Greek Storage Stuck in No-Man's-Land

Greece's environment and energy minister Panos Skourletis expressed dissatisfaction with the lack of progress in turning a gas field into an underground natural gas storage (UGS) during a recent speech in parliament. He criticised the state privatization fund Taiped for “not having shown any interest in moving ahead all these years” with plans to convert a gas field in the Gulf of Kavala into an UGS, Energypress reports. 

He said that UGS is “a highly significant issue throughout Europe and such facilities are greatly sought after,” but although ownership of the field was transferred to Taiped in 2011, nothing has been done since.

According to a source, establishing UGS was to have been part of the plan to enhance Greek energy security and foster a southeast European trading hub; other elements included the Trans Adriatic pipeline; Interconnector Greece-Bulgaria and its extension into Romania and boosting the import capacity of the LNG terminal in Revithoussa, near Athens.

However, “Nothing has happened since then [2011] and, moreover, as Greece has shown no interest, the project has been excluded from the list of energy Projects of Common Interests (PCI),” sources told NGE. 

Greek energy minister Panos Skourletis 

Greek private exploration and production company Energean still holds a gas production licence for the field and produces gas from it periodically, according to the company. In July 2011, Energean submitted to the energy regulator a proposal regarding the conversion of South Kavala into UGS, which might have qualified for EU funding if it was deemed to be a PCI.

EU granted Energean and its partner Italy’s Edison, as sponsors of the project, funding under the trans-European energy networks (TEN-E) to carry out technical and commercial studies in 2011. Energean completed the pre-feasibility study and held a feasibility study in cooperation with Edison. “Our interest for the UGS project is still active as we have the experience to operate the field,” Energean confirmed.

“The appropriate solution would be for the government to convert Energean’s production licence into a storage licence, then reserve the natural gas quantities needed for safety reasons and, finally, proceed to a tender regarding the rest of it,” sources close to the company said, adding that UGS in South Kavala could hold up to 1bn m³.

The cost of the project has been estimated at $350mn initially but the whole proposal has to be updated based on the market conditions. “It is too early to predict the funding sources; but it is very significant that the EU seems very encouraging and supportive to all the projects relating to the creation of natural gas storage infrastructure,” the source said.

Kama Mustafayeva