Tender for underground natural gas storage unit off Kavala seen in summer

The tender for the utilization of the underground gas reserve off the northern city of Kavala is set to be launched in summer, in one of the first privatizations that will be announced after the initial shock of the crisis, concerning an investment of 300 million euros.

The Hellenic Republic Asset Development Fund (HRADF) published yesterday an invitation to submit tenders on preparing a cost-benefit analysis on the project.

A move that is the first step in launching the tender for the concession of the facility, one of the many links in the ambitious plan to turn northern Greece into a strong regional energy hub, along with the Alexandroupolis FSRU and the TAP, IGB pipelines.

In the underground infrastructure, it will be possible to store, in exchange for a price, of course, natural gas for a long time, a possibility that does not exist today in Greece, despite this being provided in many other European countries.

GEK TERNA has expressed an interest in taking part in this tender, through a joint venture with STORENGY (a subsidiary of France's Engie) and Energean Oil & Gas. Additionally, the participation of DESFA, most of which is owned by the Italian-Belgian-Spanish consortium Senfluga, is also likely.

The next step after the cost-benefit study, which will also judge the terms of the tender, concerns RAE, which will be required within four months to determine the basic principles and guidelines for the pricing of the storage facilities. More particularly, RAE will be called upon to come up with the methodology for calculating the required revenue, as well as the percentage of any additional performance (premium WACC) during the regulatory period.

At the same time HRADF, with the help of a technical consultant, will prepare the announcement for the first phase of the tender, ie the process of submitting expressions of interest and initial selection of candidates.

The use of underground storage facilities for natural gas is a method that has been used internationally for more than 40 years. Across the globe, there are an estimated 650 underground gas reservoirs today, with a capacity of close to 350 billion cubic meters. In fact, in Europe, it is estimated that there are about 110 underground storage areas in more than 15 countries.