Ukraine

EU summit agrees on need for emergency energy measures

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

 

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

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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.