have been an anchor lender to the project, alongside the EBRD and other leading financial institutions, to successfully finance this complex and ambitious project and welcomes the continued close cooperation between all project partners to ensure that environmental, social and technical best practice is followed.”

Nandita Parshad, EBRD Managing Director Sustainable Infrastructure, remarked: “The Trans-Adriatic Pipeline will set the foundation for an integrated gas market across south-eastern Europe and enhance the region’s strategic status as an energy hub. We believe that gas remains an important transition fuel in this region that can help displace coal and facilitate penetration of renewables.”

The financing is provided by a group of 17 commercial banks, alongside the EBRD and the European Investment Bank (EIB). Part of the financing is covered by the export credit agencies – bpifrance, Euler Hermes and Sace. The project raised EUR 3765 million in third party senior debt with a door-to-door tenor of 16.5 years, combining commercial debt along with development financial institutions (DFI) and export credit agencies (ECA) related financing:

  • EIB Direct Facility, benefitting from a guarantee from the European Union under the European Fund for Strategic Investments EFSI: EUR 700 million
  • EBRD A-Loan: EUR 500 million
  • EBRD B-Loan: EUR 500 million funded by commercial banks
  • ECA facilities, benefiting from comprehensive cover by:
    • Bpifrance Facility, EUR 450 million Euler Hermes Facility, EUR 280 million
    • A SACE Facility, EUR 700 million;
  • Commercial term loan facility: EUR 635 million directly provided by commercial banks without any ECA or multilateral involvement.

Costs have previously been funded in full by TAP’s shareholders: BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

TAP was advised by Société Générale (SG) as Financial Advisor and Allen & Overy as Legal Advisor; lenders were advised by Clifford Chance.

Kavala UGS project to cost €240m, RAE official estimates

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An underground gas storage facility planned to be developed from a depleted natural gas field in northern’s Greece’s offshore South Kavala region will cost approximately 240 million euros and offer a transmission capacity of 360 million Nm3 per year, with a potential to be doubled, according to RAE (Regulatory Authority for Energy) official Nektaria Karakatsani, who discussed the project at a recent conference.

However, details concerning the investment cost’s recovery remain unclear, it was noted.

The UGS project has already secured a place on the European Commission’s PCI list, offering EU financing support and favorable terms. The inclusion highlights the underground gas storage facility’s significance for Europe’s strategy aiming to unify energy markets.

The UGS will greatly reduce the threat of energy crises for Greece should inflowing gas supply happen to be irregular, she underlined.

Greece launched a balancing platform for natural gas on July 1 and is currently planning its development into an organized gas market envisioning the country’s establishment as a regional commercial gas hub.

New gas entry points, besides the TAP route, which is scheduled to be launched early in 2020, will be needed to secure sufficient gas quantities and flexibility during this transition, the RAE official pointed out, adding the role to be played by the Kavala UGS during this stage will be vital.

RAE: Market interest needed to develop Greece-Fyrom pipeline

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Sufficient market interest will be needed if a natural gas pipeline linking Thessaloniki and Fyrom (Former Yugoslav Republic of Macedonia) and an LNG bunkering facility on the islet Revythoussa, just of Athens, are to be developed, RAE, the Regulatory Authority for Energy, has noted in response to a ten-year gas system development plan (2017-2026) submitted by gas grid operator DESFA.

RAE offered its conditional approval of DESFA’s plan for the Thessaloniki-Fyrom pipeline, a project budgeted at 48.7 million euros, as long as market test, including binding capacity reservation offers, is previously conducted.

As for the Revythoussa LNG bunkering facility plan, the energy authority acknowledged the project could be required in the future as a result of the shipping LNG market’s anticipated growth, while noting DESFA has yet to submit a complete plan and feasibility study supporting its sustainability.

A decision on the induction of this project into DESFA’s ten-year plan will be reached once a comprehensive plan has been submitted, RAE added.

DESFA is looking at developing an LNG bunkering facility to serve the refueling needs of vessels with capacities ranging from 1,000 to 20,000 cubic meters.

RAE also approved a plan for the development of a natural gas compressor station needed for the gas system’s hydraulic stability once the TAP pipeline, running through northern Greece, begins operating.

DEPA seeking long-term supply agreement with US firm Cheniere

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A long-term LNG supply agreement of between 15 and 20 years has been the main focus of negotiations over the past few months between Greek gas utility DEPA and US energy company Cheniere, primarily active in LNG-related businesses.

DEPA’s recently appointed chief executive Dimitris Tzortzis is seeking a delivery arrangement that would enable the gas utility to not only import gas into Greece but also trade LNG in international markets, to the extent permitted by global market conditions.

Tzortzis mentioned DEPA’s ongoing talks with Cheniere at the Southeast Energy Forum in Thessaloniki last Friday without elaborating further.

The DEPA boss told the event that the two sides have already established a spot cargo LNG agreement for 2018.

DEPA intends to renegotiate existing agreements with gas suppliers Sonatrach, Botas and Gazprom and also assume a trading role in the natural gas market, DEPA officials have commented when asked if the Greek market has capacity for further gas amounts.

At present, DEPA is supplied an annual natural gas amount of 2.2 billion cubic meters by Gazprom. This deal expires in 2026. Sonatrach supplies between 0.55 and one billion cubic meters in a deal ending 2021, when an arrangement with Turkey’s Botas for 0.75 billion cubic meters, annually, also expires.

In 2020, the Trans Adriatic Pipeline (TAP) is expected to bring a further one billion cubic meters of Azeri natural gas into the Greek market.

Serbia discussed as Italy alternative for East Med project

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An alternative route, replacing Italy with Serbia, for the ambitious 5 billion-euro East Med natural gas pipeline, planned to carry southeast Mediterranean natural gas deposits to the EU via Greece, was discussed at a five-way meeting in Thessaloniki last Friday between leading energy-sector officials representing Greece, Israel, Bulgaria, Serbia and the US.

The meeting’s participants expressed concern over the new Italian coalition’s unfavorable view of such projects. In June, the Italian coalition described as “pointless” the Trans Adriatic Pipeline (TAP) project, the final stage of a bigger project – the Southern Gas Corridor – that will take Azeri gas to western Europe. Intended to diversify Europe’s natural gas sources and lessen the reliance on Russia, the TAP project represents the cornerstone of the EU’s energy security policy.

An extremely complex 1,900-km project whose greatest part would run underwater, East Med is planned to conclude in Italy. It is being supported by the EU as a PCI- status project.

Serbia’s mining and energy minister Aleksandar Antic, one of the five participants at the Thessaloniki meeting, held within the framework of the Thessaloniki International Trade Fair, is believed to have embraced the plan for an alternative East Med route that would include his country – should Italy not clarify its position.

 

DEPA seeking improved terms for Gazprom, Sonatrach supply

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DEPA, the public gas corporation, is making an effort to renegotiate contracts with its two main suppliers, Russia’s Gazprom and Algeria’s Sonatrach, for improved terms, energypress sources have informed, as a result of market condition changes.

Besides supplying DEPA, Gazprom now also sells directly to other major customers in Greece, such as the Mytilineos group, a development reshaping the country’s natural gas market.

DEPA’s chief executive Dimitris Tzortzis and Gazprom Export deputy director Elena Burmistrova are believed to have discussed the subject at a meeting in St Petersburg last month. Officials of the two gas companies are expected to stage a new meeting in St Petersburg this week, sources informed.

DEPA officials will seek to improve the terms of the Greek gas utility’s existing Gazprom gas supply deal to help offset the Russian firm’s new dealings with other customers in Greece.

DEPA already appears to have ensured an exemption from a take-or-pay clause requiring payments for unconsumed amounts specified in supply contracts. DEPA is also pushing for a lower price but Gazprom officials do not appear willing to discuss such a prospect.

However, DEPA does appear to stand a chance of being granted a right to resell a proportion of gas amounts purchased from Gazprom in Balkan markets.

DEPA is also seeking to improve the terms of its supply deal with Algeria’s Sonatrach, the Greek gas utility’s second biggest source, supplying LNG.

Tzortzis, the DEPA boss, was in Algeria earlier this month for talks with Sonatrach officials on supply security concerning the Greek market in 2019, as well as supply price and pricing formula issues.

At these talks, Sonatrach officials pressured for price hikes as a result of higher international gas prices, but the DEPA boss insisted Algerian LNG needs to remain competitively priced as TAP-pipeline natural gas stemming from the Azerbaijani section of the Caspian Sea will begin entering the Greek market in 2020. A contract ensuring one billion cubic meters per year of Azerbaijani natural gas supply to the Greek market has already been signed.

As is the case with Gazprom, DEPA is also pursuing the right to resell a portion of its Sonatrach gas purchases to foreign markets.

DEPA intends to terminate a third gas supply contract held with Turkey’s Botas in 2020, a year ahead of its expiry date, as the terms of this agreement are regarded as being  unfavorable in view of the imminent supply of Azerbaijani gas to Greece via the TAP pipeline. Though talks between DEPA and Botas have not been held, an extension of their contract has already been ruled out.

Gazprom and DEPA currently hold a supply agreement for 2.6 billion cubic meters per year, until 2026. Sonatrach supplies the Greek gas utility between 0.55 and one billion cubic meters per year based on a contract expiring next year, when DEPA’s deal with Turkey’s Botas, supplying 0.75 billion cubic meters per year, also expires.

 

 

Agreements signed for IGB financing, TAP interconnection

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Bulgarian Energy Holding (BEH) and the European Investment Bank (EIB) have signed a Memorandum of Cooperation for the financing of the Bulgarian side of the Greek-Bulgarian gas grid interconnector (IGB), while, in a concurrent development, the IGB consortium and the TAP consortium, constructing the gas pipeline to carry Azeri natural gas through northern Greece, Albania and across the Adriatic Sea to Italy, have also signed an interconnection agreement to link the two pipelines.

Both agreements were signed at a meeting held by CESEC, the Central and South-Eastern European Gas Connectivity initiative. Greek energy minister Giorgos Stathakis, his Bulgarian counterpart, Temenuzhka Petkova, as well as other highly ranked EU officials attended the CESEC session.

The Greek energy ministry released an announcement underlining the significance of these two projects for Greece and the wider Balkan region. The IGB promises to carry gas transmitted through the TAP pipeline to the Bulgarian network as well as those of other EU member states, the energy ministry statement stressed.

The preliminary financing agreement between BEH and the EIB concerns a 110 million-euro loan with favorable terms to be guaranteed by the Bulgarian state.

Providing further backing, Greek Prime Minister Alexis Tsipras and his Bulgarian counterpart Boyko Borisov also signed a political agreement of support for the IGB interconnector in the presence of European Commission president Jean-Claude Juncker.

The Greek and Bulgarian sides agreed to commence work on the IGB by the end of 2018 for an operational launch within 2020.

Supreme Court rejects TAP block in Kavala, clearing way for completion

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The Greek segment of the TAP natural gas pipeline appears to have cleared one last hurdle obstructing its development following the rejection by the Council of State, Greece’s Supreme Administrative Court, of a case filed by the municipality of Kavala, northern Greece, and other local authorities seeking a revision of the project’s route in the Kavala area.

The disputed Kavala segment concerns a 10-kilometer stretch, from the pipeline’s 195th kilometer to the 205th kilometer. Construction work at this stretch was scheduled to begin in autumn, 2016 but has been delayed as a result of the local reaction.

Highlighting the pipeline’s problem in the Kavala area, construction work has progressed, or even been completed, at all other segments.

The TAP project is planned to run through northern Greece, Albania and across the Adriatic Sea to Italy.

The energy ministry, local government officials and the TAP consortium recently signed an agreement for the construction of a water supply pipe system to handle water-shortage problems that have affected the Kavala area over many years. This project is budgeted at nearly 20 million euros.

The TAP consortium is set to receive a 1.2 billion-euro loan from the EBRD following a positive appraisal of the project by the bank, it was revealed yesterday. This loan’s extension is expected to be confirmed at an EBRD meeting on July 4.

 

 

TAP route will continue as planned, Kavala locals told

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There is no more leeway for any further discussion concerning revisions to the TAP natural gas pipeline’s route, which will be developed as planned, energy minister Giorgos Stathakis has made clear following the presentation of a technical study conducted by the Technical Chamber of Greece (TEE).

The TEE study was prompted by the objections of a small number of residents and farmers in the Kavala region, which makes up part of the pipeline’s crossing through northern Greece.

Representatives from all sides held a meeting at the ministry yesterday, during which the TEE study and views of all participants were presented. TEE officials noted that local concerns were groundless.

The TAP consortium had made a route revision following an initial public consultation procedure.

Government MPs holding Kavala region seats appear to have backed the energy minister in order to prevent TAP, a project of national importance, from being undermined.

The problem spot in the Kavala area concerns a 10-kilometer stretch of  550 kilometers already constructed or currently being constructed on Greek territory.

Work on this 10-km section, from the pipeline’s 195th kilometer to the 205th kilometer, was scheduled to begin in autumn, 2016. The section remains pending, meaning the pipeline cannot operate with the existing gap.

The TAP project is planned to run through northern Greece, Albania and across the Adriatic Sea to Italy.