THE NATURAL GAS MARKET IN GREECE

THE NATURAL GAS SYSTEM OF GREECE

Thessalonica area

Pipeline

Athens area

LNG Terminal

Max Pipeline capacity : 9 bcm

LNG throughput upgraded in 2007
Pipeline to Turkey (2008) : 3 – 8 bcm
Pipeline to Italy (20??) : >8 bcm
 GAS MARKET STRUCTURE

• Natural Gas supply to Greece started in 1996

• Greece got a derogation from Directives on liberalization of gas
market
• Liberalization started in 2005 (for large consumers), but is
expected to start operating from 2007 onwards (Law 3428/2005)
• DEPA SA is the incumbent company
• State controls 65%,
65% ELPE 35%,option
35% option of PPC to take 30% share from State
• At present vertically integrated, owning all assets
• Holds all import contracts and all supplies to large customers and to gas distribution companies (cities)

• DEPA legal unbundling is on going

• In 2007, DESFA will be the gas transportation system operator (with ownership of all gas assets) and DEPA
will be a commercial gas supply company

• Gas Distribution companies (cities) are owned by DEPA but

management (and 49% of shares) is granted to strategic investors
((Italgas
g in the north and Cinergy
gy with Shell in Athens).
) Theyy hold
a 30-years monopoly right to distribute and supply gas in the cities
 THE STRUCTURE OF DEPA

Corporate Structure

Greek State Private investors PanEuropean

(Athens & London Holdings S.A.
S.E.)
65 % 43,7 %
31,6
, % 24,7
, %

Hellenic Petroleum

35 %

Local Authorities
DEPA
Flow of dividents (10%)
100%
Gas distribution companies of
Attiki, Thessaloniki and
Investors 51 % Thessaly
(ownership of fixed assets)
49 %
3 Prospective EPAs Attiki Denmark Italgas Italgas
(60% Cinergy –
• East Macedonia & Thace 51 % 40% Shell Gas)
• Central Macedonia 51 % 49 % 51 % 49 %
• Sterea & Evia 49 %
Attiki EPA Thessaloniki Thessaly
EPA : Regional Gas Supply Company EPA EPA
 THE NATURAL GAS MARKET IN GREECE
Market Opening
According to the new Gas Law: N.3428 / 2005:
1st phase 1/7/2005: 80%
(Power & Cogeneration Producers with > 100GWh)
2nd phase 15/11/2008: 85%
(Industrial consumers outside EPAs' distrubition section)
3rd phase 15/11/2009: 90%
(All domestic consumers outside EPAs' distrubition section)
4th phase (after expiration of EPAs' License) 100%
((All consumers includingg EPAs))
Transportation tariffs are applicable from March 2006 and valid up to 2010
(according to a ministerial decision YA.4955).
Gas Transportation and other Services Contract prepared by DESFA-RAE
is now under public consultation, (valid for the transition period).
Gas Network Code and TPA Access Rules are under preparation by RAE
(first draft to be given in March 2007 and application by 1/9/2007).
Gas Market Regulations

• Legally unbundled Gas TSO, owning the assets

• Provides access to gas transport and LNG at regulated tariffs
• Provides gas balancing services
• Carries out investment in main gas infrastructure
• Links potentially private gas infrastructure with main system
• Gas
G ttransportt tariffs
t iff are relatively
l ti l high
hi h in
i Greece
G
• Tariffs are set on a total cost – plus basis by Minister after opinion by
Regulator
• Tariffs recover the value of Gas Assets which is high in comparison with the
low rate of use of gas infrastructure
• Basic
B i Tariffs,
T iff as approved, d are 2-3
2 3 €/MWh-gas
€/MWh (1 5 iin the
(1.5 h EU)

6
 THE NATURAL GAS MARKET IN GREECE
M k t - Demand
Market D d
9.000

RGDCs
G Cs
8.000 TOTAL CHEMICAL USES
INDUSTRY + CHP
7.000 TOTAL ELECTRICITY GENERATION

6.000

5.000
m cm

4.000

3.000

2.000

1.000

0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
 THE NATURAL GAS MARKET IN GREECE

Market – Growth 1/2

o Power Generation
Forecast for increase in electricity demand 3,1% p.a. to 2015.
Natural Gas will account for 37% of electricity generation by 2015.

o Residential and commercial sector

• Three EPAs ((RGDCs)) with obligation
g in their licenses,, to expand
p the
distribution networks in four major cities (length to be reached in the first
7 years).
• Three
Th additional
dditi l EPA
EPAs will
ill be
b created
t d to
t cover the
th areas crossed d by
b the
th
gas infrastructure.
• The existing EPAs have a 30 year monopoly for consumers up to 9 bcm/y,
(final plateau for the total national gas consumption).
• The future EPAs may have a conditional monopoly for up to 20 years.
 THE NATURAL GAS MARKET IN GREECE

Market – Growth 2/2

Administrative measures to support use of gas.

o Compulsory substitution of heating oil with natural gas, in the historic centre
of Athens.
o Compulsory substitution of fuel oil with natural gas for burners with a
capacity exceeding 400 kW within 1 year from gas availability.
o Exemption from excise tax until 2010, (no special fuel duty).
o Obligation to construct internal installations in all dwellings built in areas
where natural gas is or will be distributed.
o Decision to connect a collective building to the grid may be taken by simple
majority of owners.
THE NATURAL GAS MARKET IN GREECE

Natural Gas Supply

o C
Contract withi hG
Gazexport
(signed 1988) of 2.8 bcm.
o Contract with Sonatrach for
LNG (signed 1988) of 0.68
bcm (max.) and 0,51 bcm
(min.).
o Contract with Botas (signed
2003) off 0.75
0 75 bcm,
b start
t t
deliveries mid-2007.
o Additional Pipe Gas and LNG
after 2008.
Gas Supply Contracts and Prospects

• DEPA SA is the single holder of import contracts

• Prometheus Gas (subsidiary of Gazprom) has also a potential of gas imports
up to 2.8 bcm per year
• Import contracts
• From Russia through pipeline up to 2.8
2 8 bcm per year
– Take or pay contract up to 2016, negotiations on going for extension
– Competitive gas prices but tightly linked to oil prices
• From
F Al
Algeria
i as LNG up to 00.680
680 bbcm per year
– Take or pay contract (0.510 bcm), high prices linked to oil prices
– LNG terminal has much more storage and throughput capacity (1 km3/h)
• From Turkey, future contract for up to 0.740 bcm/year (uncertainty)
• Current border gas prices are high : ~ 250 $/km3
• PPC SA isi by
b far
f the
h largest
l consumer (~75%)
( 75%) and
d hholds
ld a
dedicated contract with clause about “best supply prices”

11
Uncertainty Issues in Gas Market

• Security of Supply
• Gazprom gas dominates supply to Greece – risk of duopoly
• Pipeline gas supply other than Gazprom’s gas is difficult
– Third party access to Bulgarian pipeline is probably impossible
– Non Russian gas through Turkish pipeline is expected beyond 2010
• LNG terminal may provide some opportunities
• Incremental gas needs beyond current contracts are not yet
secured;
d currentt contracts
t t approachh exhaustion
h ti
• Competition in gas wholesale trade not yet developed
• Gas transport tariffs are relatively high
• Negotiations are on going to:
• Remove excessive clauses regarding
g g costs related to variabilityy of gas
g use and
gas balancing
• Complete the codes and regulations regarding access to gas infrastructure

12
 THE NATURAL GAS MARKET IN GREECE

Infrastructure of Transmission System

Present Expansion Project

o HP (70 bar) mainline o Compressor
511 km
km, 36
36” and station on the
30” mainline
o HP branches - First phase:
450 km, 10
10” to 30
30” 2 units of 7,7
,
o MP (19 bar) networks MW (ISO
350 km conditions)
o 4 Operation & - Second phase: 1
Maintenance Centers additional unit
nit
o 24 M/R stations
THE NATIONAL GAS GRID
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

Ljubljana
West Balkans SEA OF AZOV
Zagreb
Gas Corridor Russian gas
Belgrade
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Tehran
Nicosia Iraqi
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem
 THE NATURAL GAS MARKET IN GREECE
International Interconnections
Dutch &Norwegian gas Russian gas
g
Kiev
Prague
Luxembourg

Vienna Bratislava
Russian gas
MOLDOVA
Budapest
V d
Vaduz Kishinev
Bern

West Balkans
Ljubljana
Zagreb
Gas Corridor
SEA OF AZOV
Russian
Belgrade
Gas Russian gas
A

Bucharest
D

San Marino
R

Monaco Sarajevo
IA

LNG BLACK SEA

CAS
LI GURI AN
T

SEA
IC

Sofia
Azeri
ITG Project Azeri
SE

Blue Stream gas

Rome Scopje Tbilisi
A

PIAN
Gas
Kirklareli

Tirane Istanbul
komotini Eregli

Brindisi Baku
LNG Izmit

TYRRHENIAN Ankara Erzurum Yerevan

SEA Otranto Thessaloniki Karacabey Bursa

Karacabey
Can
AE

SEA
Kirsehir Erzincan
Eskisehir

Algerian Perdika Izmir

GE

LNG Izmir
Kayseri
Turkmen
AN

LNG
LNG Iranian gas
Tunis
SE

gas
A

IGI Project
Valletta Iran Tehran
Nicosia Iraqi Gas
gas
Algerian
gas
g
M ELibyan
DITERRANEAN SEA Beirut
Baghdad
g
Damascus

Tripoli gas
Egyptian
Amman
LNG Jerusalem