Natural gas / LNG is drying up, Russian gas is gaining ground

High temperatures are expected to put a “fire” on energy demand in the next period and there are already price increases in electricity tariffs. Despite the very high participation of Renewable Energy Sources in the energy mix, natural gas proves to remain resilient and a “cushion” in the stability of the energy system. In recent years, Greece has increased its natural gas imports, specifically LNG, through the facilities located in Revythoussa.

It was April 2022 when European Energy Commissioner Kadri Simson was at the liquefied natural gas facilities of the National Natural Gas System Administration (DESFA) in Revythoussa and declared that LNG will play an important role in the energy security of both Greece and Europe. Two years after the start of the war in Ukraine and the sanctions against Russia, the situation has changed in terms of the demand for Russian gas. More specifically, in Revythoussa in June the volume of liquefied natural gas loads will not exceed 178,286 cubic meters. A year ago (June 2023) the total volume of LNG cargoes was 369,275 cubic meters. Therefore, a very significant decrease is recorded, which is due to the reduced demand but also to the fact that the flows of Russian gas imported through Turkstream are increasing. The main reason is that gas coming in through pipelines is cheaper compared to long-term LNG contracts. It should be noted that the Southeast European Energy Institute in a study published a few days ago (Energy Trends 2023-2024) reported that in the first quarter of the year the country’s total natural gas imports were up 14% compared to the first quarter of 2023 The IENE reports that “in Greece there was an increase in Russian gas imports through Sidirokastro by 65% ​​in 2023, compared to 2022, i.e. from 8.9 TWh in 2022 to 14.7 TWh in 2023, while between 2021 and 2022 the country had reduced its imports of Russian natural gas by almost the same percentage (68%).

New gas projects on the way

Despite all this, the plans do not seem to change in relation to the construction of new natural gas power plants in our country. PPC together with DEPA Emporias and Damco Energy are building a natural gas plant in Alexandroupoli with a capacity of 840 MW. This investment is expected to be completed in approximately two years. At the same time, TERNA and Motor Oil are building an 877 MW power plant in Komotini. Thus, the estimate that exists is that natural gas will continue to play an important role in the production of electricity in the coming years. Natural gas will thus play an essential role in the stability of the energy system. At the same time, in the final stretch is the Alexandroupoli LNG terminal. The specific project, which is expected to be put into commercial operation in a few days, will ensure new quantities of natural gas to supply the Greek and regional markets of South-Eastern Europe, contributing to the diversification of sources. It will also contribute to the supply of the Vertical Corridor. It should be noted that the main factors for the steady consumption of natural gas in our country are power generation and industry. In terms of electricity generation, natural gas now exceeds 40% as part of the energy mix.

The impact of natural gas prices on electricity tariffs

The big question is, of course, whether these developments will affect the prices of electricity tariffs. Given that the demand will increase in the summer months, the use of natural gas will become more necessary. The price of natural gas on the TTF trading hub is around 33 euros per megawatt hour, up from 25 euros in mid-March. Certain predictions cannot be made about the course of prices. However, current prices will probably be higher compared to the last five months. The developments in the Middle East cause great uncertainty. Also, the emergency shutdown at Norway’s Nyhamna natural gas processing plant is affecting gas price formation. In other words, it turns out that Norway also plays an important role in supplying Europe with natural gas.