Greece ending Russian gas dependence

In a deal that would secure natural gas supplies for Greece in the event that flows from Russia are disrupted, the Energy Ministry announced on Thursday that DEPA Commercial, the largest gas utility in Greece, has reached an agreement with TotalEnergies for the supply of liquefied natural gas (LNG) over the winter if necessary.

“It’s a deal of key importance for the country’s energy supplies in the event gas flows from Russia are curbed or halted,” the statement said on the agreement which stipulates that TotalEnergies will provide Greece with two LNG cargoes each month for five months, up to March 2023. The quantities represent about one-seventh of annual gas consumption (70 terawatt hours in 2021) and, according to competent sources, substitute almost 100% of Russian gas imports, not only for DEPA but for the country as a whole.

DEPA imports from Gazprom about 2 billion cubic meters of gas per year under a long-term contract, while the quantities imported by Mytilineos, the Copelouzos Group and Public Power Corporation (PPC) add up to 1 billion bcm.

What is also noteworthy is that the contract does not price the gas with reference to the Dutch TTF which, according to DEPA’s head Kostas Xifaras on the occasion of the ongoing debate in the European institutions on the imposition of a cap, “no longer reflects the balance of supply and demand.”

Greece reserves the right not to purchase the gas but pay a cancellation fee. The deal is part of the country’s security of supply framework, which implies that if LNG is not required, DEPA will be repaid for the fine it will pay to TotalEnergy through the security of supply fee paid by gas system users.

The risk of this expenditure is seen as well warranted by the tight circumstances on the geopolitical and energy fronts in recent days.

According to Bloomberg’s estimates, the sabotage on Nord Stream increases Europe’s LNG needs by 90%. This will mean a real war between Europe and Asia for cargoes, which is driving ship fares to new records.

Greece currently receives Russian gas through the TurkStream pipeline, which also provides to Hungary via Serbia.

Athens has been striving to lessen its dependency on Russian gas by increasing LNG imports and reopening several coal-fired power plants, as well as planning to convert some gas-fired stations to diesel.