South Kavala UGS tender qualifiers by early February

Greece’s privatization fund TAIPED will finalize its list of second-round qualifiers in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece by late January or early February, sources have informed.

Three parties submitted first-round expressions of interest: China Machinery Engineering Co. Ltd. (CMEC) – Maison Group; DESFA – GEK Terna; and Energean Oil & Gas (in alphabetical order).

Assessments of their supporting documents and other criteria are expected to be completed within the next twenty days.

RAE, the Regulatory Authority for Energy, still needs to deliver decisions concerning the operating framework of the UGS.

These pending issues include a RAE decision on the percentage of the UGS project’s capacity to be regulated, thus pre-determining this proportion’s revenue, and the earnings percentage to be determined by market forces.

The authority also needs to decide on the duration of the regulatory period and its WACC level.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

South Kavala UGS bidders talk formations as deadline nears

Prospective bidders of an upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north are deliberating over possible partnerships as the October 19 deadline for official expressions of interest approaches.

Greek gas grid operator DESFA, Energean Oil & Gas and GEK TERNA will participate in the tender, according to enegypress sources, while some market officials believe a Chinese company, not yet revealed, is also interested.

All three Greek companies have remained tight-lipped on possible partnership formations for the tender. GEK TERNA and Energean Oil & Gas are believed to be discussing the prospect of teaming up, while DESFA and the Chinese company will most likely enter the tender alone, energypress sources informed.

The tender, staged by privatization fund TAIPED, will offer rights for the use, development and exploitation of the virtually depleted offshore natural gas field south of Kavala as a UGS facility for a period of up to 50 years.

Investments needed for the project’s development are estimated between 300 and 400 million euros.

The field is located approximately 6 kilometers from the west coast of the island Thasos, in the North Aegean Sea, at a depth of 52 meters.

Its development into a UGS facility promises to contribute to Greece’s energy security and that of southeast Europe.