INTERACTIVE: Greece's MYTILINEOS leapfrogs incumbent DEPA as top LNG buyer

Author: Patrick Sykes

2019/08/06

• State-owned DEPA’s market share falls to 29%

• Low spot LNG prices and rising demand support growth

• TAP and IGB to boost hub plans from 2020

LONDON (ICIS)--Private Greek industrial group MYTILINEOS has overtaken incumbent DEPA to become the country’s biggest LNG importer this year, the first time an independent has knocked the state-owned company from the top spot.

MYTILINEOS imported over 370,000 tonnes of LNG from January to July, or 39% of the national total, according to LNG Edge. DEPA took 273,000 tonnes, or 29%.

By contrast, DEPA’s market share was 92% last year, and has never previously fallen below half.

The shift indicates the progress made in one of the last countries in the European Union to liberalise its gas market.

The market began opening back in 2005, but momentum picked up from 2018 when the retail market was fully liberalised, leaving consumers free to choose their supplier. DEPA has been losing customers ever since.

Now, three-year low LNG prices have reduced the barriers to entry for buyers, while the newly expanded Revithoussa import terminal near Athens has given them more capacity at home to soak up cargoes.

With demand from the power sector as well as industrial interests in aluminium manufacturing, MYTILINEOS is at the front of the queue.

NEW PLAYERS

MYTILINEOS is one of several private importers to enter the market this year, alongside joint Greek-Italian venture ELPEDISON, local trader Motor Oil and HERON, which counts France’s ENGIE and Qatar Petroleum among its shareholders.

MYTILINEOS and Motor Oil previously bought LNG under joint venture M&M Natural Gas, but on 16 January MYTILINEOS completed the acquisition of Motor Oil’s stake.

A source at a private Greek utility said MYTILINEOS’s main advantage was its “solid consumption.”

With 1,200MW of gas-fired power generation capacity (14% of installed thermal capacity nationwide), it has the broadest domestic demand base of the independents.

That dominance looks set to grow further in future.

Last month MYTILINEOS announced the start of construction on a new 826MW CCGT power station in the central Voiotia region, one of the biggest such facilities in Europe.

HUB PLANS

Access to low gas prices also strengthens Greece’s hand as an aspiring energy hub, and creates arbitrage opportunities for companies prepared to take the risk.

The first physical reverse flows from Greece to Bulgaria took place in May.

The IGB pipeline across the same border will further strengthen flows when it comes online in 2020, the same year first gas is expected via the TAP section of the Southern Gas Corridor bringing Azeri gas to Europe.

At a conference in July, Panayiotis Kanellopoulos, director of MYTILINEOS’s gas trading arm, called exports to Bulgaria “a no-brainer” due to spread between the two markets.

“The gas price in Bulgaria, mainly supplied by pipeline gas by Russia, is very expensive – we’re talking about a huge difference. LNG at the range of $4-5/MMBtu, pipeline gas at the range of $8/MMBtu.”

MYTILINEOS does not have any known long-term LNG supply contracts. A spokeswoman declined to comment on whether the company would seek term deals in future.

OUTLOOK

Low spot prices may not last forever. But Greek demand is still set to grow, from 5 billion cubic metres (bcm)/year to 7bcm by the end of the decade, according to grid operator DESFA.

MYTILINEOS’s bet on the future of gas in Greece indicates that the company plans to remain a major player in meeting that demand.

Kanellopoulos appeared to lay down the gauntlet to pipeline suppliers such as Russia’s Gazprom to woo buyers with lower prices.

“We are expecting the current pipeline gas suppliers in the market to defend their market share.”

Gazprom supplies both MYTILINEOS and DEPA with pipeline gas under term contracts.

For the moment, MYTILINEOS remains the dominant force in Greek LNG imports.

As of Tuesday, DESFA’s unloading schedule showed the company will receive six of the 15 cargoes expected from August to the end of October, still more than any other company.