The European Commission has approved, under EU State aid rules, a €166.7 million Greek support measure for the construction of a new liquid natural gas (“LNG”) terminal in Alexandroupolis, Greece. The project will contribute to the security and diversification of energy supplies in Greece and, more generally, in the region of South East Europe, without unduly distorting competition.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: "The new LNG terminal in Alexandroupolis will improve gas supply and infrastructure not only in Greece, but in the whole South Eastern European region. This will contribute to achievement of the EU's goals in terms of security and diversification of energy supply. The Greek support measure limits the aid to what is necessary to make the project happen and sufficient safeguards will be in place to ensure that potential competition distortions are minimised."
Greece notified the Commission of its plans to support the construction of a new LNG terminal in Alexandroupolis, consisting a Floating Storage Regasification Unit (“FSRU”) for the reception, storage and regasification of LNG (complemented by permanent offshore installations, such as mooring system and risers), as well as a system of a sub-sea and an onshore gas transmission pipeline which will connect the FSRU to the National Natural Gas System of Greece (“NNGS”).
Given its strategic importance for the diversification of natural gas supplies into the South-Eastern European region, the LNG terminal in Alexandroupolis has been included in the lists of European Project of Common Interest in the energy sector, based on the EU TEN-E (“Trans-European Network for Energy”) rules since 2013.
The terminal is expected to improve security of supply not only for Greece, but also for Bulgaria and for the wider South Eastern European region, as it will constitute a new potential energy source to feed into the interconnector between Greece and Bulgaria (“IGB”). The Commission approved public support for the IGB project, which is currently under construction, under EU State aid rules in November 2018.
The Greek Authorities have confirmed that the LNG Terminal would be apt to use for hydrogen, and that the project would contribute to a cleaner energy mix through increased use of gas instead of coal.
The project will be financed by the Greek State using European Structural and Investment Funds (“ESIF”), notably funds directly controlled and managed by Greece under the 2014-2020 Partnership Agreement for the Development. The support will take the form of a direct grant amounting to €166.7 million. The beneficiary of the aid is Gastrade SA, a company in which the Greek gas incumbent (DEPA) and the Bulgarian gas Transmission System Operator (Bulgartransgaz EAD) hold a participation. Gastrade will be the promoter and operator of the new terminal.
The Commission assessed the measure under EU State aid rules, in particular under the 2014 Guidelines on State Aid for Environmental Protection and Energy.
The Commission found that the aid is appropriate and necessary, as the project would not be carried out without the public support. In this context, the Commission took into account the inclusion of the project in the list of Projects of Common Interest in the energy sector.
Furthermore, in order to ensure that there is no overcompensation, the project promoter will be obliged to give back to the State part of the revenues generated from the terminal, should they go beyond a set capped level over the project lifetime. In addition, the National Energy Regulator has put in place certain safeguards to prevent an increase in the market position of the largest gas operators involved in the project, such as a limitation of the share of LNG that can be booked in the terminal by such players.
This will ensure that the aid is proportionate and limited to the minimum necessary for triggering the investment and that potential distortions of competition and trade are minimised.
On this basis, the Commission concluded that the measure is in line with EU State aid rules, as it will further security and diversification of energy supply, notably in the South-Eastern European region, without unduly distorting competition.
Background
The Floating Storage Regasification Unit (“FSRU”) of the new terminal will be stationed approximately 17.6 km from the town of Alexandroupolis in Northern Greece, at an offshore distance of approximately 10 km from the nearest shore. The FSRU will have an overall delivery capacity 5.5 billion cubic meters/bcm per year. The subsea and onshore sections of the gas transmission pipeline, of 24 km and 4 km respectively, will transmit the gas from the floating unit to the Greek natural gas network. The connection point of the pipeline will be the Kipi‐Komotini branch of the National Natural Gas System of Greece (“NNGS”), at a new entry point from which the natural gas from the floating unit will be transmitted to the NNGS.
Wednesday 23 June 2021
Signing of Advanced Reservation of Capacity Agreement (ARCA) between DESFA and Dioriga Gas
DESFA and Dioriga Gas signed on Wednesday June 16th 2021 the Advanced Reservation of Capacity Agreement (ARCA) for the construction of the connections between the planned floating storage and regasification unit of Dioriga Gas, which is set to be developed by the subsidiary of Motor Oil in the Gulf of Agioi Theodoroi, in Corinth and the National Natural Gas Transmission System (NNGTS) owned and operated by DESFA. The agreement was signed by the CEO of DESFA, Maria Rita Galli and the CEO of Dioriga Gas, Ioannis Kioufis.
This is an important step in the development of the Dioriga Gas FSRU, as with the signing of the agreement, DESFA begins the preparation of studies for the construction of a Metering and Regulating Station with a capacity of 490,000 Nm3 / h (11.76 mn. Nm3/day), which is going to connect the Dioriga Gas FSRU with the NNGTS, a project that is included in the three-year period of the Ten-Year Development Plan of DESFA 2021-2030.
Upon completion and in conjunction with DESFA's existing infrastructure, the FSRU of Dioriga Gas will be an additional gateway for natural gas to serve emerging national and regional gas markets, enhancing security of supply and diversification of energy supply sources, as well as competition at both national and regional level, with significant benefits for consumers.
In addition, in synergy with DESFA’s Small Scale LNG infrastructures (LNG Truck Loading Station & New Small Scale LNG Jetty), which are being constructed in the Revithoussa LNG Terminal, the planned LNG barge reloading and truck loading facilities of the Dioriga Gas FRSU will facilitate further penetration of natural gas in the maritime sector, as well as in areas far from the natural gas network.
On the occasion of the signing, Maria Rita Galli, CEO of DESFA, noted: "We are glad for today's signing as a further step has been achieved for a new gas import infrastructure project that will further enhance the role of Greece as Southeast Europe’s international energy hub. DESFA ensures open access to the National Natural Gas System, steadily fostering the development of competition in the Greek energy market, with significant benefits for the country, the Greek economy and the final consumer."
The CEO of Dioriga Gas, Ioannis Kioufis, stated: “We would like to thank DESFA for the cooperation so far. Today’s signing is very important as it signals the beginning of an important project from which the Greek consumers will benefit. Motor Oil as an energy group is committed in realizing works of strategic importance for the country’s energy transition. In this respect, DESFA’s long experience in handling and operating natural gas infrastructures is important for the successful completion of this emblematic project. We are looking forward in realizing together the next steps of the project.”
Friday 4 June 2021
Tellurian and Vitol sign 10-year LNG agreement for 3 mtpa
Tellurian Inc. (Tellurian) (NASDAQ: TELL) announced today it has finalized a liquefied natural gas (LNG) sales and purchase agreement (SPA) with Vitol Inc. (Vitol). The SPA is for three million tonnes per annum (mtpa) on a free on board (FOB) basis at Driftwood LNG for a ten-year period, indexed to a combination of two indices: the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), each netted back for transportation charges. At today’s prices, the agreement is valued at approximately $12 billion in revenue over ten years.
President and CEO Octávio Simões said, “Tellurian continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want. Vitol expressed interest in the development of Driftwood early on, and it is fulfilling to finalize this agreement with the world’s largest independent trader of energy. As the world electrifies and our population grows, the demand for reliable, low-cost energy will continue to increase. LNG provides a stable source of fuel at an attractive price, and Tellurian’s integrated model is positioned perfectly to offer volumes on JKM, TTF or blended price basis.”
Executive Vice President LNG Marketing & Trading Tarek Souki added, “Tellurian has made exceptional progress on our intended first phase capacity sales by securing this second SPA with another respected global energy trading business. The two recent agreements represent an aggregate of $24 billion in estimated revenue; we will continue to be deliberate and selective in choosing our additional customers.”
Pablo Galante Escobar, Global Head of LNG and European Gas & Power at Vitol said: “Vitol is excited to conclude this agreement with Tellurian. Our long-term commitment and investment grade rating will help Tellurian as they continue their path to financial close.”
Ben Marshall, CEO of Vitol Inc. added: “Vitol’s business continues to grow and evolve in the Americas and around the world. This agreement will make Vitol one of North America’s largest exporters of natural gas, providing our customers with cost effective and cleaner fuel solutions.”
Tellurian and Gunvor sign 10-year LNG agreement for 3 mtpa
Tellurian Inc. (Tellurian) (NASDAQ: TELL) and Gunvor Singapore Pte Ltd (Gunvor) announced today a liquefied natural gas (LNG) sales and purchase agreement (SPA) for three million tonnes per annum (mtpa) for a ten year period, indexed to a combination of two indices; the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges. The LNG would be delivered free on board (FOB) from Tellurian’s Driftwood LNG, a 27.6 mtpa liquefaction facility proposed near Lake Charles, Louisiana in the United States Gulf Coast.
President and CEO Octávio Simões said, “Tellurian intends to market up to 10 mtpa of LNG in our first phase on a JKM, TTF or blended price basis, as our integrated model provides the flexibility to offer this valuable product. We welcome Gunvor, the largest independent global trader of LNG volumes, to Driftwood and look forward to providing a cleaner fuel to meet growing global energy needs and enable energy access.”
Executive Vice President LNG Marketing & Trading Tarek Souki added, “Our business model creates significant value for Tellurian; at today’s LNG prices, this agreement represents the equivalent of approximately $12 billion in revenue over the 10-year term of the agreement.”
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