Tender seen for subterranean gas storage unit in the north

The energy ministry and TAIPED, the state privatization fund, are making preliminary  moves leading to an international tender for the development of a subterranean natural gas storage facility in the south Kavala offshore area through utilization of a virtually depleted gas deposit.

The ministry is preparing a ministerial decision that will officially brand the project as an independent natural gas system (ASFA), or private storage facility, a necessary step ahead of the tender. TAIPED is preparing official texts for the tender, which, according to energypress sources, will be announced in the second half of this year and most definitely within the year.

An exploitation license held by Energean Oil – following a series of mandatory extensions provided to keep the facility operational – is due to expire in November.

The project is not only seen as useful but necessary for bolstering the country’s supply security and chances of becoming a regional energy hub.

Details concerning the project’s development and exact role remain undetermined.

Besides moving to declare the depleted deposit as an independent natural gas system, which would lead to the staging of an international tender, authorities have also considered two other options. One entails offering the development rights to Energean Oil, holder of the deposit’s existing operational license. Passing on the subterranean storage facility’s  investment and utilization rights to DESFA, the natural gas grid operator, has also been considered.

The south Kavala gas deposit is still producing small amounts being exploited by Energean Oil. The company had proposed converting the virtually depleted deposit into a natural gas storage facility back in 2010. A related application was submitted by the firm the following year, shortly before control of the facility was passed on to TAIPED for appraisal. A period of indeciveness by the Greek State followed, which led to the project’s removal from the EU’s Projects of Common Interest list. The facility regained its PCI status this year as it is regarded pivotal for energy security in Greece and the western Balkans, while also having potential to support the TAP gas pipeline, now being developed and planned to cross northern Greece.

The south Kavala project’s cost is estimated between 250 and 300 million euros.

French energy group Engie, a successor of GDF Suez, Europe’s oldest energy firm, has expressed an interest in the south Kavala project. Company officials who were part of French president Emmanuel Macron’s delegation for an official visit to Athens last September singled out the south Kavala project. Engie is already present in the Greek market with a 25 percent stake in electricity supplier Heron.