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

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

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

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

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

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

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

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

 

Alexandroupoli FSRU development launch today, pivotal project

Development of the Alexandroupoli FSRU in Greece’s northeast, a project promising to boost energy security by broadening energy source diversification for Greece and the wider Balkan region, is scheduled to officially commence today.

The prime ministers of Greece and Bulgaria, as well as Serbia’s president, will attend today’s official ceremony. The leaders will highlight the need for energy source diversification in the Balkans and reduced reliance on Russian natural gas.

The Alexandroupoli FSRU promises to establish Greece as a gas hub for transportation of LNG into the EU.

Natural gas consumption in southeast Europe totals between 10 and 11 bcm annually, half this amount provided by Russia.

The Alexandroupoli FSRU, expected to be ready to operate by the end of 2023, is planned to offer a capacity of approximately 5.5 bcm, greatly diversifying gas supply to southeast Europe.

The project is budgeted at 380 million euros, of which 166.7 million euros will be provided through the National Strategic Reference Framework (NSRF).

The Alexandroupoli FSRU will be linked with Greece’s gas grid via a 28-km pipeline, enabling gas supply to Greece, Bulgaria and the wider region, including Romania, Serbia, North Macedonia, Moldavia and Ukraine.

 

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

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

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

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

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

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

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

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.

 

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.

 

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.

 

 

 

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.

 

 

 

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.

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.

Continued energy subsidies a tough equation, fewer funds, higher prices

Government officials face a growing challenge in their effort to continue subsidizing electricity and natural gas for household and business consumers as funds backing this support are decreasing at a time when energy prices have continued rising.

According to sources, the government is looking to extend its subsidy package for households and businesses to also cover April.

Wholesale electricity prices have continued their ascent during the first ten days of March, well above levels in February, while reduced CO2 emission right prices are restricting cash injections into the Energy Transition Fund, funding the subsidies.

The wholesale electricity price average for the first ten days of March is 322 euros per MWh, well over February’s average of 211.71 euros per MWh. During this period, CO2 emission right prices have dropped to 60 euros per ton from 80 euros per ton.

Prime Minister Kyriakos Mitsotakis has called for a price ceiling to be imposed on the Dutch TTF gas exchange.

Energy markets are forecast to remain volatile as a result of Russia’s invasion of Ukraine.

Hydrocarbon prospects reassessed following invasion

The prospects of Greece’s hydrocarbon sector, given the latest conditions shaped by Russia’s war on Ukraine, which has highlighted the need for natural gas source diversification, will be reassessed at a meeting scheduled to take place at the Prime Minister’s office tomorrow, with participation from the leadership of the energy ministry and EDEY, the Greek Hydrocarbon Management Company.

The meeting’s participants are expected to examine if and how the country’s hydrocarbon prospects and can be more effectively incorporated into Greece’s energy policies.

On a wider scale, Russia’s attack on Ukraine has prompted the EU to look for ways to revise its energy policy in order to reduce its reliance on Russian gas as soon as possible. A number of EU member states are now beginning to refocus on domestic hydrocarbon potential.

Renewable energy remains the top priority in Greece’s energy policy as the country aims to transition to a climate-neutral economy.

However, natural gas is planned to serve as a bridge to facilitate the transition towards greater RES market penetration.

ELPE (Hellenic Petroleum) conducted seismic surveys in January at the Gulf of Kyparissia, west of the Peloponnese, at its Block 10 license, commissioning Norwegian company Sharewater and survey vessel SW Cook.

The same vessel then conducted conduct surveys at ELPE’s ‘Ionio’ license, an Ionian Sea block measuring 6,671.13 square kilometers, southwest of Corfu, opposite the Paxi islands.

EDEY, in an announcement, noted that Greece’s potential gas deposits could generate turnover in excess of 250 billion euros, which would support the energy transition.

Copelouzos’ Greek-Egyptian grid link backed by leaders

The Elica Interconnection, a Greek-Egyptian grid interconnection planned by the Copelouzos Group, has received the backing of Greek Prime Minister Kyriakos Mitsotakis and his Egyptian counterpart Abdel Fattah el-Sisi, entrepreneur Dimitris Copelouzos, founder of the group, has informed journalists.

A preceding teleconference between the leaders of the two countries, with participation from the president of the European Investment Bank Werner Hoyer, is expected to result in EU funding for the project.

According to Copelouzos, the project is budgeted at more than 3.5 billion euros, of which 1.5 billion euros will be provided by a group of Greek banks. The project is also a candidate for the PCI list, enabling EU funding support.

The Copelouzos group had set its sights on this project from as far back as 2008. Its double subsea cable, to stretch 954 kilometers from El Sallum to coastal Nea Makri, northeast of Athens, promises to transmit low-cost green energy with a 3-GW capacity, of which one third will be provided to local industries and the other two thirds exported to fellow EU members.

More specifically, on the exports, 1 GW will be transported through the Greek-Italian and Greek-Bulgarian networks, while the other 1 GW will be used for hydrogen production, most of which will be exported to other parts of Europe.

Licensing and financing procedures for the project are being hastened as a result of Russia’s war on Ukraine as the Elica Interconnection promises to offer Greece and the rest of the EU yet another alternative energy source as part of the continent’s effort to restrict its dependence on Russia.

The Elica Interconnection is planned to be completed by late 2025 or early 2026.

Brussels considers incentive for reduced energy consumption

The European Commission is considering for inclusion, into its package of energy-crisis measures for EU member states, a voluntary mechanism that would offer incentives for reduced energy consumption by households and businesses, based on the principles of the demand response mechanism offering such incentives to industrial consumers.

Brussels’ energy crisis tool box was expected to be announced yesterday but has been postponed by a week so that it can be adjusted to new conditions created by last week’s Russian invasion of Ukraine.

As a result, the package is now expected to offer member states additional options aimed at ending Europe’s dependency on Russian gas.

French Minister of the Ecological Transition Barbara Pompili made reference to Brussels’ consideration of the mechanism that would offer households and businesses incentives to reduce energy consumption during a joint press conference with European Commissioner for Energy Kadri Simson, staged following an emergency meeting of EU energy ministers earlier this week.

“Obviously this is a debate that needs to take place in every member state,” Pompili noted, indicating that it will be up to every EU member state to decide on whether to adopt the measure that would offer consumers an incentive to reduce energy consumption.

Gastrade decides on additional Alexandroupoli FSRU by 2025

Gastrade, the consortium established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal planned for Greece’s northeast, has reached a decision to also install an additional FSRU unit at the location, expected to be completed in 2025, as a follow-up to the first terminal, set for completion in 2023.

The consortium’s decision for an additional FSRU in Alexandroupoli had been in the making from as far back as last summer, when the energy crisis was at its early stages, but was accelerated by the long-term turmoil now seen in relations between the west and Russia following the latter’s invasion of Ukraine last week.

Russia’s invasion of Ukraine has further highlighted the need for Europe to reduce its dependence on Russian gas as soon as possible. A completely new reality now appears to be in the making.

Southeastern Europe’s gas needs to result from Europe’s reduced energy dependence on Russia, through strategic diversification, has increased the prospect of Greece’s northeast becoming an energy hub that would facilitate gas exports in all directions, including to Ukraine.

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

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

March power, gas subsidies unchanged, suppliers owed

The level of state subsidies to be offered to household and business consumers for electricity and natural gas in March will remain unchanged compared to February, a support measure worth 350 million euros for the month, sources have informed.

Energy suppliers have already been informed of the decision, reached by the energy ministry.

As a result, household consumers will receive electricity subsidies worth 39 euros per month for consumption up to 300 kWh, only for primary places of residence.

Low-income households eligible for social residential tariffs (KOT) stand to receive electricity subsidies worth 51 euros per month.

Monthly subsidies for non-household consumers, including businesses, farmers and professionals, will remain at the level of 65 euros.

As for natural gas, household consumers stand to receive state subsidies of 20 euros per MWh plus that much more from the gas company DEPA Commercial. Businesses will receive 20 euros per MWh.

According to sources, energy suppliers have yet to be compensated by DAPEEP, the RES market operator, for subsidies offered in January and February, on behalf of the Greek State. Subsidies offered by the Greek State over the two-month period were worth a total of 700 million euros.

DAPEEP sources have ascertained that the sum owed by the operator to energy suppliers will be covered either late this week or early next week.

This delay has increased the cashflow strain felt be energy suppliers, now facing even greater pressure following last week’s invasion of Ukraine by Russia, a development that has sparked a further rise in energy prices.

Escalating war increases threat of gas shortages, prices surging

The escalating war in Ukraine following last week’s invasion by Russian forces has increased fears of natural gas shortages in the European market, which has led to a new price surge, adding to the price ascent prompted by the preceding energy crisis.

Markets are now jittery over concerns that the ongoing bombardments in Ukraine could damage gas pipelines running across the country. The prospect of a Russian retaliation to stricter sanctions threatened by the west is another concern pressuring markets.

Greece is in a somewhat sheltered position as the country imports Russian gas quantities via the Turkstream pipeline, crossing the Black Sea, but, given the overall developments, Athens cannot remain complacent.

The country’s crisis management committee will be meeting again today to discuss measures should the adverse conditions created by Russia’s war in Ukraine deteriorate further.

Greek authorities are expected to try and maintain reserves at the country’s LNG terminal on the islet Revythoussa, just off Athens, as close as possible to full capacity, and use pipeline gas to the fullest extent.

The country’s gas needs for March have been fully covered by four LNG shipment orders – two by Elpedison, and one each by Mytilineos and DEPA – expected at the Revythoussa terminal. Additional orders could be placed if needed. LNG orders have yet to be placed for April.

Natural gas prices surged yesterday, ending the day at 121 euros per MWh. At such a level, retail electricity prices could reach close to 300 euros per MWh. Today’s retail electricity price is 254.94 euros per MWh.

Europe now appears determined to reduce its dependency on Russian gas, covering between 40 and 45 percent of the continent’s needs. The issue has become a top priority on the EU agenda, but the road towards achieving this objective remains unclear.

Gazprombank Swift system removal may disrupt gas flow

The removal of a number of Russian banks from Swift, an international payment system used by thousands of financial institutions, expected soon as one of the sanctions to be imposed by the EU, US, UK and allies on Russia to pressure the Russian economy following its invasion of Ukraine, could disable Russia’s ability to collect payments for natural gas and oil exports, but this development could ultimately backfire by prompting Russia to turn off its taps.

Such a prospect will largely depend on whether or not Gazprombank, Russia’s third-biggest bank, is included on the list of banks to be cut off from the Swift international payment system. This specific bank receives all payments for Russian natural gas exports to Europe.

It is feared that Russia could, as a response, disrupt natural gas supply to Europe, greatly dependent on Russian gas, especially if Moscow’s military attacks in Ukraine fail to produce the desired results, despite the cost entailed by such a move for the Russian economy and the country’s funding of the war on Ukraine.

According to British media, Russia’s ongoing attack on Ukraine is costing Moscow 15 billion pounds per day, an amount making the country’s energy export revenues crucial.

EU summit agrees on need for emergency energy measures

European leaders swiftly approved a plan on the EU’s response to the Russian invasion of Ukraine during an emergency summit in Brussels last night, strongly condemning Moscow’s military offensive against its neighboring country, an attack described as unprovoked and unjustified.

The EU response plan includes a section stipulating the need for emergency measures in the energy sector as a means of supporting EU member states against sharp energy price increases, following a proposal forwarded by Athens, according to government sources.

The European Commission will now need to offer a swift response as to how EU member states can provide additional support so that excessive energy-cost increases can be absorbed.

No finalized decisions on emergency energy-sector measures were reached at yesterday’s meeting of EU leaders. Instead, the leaders have passed on the issue to the European Commission.

Greek Prime Minister Kyriakos Mitsotakis did not hold a news conference following yesterday’s summit, as had been anticipated, but instead returned directly to Athens. He is expected to update Greek president Katerina Sakellaropoulou on the summit’s developments at a meeting today.

European social unrest feared as crisis is expected to deepen

Since its outbreak seven months ago, the energy crisis, adding to the economic hardship prompted by the pandemic, has now been pushed to even further extremes by Russia’s war on Ukraine, as higher energy prices over the long term appear likely.

The Russian invasion of Ukraine – following months of increasing gas prices paid by European consumers for Russian gas supplied by Gazprom – is driving energy prices even higher and, by extension, generating further inflationary pressure to limit the purchasing power of Europeans, a catalyst for social unrest.

Under the current market conditions, energy debt will surely rise around Europe, including Greece, as consumers struggle to meet extremely higher energy costs. Also, many energy companies will struggle to stay in business.

Social unrest and a new round of Euroscepticism can be expected once consumers fully realize that higher energy costs are not just ephemeral.

Just one year ago, wholesale electricity prices in Europe averaged between 50 and 60 euros per MWh. In Greece, annual electricity consumption totaling 50 to 55 TWh was worth approximately 3 billion euros.

Yesterday, in response to Russia’s invasion of Ukraine, natural gas prices climbed as high as 144 euros per MWh, before settling at 120 euros per MWh. Natural gas prices of such levels result in wholesale electricity prices of between 250 and 300 euros per MWh, roughly five times higher than a year ago.

Should such price levels remain, Greece’s annual electricity cost of 3 billion euros, until the start of 2021, will become a sweet memory of the past. The country’s additional electricity cost could end up being worth as much as 11 billion euros, if wholesale electricity prices remain at levels of between 200 and 250 euros per MWh.

Factoring in the additional money needed by consumers for heating costs – petrol and natural gas – only exacerbates the problem.

PM calls for European unity to counter impact of energy crisis

Prime Minister Kyriakos Mitsotakis has called for the establishment of a single line of defense by the EU as protection against the impact on energy prices by Russia’s invasion of Ukraine.

This proposed stance, expressed by Mitsotakis during a meeting in Bucharest yesterday with Romania’s leadership, as well as during an extraordinary summit of the European People’s Party, is expected to be reiterated at today’s emergency European Council meeting.

Europe must establish a common response to rising energy prices as a means of protecting consumers and businesses and limiting the continent’s exposure to gas price fluctuations, through a diversification of energy sources, the Greek Prime Minister supported during yesterday’s meetings.

According to sources, Mitsotakis will go into today’s European Council meeting with a specific proposal believed to entail utilization of the EU Emissions Trading System’s Market Stability Reserve that could lead to energy crisis support worth as much as 100 billion euros.

Last month, energy minister Kostas Skrekas presented a similar proposal at a meeting of EU energy ministers in France.

The Greek proposal could gain wider acceptance this time around given the grim forecasts of even higher energy costs.

Gov’t officials fear further energy price escalation

Government officials, battling for months to deal with exorbitant energy price levels resulting from the energy crisis, now dread the thought of a further price rise in wholesale electricity to levels of as high as 400 euros per MWh should the Ukraine problem develop into a bigger conflict.

Responding to a halt in the licensing procedure for Nord Stream 2, a subsea gas pipeline directly linking Russia with Germany, Russian officials have warned of higher natural gas prices that could lead to wholesale electricity price levels of as much as 400 euros per MWh, more than double the already-high 188.39 euros per MWh at present.

Despite these concerns, local officials remain less troubled about a possible energy shortage, heartened by the milder weather conditions, high water reservoir levels at dams, as well as the increased production capacity of RES units this time of the year, which, in a worse-case scenario involving a Russian gas supply interruption via the Turk Stream pipeline, should help the grid maintain sufficiency levels.

Top-ranked government officials, including aides of the Prime Minister Kyriakos Mitsotakis, energy minister Kostas Skrekas, RAE (Regulatory Authority for Energy) president Thanasis Dagoumas, power utility PPC’s chief executive Giorgos Stassis, and gas utility DEPA’s chief executive Konstantinos Xifaras, held a meeting yesterday to examine the pressured energy market’s developments, emergency plans, as well as the financial leeway available for a continuation of energy subsidy support for beleaguered consumers.

 

Athens to discuss plan should Russian gas supply be cut

The Greek government is on high alert fearing the entry of Russian troops into two rebel-held regions in Ukraine’s east could disrupt Russian natural gas supplies to Europe and prompt energy insufficiencies, including in Greece.

In response to the development, energy minister Kostas Skrekas has been asked to attend an emergency meeting of the Government Council for Foreign Affairs and Defense (KYSEA), to be headed by Prime Minister Kyriakos Mitsotakis, and present a detailed update on the strategy he could implement to avert a natural gas shortage in Greece should Russia disrupt its gas supply to Europe or the EU imposes economic sanctions on Russia, including its gas exports.

Russian president Vladimir Putin has recognized Donetsk and Luhansk as independent states.

The fundamentals of the Greek energy minister’s plan had been presented at a recent government meeting on February 14.

According to sources, the worst-case scenario would entail a disruption of Russian natural gas supply via the TurkStream pipeline, which supplies Bulgaria and then Greece.

In this event, Greece would need to utilize gas grid operator DESFA’s LNG terminal, on the islet Revythoussa just off Athens, to its fullest, as well as the TAP pipeline supplying natural gas from Azerbaijan.

The Revythoussa LNG terminal is currently filled to capacity and would remain so with two shipments each month for as long as the Ukraine crisis continues, sources have informed.

However, the big question for Greece, and Europe as a whole, is whether LNG shipments will be available, and at what price.

Milder weather conditions, resulting in less gas consumption, would help ease the pressure on grids throughout Europe.

Egypt appears keen to accelerate plan for natural gas pipeline to Greece

Egypt’s minister of petroleum and mineral sources Tarek El-Molla (photo, right) has underlined the potential of energy-sector collaboration between Cairo and Athens and the significance of an MoU signed by Egypt and Greece for joint development of energy infrastructure.

The Egyptian minister was speaking at the annual Egypt Petroleum Show, Egypts, before 2,000 attendants from 65 countries, among them top-ranked officials from multinational energy giants.

Agreements already signed between Egypt and Greece pave the way for the development of a subsea natural gas pipeline linking the two countries, El-Molla noted.

According to diplomatic sources, this special mention by the Egyptian minister highlights his country’s interest to push ahead with the natural gas pipeline project, which, on the one hand, would facilitate Egyptian natural gas exports to the EU and, on the other, help the continent further diversify its energy sources.

A further increase in activity between Athens and Cairo for an acceleration of procedures leading to the gas pipeline project’s development has not been ruled out by the diplomatic sources.

In addition, the potential of a subsea electricity grid interconnection between the two countries also seems to be gaining momentum, the diplomatic sources noted. Greek power grid operator IPTO and Egyptian counterpart EETC are collaborating on this latter project.

The current Russia-Ukraine problem once again highlights Europe’s need for further energy source diversification. Russia, through gas giant Gazprom, covers approximately one third of European natural gas consumption in the household and business sectors.

 

Emergency energy plan shaped should Russia invade Ukraine

The government’s emergency energy sufficiency plan should a Russian invasion of Ukraine occur over the next couple of months and interrupt Russian gas supply to Greece, a worst-case scenario considered unlikely yet not impossible, includes at least three additional LNG shipments from Algeria and Egypt, a switch to diesel powering of natural gas-fueled powered stations, wherever this is technically possible, as well as increased inflow of natural gas from Azerbaijan through the TAP route.

The country’s energy planning authorities continue to believe there is no cause for alarm, despite being under no illusions that the quantity of Russian gas supply received by Greece could be fully replaced in the event of a disruption.

External factors beyond the control of the country’s energy officials will be crucial should  Russian forces invade Ukraine. The duration of any conflict, weather conditions over the next couple of months, as well as the availability of additional gas orders, in a market where demand levels are already breaking records, are all crucial factors that would shape the severity of yet another crisis.

Energy crisis entering acute winter period, EU disjointed

The energy crisis’ greatest challenges lie ahead with energy exchange futures indicating a fiery period that will last at least three months, until March, followed by a very slow de-escalation in prices.

The problem is not just the exorbitant price levels experienced over the past few months, but the even higher prices anticipated over the next few months. January gas futures are approximately 50 percent over November levels.

A series of support measures announced for consumers in Greece by Prime Minister Kyriakos Mitsotakis over the weekend would normally ease some of the strain, but, given the upward trajectory in prices, this support will soon be cancelled out.

In the absence of a uniform EU strategy to tackle the crisis, member states are being called upon to find solutions for themselves. European leaders failed to reach consensus at a summit meeting late last week.

EU gas reserves are at 62 percent capacity at the start of winter. The European Commission’s ongoing dispute with Russia over certification of the Nord Steam 2 gas pipeline, running direct to German via the North Sea, as well as the threat of a Russian invasion of Ukraine, are key geopolitical factors behind Europe’s energy crisis. Russia covers 60 percent of Europe’s natural gas needs.

 

Long-standing DESFA northern Greece pipeline plan scrapped

Gas grid operator DESFA has scrapped plans for a natural gas pipeline that had been envisioned to run across northern Greece, from Komotini in the northeast to Thesprotia in the northwest, after maintaining the project in the company’s business plans for about a decade.

DESFA reached this decision as Russian President Vladimir Putin is supporting Gazprom’s development of a second branch for the wider Turkish Stream gas project, deviating Ukraine, to supply the Balkans and central Europe via Bulgaria, not Greece, as was initially considered.

A first Turkish Stream branch supplying Russian gas to Turkey is already operating.

“The project remained on the business plan for approximately ten years without progressing to the construction stage, while there is no sign of conditions leading to its construction in the immediate future,” DESFA announced.

The Komotini-Thesprotia pipeline project was budgeted at 1.8 billion euros.

The total cost of projects included in DEFSA’s development plan for 2021-2030 is now budgeted at 545.5 million euros.

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

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.

 

Trump’s stance could reshape Europe’s foreign and energy policies

The election of Donald Trump to the US presidency may bring about changes to Europe’s energy and foreign policies if the new American leader insists on pursuing a path leading to isolationism and warmer ties with Russia.

As for the Russian part of the equation, speculation of Trump’s close personal and business associations with the Kremlin has become widely known. The disclosure of Russia’s alleged intervention in the US elections, the objective being to push Trump to power, has stunned the political landscape worldwide.

If these developments are transformed into foreign policy then major shifts in balances of power can be expected in regions such as Eastern Europe, the Middle East and central Asia.

Trump’s ongoing disparagement of NATO is not an encouraging sign for countries of the former eastern bloc. They view Russia with hesitancy and need allies, Ukraine being an obvious example.

A change of energy market roles for Russia and Ukraine would severely impact Europe’s energy policy. For many years now, Ukraine’s extensive pipeline network has been used by Russia to transmit its natural gas to Europe. However, as a result of troubled relations between Moscow and Kiev, the Kremlin has sought strategic independence from Ukraine over the past decade or so. Russia has been promoting the development of new gas supply lines to Europe such as Nord Stream 1 and 2, South Stream and Turkish Stream, all of which bypass Ukraine.

Russian wants to establish itself as a gas supplier to Europe via a seamless network, which would enable the country to increase its supply and control both networks and the market.

The European Commission claims it wants reduce its Russian energy dependence, despite the fact that consumption has increased, as highlighted by market data for 2016.

Brussels essentially does not want Russia to develop new pipelines as it fears Europe’s influence on energy issues will diminish. Another European fear is that Ukraine will be completely abandoned to Russian intentions. Ukraine’s pipeline network is its most powerful bargaining tool opposite Russia. If Trump insists on a pro-Russia policy, prompting a US-Ukraine split, then Europe will be Ukraine’s only remaining ally.