Alexandroupoli LNG to set sail or hit the rocks? [GGP]
On the 30thof October, a markettest for the Alexandroupoli LNG terminal was launched by the project’s promoters. Included in the EU’s third list of PCI’s, the proposed LNG facility in northern Greece would be a floating storage and regasification unit (FSRU), moored 17km offshore of the city of Alexandroupolis. The study for what would be Greece’s second LNG terminal (the other being Revithoussa LNG, operated by the Greek gas TSO - DESFA) was co-funded 50% by the European Commission, through the Connecting Europe Facility (CEF) programme.
Expected to be commissioned in 2020, the facility would be a 350+ mil EUR investment. With an estimated annual capacity of 6.1 billion cubic metres (bcm), the LNG terminal advertises itself as a new source of gas for southeastern Europe, aiming to also feed-into the Trans Adriatic Pipeline (TAP) and the Interconnector Greece-Bulgaria (IGB) for flows towards Bulgaria and Romania, and potentially also Serbia, Hungary, Ukraine and Moldova.
The Alexandroupoli LNG project was initially promoted by Gastrade S.A. – a company of the Greek energy group Copelouzos. At the end of 2016, a 20% stake in the share capital of Gastrade was acquired by Monaco-based LNG major GasLog Ltd, operator of a fleet of 25 LNG carriers. Also expected to acquire a 20% stake in the share capital of Gastrade are Greek public gas corporation DEPA and the Bulgartransgaz (BEH). The Bulgarian Government’s possible participation as shareholder in the project has been confirmed November 1stby Energy Minister Petkova, during a meeting with the US ambassador to Bulgaria, Mr. Eric Rubin. The fifth equal stake of 20% is expected to go to a key international player (most likely an LNG supplier from the USA) – Cheniere LNG and Tellurian LNG being touted as possible additions to the Alexandroupoli FSRU ‘consortium’.
Our take: If ever to become operational, the Alexandroupoli LNG terminal could diversify the supply of natural gas in the Greek and South-East European market, potentially contributing to energy security in the region. With a sizeable capacity of 6,1 bcm per year (twice the annual consumption of Bulgaria) the terminal has the potential to increase competition in the region, but it remains to be seen whether the LNG delivered here will be able to compete on price with Black Sea gas, Azeri gas or Russian gas. As the regional gas market is shaping up at the moment, it seems that the Alexandroupoli FSRU could be one ship too many.
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