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Perspectives of the Greek and Italian gas markets Perspectives of the Greek and Italian gas markets and the role of the IGI project as a and the role of the IGI project as a
Trans-European projectTrans-European project
ECSEE WorkshopECSEE WorkshopOctober 2005October 2005
BelgradeBelgrade
J. Florentin DEPA S.A.
Projects Director
E. Ruggeri EDISON S.p.A
Business Development Manager
2
Plan of presentationPlan of presentation
PART 1 – GREECE (by Mr J. Florentin)
• DEPA S.A.• The Greek Gas Market• The Interconnection Turkey-Greece (ITG)
PART 2 – ITALY (by Mr E. Ruggeri)
• EDISON S.p.A.• The Italian Gas Market• The Interconnection Greece-Italy (IGI)
3
PART 1 – GREECE and the ITG Project PART 1 – GREECE and the ITG Project
by Mr J. Florentin
4
Greek gas market - HistoricGreek gas market - Historic
One of the last European countries to introduce natural gas
Gas supply contracts signed in 1987 (Gazexport) and 1988 (Sonatrach)
Establishment of DEPA in 1988
Start of commercial operation: November 1996
Completion of the LNG terminal in 1999
Market dominated by power generation
5
Greek gas market – Main infrastructureGreek gas market – Main infrastructure
• HP (70 bar) mainline
– 511 km, 36” and 30”
• HP branches
– 450 km, 10” to 30”
• LNG terminal
– 2 tanks 65.000 m3 each
– Send out rate 220.000 Nm3/h (2007: 600.000)
• 4 Operation & Maintenance Centres
• 24 M/R stations
6
Gas distribution companies of Attiki, Thessaloniki and
Thessaly(ownership of fixed assets)
Greek gas industry corporate structureGreek gas industry corporate structure
49 %
Greek State Private investors(Athens & London
S.E.)
Hellenic Petroleum
65 %
DEPALocal Authorities
35 %
32 %
35 %
Thessaloniki EPA
Thessaly EPA
ItalgasItalgas
Attiki EPA
Attiki Denmark(60% Cinergy – 40% Shell Gas)
3 Prospective EPAs
• East Macedonia & Thace• Central Macedonia• Sterea & Evia
Investors
51 %
49 %
51 % 49 % 51 %
51 %49 % 100%Flow of dividents (10%)
EPA : Regional Gas Supply Company
PanEuropean Holdings S.A.
33 %
7
Market - DemandMarket - Demand
0
1
2
3
4
5
6
7
8
9
bcm
NGVs
Industry + CHP
Chemical
RGDCs
Power
8
Market - SupplyMarket - Supply
0
1
2
3
4
5
6
7
8
9
bcm
3rd Party
Additional Pipe
Additional LNG
BOTAS
SONATRACH
GAZEXPORT
9
Market – Growth drivers (1/2)Market – Growth drivers (1/2)
• Power generation
– Regulator: all new capacity should come from either RES or gas fired units.
– Increase of electricity demand forecast: 3,1% p.a. up to 2015
•One new power plant (400 MW) p.a.
•Nat.Gas accounted for 15,0% of electricity generation in 2002 It is expected to account for 36,7% by 2015
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Po
wer
su
pp
ly (
MW
)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
En
erg
y su
pp
ly (
GW
h)
Power CAGR 1997-2002: 5,9%
Energy CAGR 1997-2002: 4,2%
10
Market – Growth drivers (2/2)Market – Growth drivers (2/2)
• Residential and commercial sector
– Three EPAs (RGDCs) with obligation, in their licenses, to expand the distribution networks in four major cities (length to be reached in the first 7 years).
– Three additional EPAs might be created to wholly cover the areas crossed by the gas infrastructure.
– According to the EU Dir. 2003/55 Art 28 § 8, the existing EPAs have a 30 year monopoly for consumers up to 9 bcm/y.
– According to the EU Dir. 2003/55 Art 28 § 5b, the future EPAs may have a conditional monopoly for up to 20 years.
11
Interconnection Turkey-Greece (ITG project)
Greek part– 86 km, 36”– Funding:
• Studies: TEN 50%• Construction
– CSF III (EU): 29%
– CSF III (Greek State) 29%
– Equity & loans 42%
Turkish part– 200 km, 36”(17 km off-shore, max. depth
70m)– Funding:
• Studies: TEN 50%
Maximum capacity (with 2 compressors): 11 bcm/y
On stream: 1Q2007
12
Interconnection Turkey-Greece (ITG project)Interconnection Turkey-Greece (ITG project)
Progress to date:
• Interstate agreement signed in Feb. 2003
• Gas sales agreement signed in Dec. 2003 - (0,75 bcm for 15 years)
• Construction of Greek part: Phase 1 approaching completion, Phase 2 to start 1Q2006
• Construction of Turkish part: awarded
• Construction of Border metering station: awarded
• Tender package for HDD under Evros/Meric river under preparation
• Mechanical completion forecast: 1Q2007
13
PART 2 – ITALY and the IGI Project PART 2 – ITALY and the IGI Project
by Mr E. Ruggeri
14
EdisonEdison Shareholder Structure Shareholder Structure
Market
34,2%34,2%
EDISONEDISON
63,3% 63,3%
Transalpina di Energia
EDFEDF DELMIDELMI
50% 50% 50% 50%
2,5% 2,5%
AEM AEM MilanoMilano
Dolomiti Dolomiti Energia TrentoEnergia Trento
51% 51% 10% 10% 10% 10% 6% 6%
BPMBPM
3%3%
CrtCrt
5%5%
ENIAENIA
15%15%
SELSELMedioBancaMedioBanca
15
EdisonEdison Positioning in the Italian Energy Market Positioning in the Italian Energy Market
Enel Edison Endesa Enipower Others AEM Milano
126.048.0
20.8 13.9 9.5
58.1
Major power producers in Italy in 2004 (TWh)
(a) Net of losses and settlements with National Grid Operator (GRTN)
Major gas suppliers in Italy in 2004 (Bcm)
ENI ENEL Edison Others
purchases from ENI
9.0
54.1
18.013.1
9.4 7.7
8,6 3,4
16
Edison Development Plan (1/2)Edison Development Plan (1/2)Power availability mix (TWh) (a)
(a) Net of losses and settlements with National Grid Operator (GRTN)
Import and domestic purchases
Edison hydroelectric and wind production
Edison thermoelectric production
51.5
2004
44,3
3,73,5
0
5
10
15
20
25
30
35
40
45
50
55
54
2009
60
65
70
75
17
Edison Development Plan (2/2)Edison Development Plan (2/2)
Gas availability mix (bcm) Domestic purchases
Domestic production
Direct gas supplies to power plants Imports
Changes in stock
Foreign production
2004
13.4
-0,3-2
0
2
4
6
8
10
12
14
3,7
6,7
1,00,3
2,0
2012
16
18
2019,5
18
Italian Gas MarketItalian Gas Market
Italian Capacity vs Demand (2003-2015)
-
20,0
40,0
60,0
80,0
100,0
120,0
140,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Bcm
Domestic Production ex-USSR Algeria Netherlands/Norway
Libya Rovigo LNG IGI Other Project
Demand-Base Demand-High
The Italian market is structurally short in capacity compared with most other EU countries.New ongoing projects - already sanctioned (Rovigo LNG, Transmed and TAG repowering)
and under development - will be able to satisfy demand growth (driven by power generation) and increase availability and security of supply.
19
RussiaNetherlands
Norway
LibyaAlgeria
Algeria LNG
Qatar LNG
Algeria
Caspian + LNG
AlgeriaLibya
Algeria LNG
AUSTRIA, SLOVENIA CROATIA HUNGARY
FRANCEGERMANY
HUB
The diminishing gas production of the UK and the NL coupled with the increasing gas demand in the French and German markets will call for more use of alternative gas supplies.
Significant natural gas reserves (approx. 20-25% of global gas reserves) are situated in N. Africa and in the Caspian region.
Italy is in a geographical strategic position and, through the necessary contractual, infrastructure and technical developments, could become a Transit Country for African and Caspian gas to N. European markets.
A Reverse Flow, virtual first and physical eventually, is expected to occur in the north Italian border, once new infrastructures are developed.
The European contextThe European context
The creation of an interconnected European gas system will support the creation of a Hub
20
Interconnection Greece-Italy (IGI): Project Description
The Interconnection Greece-Italy (IGI Project) is developed, since 2002, by Edison and Depa in cooperation with Botas (Turkish natural gas state company), with the aim to connect the huge Caspian and Middle East gas resources to the European market.
IGI CAPACITY: 8 – 10 bcm/y ITG CAPACITY: approx. 12 bcm/y
IGI
ITG
IRAN
AZERBAIJAN
RU
SS
IA
IRA
Q
EG
YP
T
The Interconnection Turkey-Greece (ITG) has been developed by Depa and Botas with the aim to connect the two countries, creating a corridor for gas supplies to Greece and Europe. The project, currently under construction, will start operations in 1Q 2007.
ExistingUnder DevelopmentUnder Construction
21
IGI onshore section
Total length : 595 Km
Pipeline diameter : 36“
Capex: 600 M€
IGI offshore section
Total length : 212 Km
Pipeline diameter : 32“
Max. water depth: 1450 m
Capex: 350 M€
Compressor stations
Kipi CS: 39 MW
Komotini CS: 26 MW
Nea Mesimvria CS: 39 MW
Stavrolimenas CS: 75 MW
Interconnection Greece-Italy (IGI): Project Description
Nea Messimvria
Kipi
ITG
IGI offshore section
IGI onshore section
Comp. station
22
Status of the IGI Project
Edison and Depa have finalised the IGI Project feasibility study, which has benefited of an EU financing of approx. 1 M€.
The Feasibility Study included the following activities:
Part 1: Technical Feasibility Gas flow simulation study for the entire system (from Turkey to Italy)
Project Design Basis
Definition of system routing
Pre-Basic Engineering of IGI system
Capex and Opex assessment
Preliminary environmental impact assessment
Project impact on the Italian Gas Grid
Part 2: Economic and Financial Feasibility Definition of the project business plan (unlevered version)
Finalisation of the net-back analysis and assessment of the project economic viability
Definition of the optimum corporate, commercial and financial structures
Development of the project financial plan
Confirmation of project financial feasibility
23
The Commercial Structure of the IGI ProjectThe IGI project is divided into two sections: offshore and onshore, to be developed via two separate companies: Poseidon Co. (or Neptune Co) and Demeter Co. respectively. These Companies will act exclusively as transportation companies. Edison, Depa and Botas respective role in the development of the IGI Project will be as follows:
24
The Commercial Structure of the IGI Project
Edison: Principal shipper within the IGI system (securing at least 80% of the Long
term capacity) Shareholder in Poseidon Co.
Depa: Shipper within the IGI system for 20% of the capacity Shareholder in Poseidon Co Carrier through the Greek grid and 100% owner of the onshore section of the
IGI project (Demeter Co)
Botas: Carrier through the Turkish grid Possible bridge supplier to IGI project shippers Possible shareholder in Poseidon
25
Time Schedule
Expected start-up date: 2010Expected start-up date: 2010