Greece’s Public Gas Corporation DEPA is the company that introduced natural gas to Greece implementing a big energy investment, making substantial contribution to the development of the Greek economy, the protection of the environment and the improvement of the quality of life of the local communities, which is especially important as the country tries to exit from a long-running financial crisis.
Following the EastMed energy roundtable in Brussels on March 28, DEPA CEO Theodoros Kitsakos spoke to New Europe in an interview, discussing Greece’s emerging natural gas market, the role of gas as a transportation fuel and Greece’s geopolitical energy role in EU energy security.
New Europe: What are the possibilities for the Greek natural gas market?
Theodoros Kitsakos: Natural gas is the fastest growing form of primary energy worldwide, which is especially important if we take into account efforts to reduce global emissions while maintaining competitiveness. Right now, there is an emerging gas market in Greece. In order for a small market, like Greece, to become a peripheral hub, you have to look first at your domestic market. The growth potential has been and remains significant as average Natural Gas consumption in Greece has been far below the EU average (Greece 12% – European average 21%). The most important thing is the gas culture. There is a lot to do in order to upgrade the gas culture and the Greek gas market and DEPA is working hard on that.
In this direction, last year we made progress when it comes to expanding the Greek natural gas grid and the further coverage of regions that lacked gas supplies until recently. The company’s strategy is customer-oriented, socially sensible, developmentally driven, contractually flexible and pricewise agile.
DEPA expects this through the expansion of the natural grids, the increased use of natural gas in transportation, the expected added consumption for the next 15 years will be around 8 bcm, resulting in an average consumption increase of 0,7 to 0,8 bcm/year and a subsequent reduction of over 50 Ktons of emitted CO2. Already, the gas supply of new locations and regions (islands, Epirus, Western Macedonia etc) is well under way using pipelines, ships and trucks.
NE: As EU countries make the transition to clean energy and use more renewable energy, gas will play an important role and lot of European countries, especially Germany and Italy, are increasing their use of natural gas in transport. What plans does DEPA have on this regard?
TK: DEPA is the company that launched natural gas as a transportation fuel in Greece. Several years ago, a significant percentage of buses in Athens were converted to natural gas with funding support from the European Union.
DEPA is continuing to advance the use of natural gas as a transportation fuel under the brandname FISIKON. During 2016, consumption has increased significantly compared to the previous year. DEPA currently operates 10 CNG refueling stations in various cities all over Greece, while more are under construction or in licensing phase in many cities.
It is also worth noting, that recently passed laws help the increased role of natural gas in transport vehicles.
DEPA wants to create a new reality for the purchase of natural gas in our country by positively contributing to the development process.
NE: Can Greece play a role in European and regional energy security?
TK: Greece, due to its geopolitical position in the transit of hydrocarbons from the Caspian and Russia, as well as its proximity to recently discovered reserves in the East Mediterranean, can play an important role as an energy hub.
DEPA’s contribution is especially valuable towards the longstanding goal of Greece to become a regional energy hub in Southeast Europe. The country aims to transfer natural gas from the East to the West through the Trans Adriatic Pipeline (TAP) and Poseidon pipelines, but also from the Eastern Mediterranean fields to Europe through the East Med pipeline, as well as into the Balkans through IGB and the planned Alexandroupolis LNG terminal.
With energy security in mind and with a strong financial standing in hand, DEPA carries on with its strategic planning in order to complete significant international projects, as well as its own internal market expansion.
DEPA’s focus is both on the North-South natural gas route, as well as on the East-West route, when it comes to new pipelines and interconnections.
DEPA’s strategic choice is to ally itself to other strong players in the market, both for the realisation of important projects and for the supply of new potential customers. One successful example is DEPA’s collaboration with Edison in the Poseidon consortium (equally owned by DEPA and Edison), engaged in the development of gas infrastructure projects in South East Europe and currently promoting the Interconnector Greece-Bulgaria (IGB), the Poseidon pipeline and the Eastern Mediterranean pipeline (EastMed). All the above projects have been recognised by the EU as Projects of Common Interest (PCI).
The interconnector Greece-Bulgaria (IGB) is a key project for the SE Europe region, since it will enhance diversification of supplies and routes of Bulgaria and beyond.
The Poseidon pipeline, the offshore section of the Interconnector Turkey-Greece-Italy IGI POSEIDON (former ITGI), is designed as a multi-source import project that could substantially contribute to Europe’s security of supply through diversification of sources and/or routes.
NE: Is the export of hydrocarbons from the East Med via Greece a realistic proposition?
TK: The East Med pipeline, which is planned to transport natural gas from the recently discovered fields in Eastern Mediterranean to Europe, is feasible and viable.
All technical and economic studies conducted in 2016 by world class leading companies such as Intec SEA, C&M Engineering and IHS CERA concluded that the project is technically feasible, economically viable and commercially competitive. From a technical background all steps are quite feasible. There is only one small part of less than 10 kilometres just before the island of Crete where the depth is quite high. But technology has advanced so we can cover this as well, so the whole route is guaranteed.
On the political level, the project is receiving a continuous and growing support by the Governments of Greece, Italy, Cyprus and Israel as well as the European Commission.
DEPA favours the East Med pipeline, which plans to connect the Levantine fields with Cyprus to Crete and mainland Greece. East Med could offer an additional diversified supply of natural gas to Greece and Italy via the IGI Poseidon pipeline and for Europe in general.
East Med, which is projected to carry up to 14 billion cubic metres of natural gas to Greece and Europe, is technically, commercially and competitively viable.
NE: While we are on the topic of EU-backed projects, do you see an increased role of liquefied natural gas projects in the region?
TK: As I have mentioned Greece’s natural gas market is still developing compared to other countries in Europe.
Nevertheless, when it comes to the use of liquefied natural gas on an international level, the use of LNG as a fuel and Greece’s position in the Mediterranean, DEPA is a project coordinator in Poseidon Med II, which aims to take all the necessary steps towards adoption of LNG as a marine fuel in the East Mediterranean, while making Greece an international marine bunkering and distribution hub for LNG in South Eastern Europe.
The project, which is co-funded by the EU, involves three countries, Greece, Italy and Cyprus, six Mediterranean ports (Piraeus, Patras, Limassol, Venice, Heraklion, Igoumenitsa) as well as the Revithoussa LNG terminal. The project brings together top experts from the marine, energy and financial sectors to design an integrated LNG value chain and establish a well-functioning and sustainable LNG market.
Our next targets are the expansion of LNG use in Western Greece and the expansion in Crete and the large islands in cooperation with PPC (through an already signed MOU). Here we have an extremely interesting opportunity for the participation of private investors.
NE: How was the gas shortage this winter averted and how can you avoid similar problems going forward?
TK: Natural gas cemented its importance for Greece during 2016 and the beginning of 2017, not only as a bridge fuel for the energy transition toward a sustainable economy, but also as a reliable and flexible energy source, which proved that it enhances energy security.
Natural gas was the primary fuel used to cover excess demand during a period of extreme cold weather and energy shortages and provide adequate heating and power to citizens, businesses and industries.
DEPA played an important part during the energy shortage that took place this December-January in Greece (as well as many other European countries), since, through careful planning and foresight, it managed to supply the market with non-scheduled LNG cargoes through the Revithoussa terminal. DEPA foresaw the rise of demand for gas and promptly acted to increase LNG supplies. During the period of high demand (December 2016 and January 2017) that followed, DEPA arranged for the delivery of seven LNG cargoes, three of which delivered 110.000 cubic metres of gas each. In total, natural gas consumption in Greece skyrocketed during December and January and reached 320 million cubic metres versus 100 million cubic metres in the same period last year.
During the shortage, DEPA played a crucial role as the link between the natural gas and power market. The company took the initiative and managed to provide adequate quantities of gas despite high demand and a shortage of time.
NE: Going back to the difficult financial and social situation in Greece and DEPA’s role in the country’s economic development, are you optimistic that Greece can exit the crisis?
TK: Unfortunately, Greece has been involved in a long financial crisis for over seven years. That makes it especially important for everyone in their corresponding field to contribute so that Greece can emerge out of the crisis and move towards a period of stability and growth.
For its part, DEPA has adopted a socio-centric approach, putting an emphasis on an affordable pricing policy and fighting energy poverty while protecting the environment.
DEPA advances the use of natural gas as a sustainable and clean fuel, while it helps Greece achieve its energy and climate goals for 2020 and beyond. Furthermore, DEPA’s planning has a distinct social dimension, which is all the more important in a time of economic hardship for Greek consumers.
It should be noted that the price of natural gas was reduced in 2016 and in recent years, as a result of cheaper oil, but also through DEPA management’s negotiations with its suppliers. This was significant for Greek consumers, as they are now able to pay less for their supplies and have the ability to reduce their energy related costs. It is especially evident in the case of the industrial sector, which now enjoys much-reduced bills compared to previous years. Equally important, cheaper natural gas made the transition from other fuels more feasible than before for all customer categories and therefore contributes to the lowering of carbon emissions of the economy as a whole.
Through those developments, DEPA’s financial and capital standing has remained strong. Last year’s annual results are vigorous and so the company retains its ability to amass capital in order to finance its ambitious investment programme without any problems.
We must not forget that the environment is the biggest comparative advantage for Greece and perhaps the most important growth factor. Our investments involve the regions of East Macedonia – Thrace, Central Macedonia (excluding Thessaloniki where local EPA already operates), Central Greece and Evia. These investments will lead to 140,000 new household connections, 19,000 commercial clients, 350 large industrial customers, new jobs in over 16 cities, county capitals and others.
This is the time for a national effort to pull our country out of the crisis. In this effort, DEPA is present and can play a role in increasing Greece’s development while fighting energy poverty, assuring affordable prices for consumers and protecting the environment. I’m optimistic that we can all take together the necessary steps to rebuild Greece’s competitiveness and set the foundation of a long term, healthy development.
The transition to natural gas can contribute to the goal of Greece exiting the crisis. It creates the base for companies to become more competitive by reducing the cost of their operations and creating jobs while protecting the environment.