London — The fall in spot LNG prices had led to the formation of a new dynamic on the Greek gas market as LNG cargoes increasingly head to the Southeast European country, a senior official from state-controlled gas importer DEPA said Tuesday.
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Speaking during a webinar hosted by the Hellenic Association for Energy Economics, DEPA vice president Kostas Andriosopoulos said LNG was now penetrating the Greek market "at very competitive prices."
According to data from S&P Global Platts Analytics, LNG supplies to Greece rose sharply in the fourth quarter of 2019, with some 1.2 Bcm of regasified gas supplied in the period, a three-fold increase year on year.
The strong imports into Greece's sole terminal at Revithoussa have also continued through the start of 2020 as spot LNG prices plunged to all-time lows.
"The low LNG price has led to a completely new scene in the wholesale Greek gas market," Andriosopoulos said.
"There are stranded spot LNG cargoes that might be sold at distressed prices. That only can emphasize that LNG can be equally competitive with pipeline gas and there is much higher penetration of LNG in the Greek gas mix," he said.
Total Greek LNG imports last year amounted to around 2.8 Bcm of regasified gas equivalent, according to Platts Analytics data, outpacing pipeline gas imports from Russia, which totaled 2.4 Bcm according to data from Russia's Gazprom.
DEPA has a long-term Russian gas import contract with Gazprom that runs to 2026, but Andriosopoulos said anyone with long-term commitments on contracted pipeline gas "faces problems being competitive in the market."
"Our competitors are in the position in the next two-to-three months to bring in much cheaper sources of LNG," he said.
Greek gas demand is expected to rise to 7 Bcm/year by 2030 from around 5 Bcm last year, with consumption set to be boosted by a switch away from coal-fired power generation in the coming years.
However, Andriosopoulos said gas-for-power demand also faced competition from cheap power imports from neighboring countries.
"Unfortunately, all the signs show that the power price in Greece's neighbors will be lower than in Greece," he said, adding that power imports were set to continue to take around 30% of the share of power demand over the next two-to-three months.
Despite the challenges, Greece is set to play a bigger role in the regional gas market in the coming years, with the country set to become a gateway for LNG supplies into Southeast Europe with both the 7 Bcm/year Revithoussa import terminal and the planned 5.5 Bcm/year FSRU at Alexandroupolis expected to serve the wider regional market.
Last month, the developer of the Alexandroupolis project -- Gastrade -- won binding capacity commitments for 2.6 Bcm/year of LNG into the terminal.
"The commitment from international entities around the Balkan region and trading houses showed there is strong interest in LNG in Greece," Andriosopoulos said. DEPA has agreed to take a 20% stake in Gastrade.
Andriosopoulos also said LNG was becoming more tradeable -- close to reaching "commodity status" -- and was also key in reducing European concerns over security of gas supply.
"Gas is here to stay and trading of gas will increase -- mostly in the form of LNG -- and we see that as an opportunity for our industry and our economies," he said.
"It also solves another problem -- security of supply -- which is a big issue for Europe," he said.