“We may have enough natural gas, but we’ll pay dearly for it,” is the consensus in Greece as far as the country’s fuel’s sufficiency is concerned.
This is an issue of growing significance in Europe, as the winter period begins with low reserves, a reduced flow from Russia and much of the available liquefied natural gas heading to Asian markets, where demand is huge.
Greece’s Regulatory Authority for Energy (RAE) and gas grid operator DESFA consider the quantities arriving in the country via pipelines from Russia and Azerbaijan as secure. In the first eight months of 2021 those sources accounted for 67% of domestic demand – 13.76% higher than in the same period last year.
The Greek market may have been bolstered by the operation of the Trans Adriatic Pipeline, via which 1 billion cubic meters of gas is transmitted annually, but it is also exposed to the unstable and very expensive LNG market (33-37%); this forces the competent authorities to remain alert, even if they don’t see any problem for now.
Authorities say the gas loads scheduled up to November are absolutely safeguarded; they also stress there will be normal supply from the spot market, where gas quantities can be found as long as one is willing to pay good money for them.
The situation regarding the local market sufficiency will likely be assessed during the week at a RAE meeting with DESFA and electricity grid operator ADMIE, as power market sufficiency depends on that of natural gas given that 40% of electricity output relies on gas.
The cost of an LNG load has soared from $20 million last year to $90-100 million. During the summer one company in the sector decided to cancel an order due to the high rates, while others resorted to sharing orders in order to cut costs – this is a trend that is expected to dominate the market in the coming months, until rates subside.
Predictably, the high LNG rates have led to shifts in the local gas market, with companies resorting to cheaper contracts wholesalers offer, as they also have the fuel through pipelines, such as DEPA, Mytilineos and the Copelouzos Group.
LNG’s share soared in 2020 due to its low rates, but it has now dropped significantly with the change in rates.