Competition has intensified in the country’s wholesale gas market at a time of changing conditions and negotiations for 2021 deals between importers and major-scale consumers, namely electricity producers and industrial enterprises.
Many gas supply contracts expired at the end of 2020, requiring a large number of players to renegotiate deals. Some of these big consumers have already reached new agreements with gas wholesalers.
Market conditions have changed considerably compared to a year earlier. Supply of Azeri gas through the new TAP route has already begun to Greece as well as Bulgaria, increasing overall supply, which has obliged, and permitted, gas utility DEPA to pursue a more aggressive pricing policy as the company pushes to absorb quantities it has committed to through clauses in existing contracts.
Also, the TAP-related increase of gas supply to Bulgaria, combined with this country’s inflow of Russian gas through oil-indexed price agreements, currently relatively cheaper, is now depriving Greek wholesale gas companies of entry into a neighboring market that was available for trading activity last year.
Furthermore, conditions have also been impacted by a competition committee decision no longer requiring DEPA to stage gas auctions to make available a share of its gas orders to rival traders. This measure was introduced and maintained to help liberalize Greece’s gas market.
The new conditions are pushing Greek traders towards more competitive pricing policies. They appear to have acknowledged that their profit margins will be narrower in 2021.
DEPA, helped by the fact that a sizeable proportion of its gas purchases is oil-indexed, is said to be playing a dominant role in the ongoing negotiations for new contracts with customers.
It should be pointed out that, unlike rival gas importers such as Mytilineos, Elpedison and Heron, all benefitting through self-consumption of a large part of their gas orders for gas-fired power stations they operate, DEPA does not self-consume.
Prometheus Gas, a member of the Copelouzos group, remains a formidable player, while the power utility PPC and petroleum company Motor Oil are less influential in the wholesale gas market.
Higher LNG prices, compared to pipeline gas, will decrease demand for LNG this year and weaken the interest of traders for LNG supply through gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens. Last year, this facility was a hot spot of trading activity as a result of lower-priced LNG.