The tender for Underwater Natural Gas Storage (UNGS) of South Kavala is unblocked – Part of the cost of the investment is borne by the State

The unblocking of the Hellenic Republic Asset Development Fund (HRADF) tender for the concession of the Underwater Natural Gas Storage (UNGS) of South Kavala was marked by yesterday’s meeting between the Minister of Environment and Energy and the president of the Energy Regulatory Authority.

Costas Skrekas and Athanasios Dagoumas met and discussed in the aftermath of the weighty characterizations by Mr. Dagoumas ten days ago, on the proposals of the Hellenic Natural Gas System Administrator (DESFA) to be included in the pricing regulation of the UNGS and its accompanying projects in order to improve the National Gas distribution System (ESFA). It should be recalled that Dagouma’s statements were followed last Friday, February 4, by a meeting between the president and CEO of energy administrator RAE and the administrator’s CEO, Maria Rita Galli.

The background

According to what a top source of the Ministry of Environment and Energy told OT, “the agenda of yesterday’s meeting between Skrekas – Dagoumas included the issue of the UNGS competition in Kavala”. It should be noted that the HRADF tender has been stuck for months at the stage of submitting binding bids by the finalists (GEK TERNA – DESFA and Energean) as RAE has delayed the issuance of the pricing regulation of the underwater storage unit.

Speaking to OT, the same official noted that “RAE proceeded to draft a pricing regulation, based on specific scientific and technical methodologies. This plan will probably be made public within a week.”

Regarding the dispute between RAE and DESFA for the UNGS upgrade projects given the forecast for a large increase in gas demand, according to what another competent source explains to OT “these are not related to the pricing regulation of UNGS South Kavala . These projects have to do entirely with the estimates for the needs of ESFA in the coming years and not with the investment of N. Kavala “.

It is reminded that according to what has been made public, the Administrator considers necessary the construction of a second pipeline Komotini – Thessaloniki and Athens – Thessaloniki as the capacity of the existing pipeline can not meet future consumption needs.

The state and strategic stocks

The Energy Ministry, according to a highly placed source source, “has no possibility to intervene in the pricing regulation. The Greek state can intervene only for one reason “, the same official noted about the Local Government:” For the observance of strategic safety reserves in natural gas. And experiencing the current energy crisis, we realize how important it is to maintain such reserves. ” According to the same information, the Greek state is not excluded to bear part of the cost of the investment for this purpose. That is, for the maintenance of strategic security stocks.

In this way, it is not excluded that the pricing regulation provides for a lower percentage of apportionment of the investment costs to the users of the NSRF. Information wants 50% of the cost to pass to users, 35% to be covered by the EU. (PCI project) and 15% of investors. If the Greek government really seeks to maintain strategic reserves then 50% may decrease.

The amount of investment for the development of UNGS South Kavala is estimated at 300 to 400 million euros.

The usefulness of the UNGS

Its exploitation has been pending for at least a decade. If the UNGS were operating today, it would offer financial relief of 400 million euros, in the midst of the energy crisis.

UNGS South Kavala is an exhausted natural gas field and with the appropriate investments it can serve as a storage space for quantities of this fuel in periods of low prices and its disposal at these low costs through the national natural gas system to consumers in times of energy crisi, like the one we are experiencing.

Last October, at an event, the president of TERNA ENERGIAKI, George Peristeris, had emphasized that if the gas storage of Kavala was operational, it would offer annual savings of 400 million euros to consumers. The head of the listed company had made these estimates with the unprecedented gas prices that prevailed four months ago.

So, if the pricing regulation of UNGS South Kavala is drafted, then the HRADF will be ready to give the green light for the completion of the concession tender. The regulation is a prerequisite for potential investors in order to prepare and submit their financial bids.