Greece's plan to become a major liquefied natural gas (LNG) hub in Europe and expand its LNG capacity has been undermined by declining demand and low-priced Russian gas, according to experts.
Athens is one of several EU countries that aspired to be a key natural gas supplier for Europe, said Ana Maria Jaller-Makarewicz, an energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), in an interview with Anadolu.
“But (Greece) has encountered the reality of a lack of demand for its re-exports,” Jaller-Makarewicz said.
She cited data from the EU's statistics office Eurostat, which showed that although Greece's gas consumption increased by 31% year-on-year from January to May, the country's gas exports decreased.
“This was due to Bulgaria increasing gas imports from Türkiye, resulting in Greece decreasing its LNG imports by 38% year-on-year in the first half of 2024,” Jaller-Makarewicz explained.
According to data from Greek gas-grid operator Desfa, the number of LNG tanker arrivals at the Revithoussa terminal has more than halved this year, with only 12 vessels docking compared to 26 in the same period last year.
The Revithoussa terminal, Greece's only LNG terminal, has a capacity of 7 billion cubic meters (bcm) per year, exceeding the country's 2023 gas consumption of 4.7 bcm by 50%.
Jaller-Makarewicz stated that the terminal's average utilization rate this year has been 24%, which is enough to meet domestic demand and still have spare capacity for exports to neighboring countries.
On the development of new LNG terminals, Costis Stambolis, the executive director of the Athens-based Institute of Energy for Southeast Europe (IENE), mentioned that not all of the planned terminals will proceed despite having the necessary permission and going through the regulatory process.
As part of the country’s plans to develop five LNG terminals with a combined capacity of around 25 bcm, Athens' first floating storage and regasification unit (FSRU), the Alexandroupolis, is currently undergoing tests and is expected to commence commercial operations between September and October, Stambolis noted.
Jaller-Makarewicz also said the launch of the FSRU Alexandroupolis, with a capacity of 5.5 bcm per year, has been delayed from mid-June to around October this year.
Stambolis indicated that while LNG imports have decreased compared to a year or two ago, companies are still interested in maintaining and expanding infrastructure for future growth, depending on global conditions and prices.
However, Stambolis mentioned that the final investment decision for other FSRU units in the country remains uncertain in the coming months. He believes they will be delayed, and some even canceled.
He attributed the project delays to the 'unrealistic' expectations of having multiple FSRU terminals in operation. Additionally, he stated that Greece aimed to boost its LNG terminals not only to meet domestic needs but also to serve the southeastern European market.
'So now, with Russian gas being so cheap, there's a lack of interest,' he said, noting it is 'temporary.'
- Companies returning to Russian gas due to price
Citing the EU's 2027 deadline to become independent of Russian gas imports, Stambolis said this would be challenging due to the low price.
'Right now, Russian gas in Europe is much cheaper than LNG and a lot of companies are returning to use Russian gas because of the price,' he explained.
Furthermore, he added that over the past few months, more than half of Greece's gas imports have originated from Russia, which is a contrast to the situation just 18 months ago.
'So, we have a problem because of the cost. That's a big challenge,' he stated.
According to Jaller-Makarewicz, although EU gas demand was expected to make a slight recovery this year, the opposite has occurred, as Europe’s LNG imports 'keep falling.'
She explained that Europe's LNG imports, which include those of the EU, as well as the UK, Norway, and Türkiye, decreased by 20% year-on-year to 72.6 bcm, while the imports of the EU alone fell 11% year-on-year to 60.1 bcm in the first half of the year.
'Gas and LNG demand are expected to keep decreasing in the coming years, which raises questions about whether new LNG terminals are needed or not,' she added.
'A boom in global LNG production and Russian natural gas intended to be exported to Europe might be at risk of reduced European gas demand in the near future,' Jaller-Makarewicz said.
- Türkiye and Greece can strengthen Europe's energy security
Stambolis emphasized that Greece's investment in LNG infrastructure is strategically sound, given the International Energy Agency's forecast of increased LNG capacity and expected lower prices after 2025.
However, Greek Environment and Energy Minister Theodoros Skylakakis expressed doubt about the proposed floating LNG storage unit in the Pagasetic Gulf during a parliamentary speech. He cited economic and political challenges as the reasons behind the potential setback, as reported by Greek daily Kathimerini last month.
'Greece has covered — has more than covered — its needs in LNG through the Revithoussa and Alexandroupolis stations,' Skylakakis stated.
Stambolis disagreed with the Greek minister, asserting that Greece will require more LNG capacity to serve the regional market. He believes that having five FSRU terminals may be 'a lot' but suggests that two or three would be necessary.
On the Greek minister's remarks, Jaller-Makarewicz commented it remained 'uncertain' whether additional projects would move forward.
'These additional terminals were planned to supply gas to Greece as well as Bulgaria, Romania, Hungary, Slovakia, Moldova, and Ukraine,' she added.
Despite setbacks in Greece's pursuit of a key role in LNG, particularly in southern Europe, Stambolis believes that strengthening energy security is not only a national priority but also a crucial regional one.
He added that Türkiye, in cooperation with Greece, can enhance energy security for southeastern Europe and the rest of the continent.
(Anadolu Agency, August 7, 2024)
