Greece s Contribution to the Diversification of Supplies and Routes in SE Europe

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1 Greece s Contribution to the Diversification of Supplies and Routes in SE Europe Dimitrios E. Manolis International Projects Deputy Division Head DEPA S.A. Istanbul, 11 November 2015

2 Realities and challenges for the European Gas Market Europe as a major energy consumer faces a number of realities and challenges when addressing its future needs for natural gas: Rising gas import dependency Increasing competition for new gas (both conventional and unconventional) sources from emerging economies such as China and India Persisting instability in neighboring gas producing countries Gas market liberalization, functioning and integration issues Effective climate change and energy sustainability policies

3 European Gas Hubs vs. Regional Prices 40,0 European Gas Hubs vs. Regional Prices 35,0 30,0 /MWh 25,0 20,0 15,0 CEGH Austria m+1 (Argus) /MWh PSV Italy m+1 (Argus) /MWh Greek border price (RAE & DEPA) /MWh Bulgarian border price* /MWh * Bulgarian border price includes indigenous production

4 DEPA s Strategy: Views and Perspectives Secure energy stability and sustainability New infrastructure development and upgrade, modernization and efficient use of existing infrastructure Diversification of consumer markets and export transportation routes Contribution to the development of Southern & Vertical Energy Corridor

5 Southern & Vertical Gas Corridor Projects via Greece - Overview The EU initiative is to enhance energy security by connecting to new natural gas sources in the Caspian basin. One gas field development, one pipeline expansion and two new pipeline construction: Shah Deniz Full Field development (SD2) South Caucasus Pipeline expansion (SCPx) Trans Anatolian Pipeline (TANAP) Trans Adriatic Pipeline (TAP) Since November 2007, DEPA in cooperation with the Turkish BOTAS, have initiated the operation of the Interconnector Turkey Greece (ITG), which is considered the first step for the opening of the Southern Gas Corridor. Greece/DEPA supports certain gas pipeline & LNG projects of regional and European interest: Greece Bulgaria Interconnector (ICGB) The LNG terminal in Northern Greece (with the participation of DEPA) Eastern Mediterranean Pipeline (IGI Poseidon) Greece Italy Interconnector (IGI Poseidon) Revithousa upgrade (DESFA) Sidirokastro reverse flow (DESFA) Kipoi compressor station (DESFA)

6 SEE market overview Germany SEE s market is: Slovenia Croatia Hungary Romania the closest market to new sources, including LNG through Greece Italy B&H Serbia Montenegro Kosovo Bulgaria Russia a growing market FYROM Georgia in urgent need to diversify its supply sources and increase its energy security Albania Greece Turkey Armenia in urgent need for gas to gas competition

7 The Greece Bulgaria Interconnector (IGB) The IGB pipeline: will connect Bulgaria with both existing and new gas supply pipelines (i.e. TAP) allowing gas from the Caspian Region and the Middle East to be transported through Turkey and Greece. IGB will be carrying 3bcma, scalable up to 5 bcma. IGB s regional significance has been reaffirmed by the EU, receiving a grant through the EEPR framework. in combination with other existing or under development interconnectors of local nature, (i.e. IBR connecting Bulgaria and Romania, IBS connecting Bulgaria and Serbia etc) would provide incremental gas supplies to the entire SE Europe region. similarly, would allow LNG supplies to reach the region through existing and/or new re-gas facilities in Greece. in conjunction with the LNG terminal in Northern Greece would consist a real multi-source project, essential in meeting SE European market needs and EU energy policy requirements. Italy Slovenia Croatia Hungary B&H Serbia Greece Romania Bulgaria Montenegro Kosovo Albania TAP Turkish Stream East Med IGI Poseidon IGI Onshore FYROM IGI LNG LNG IGB Turkey IGB Other Interconnectors LNG Terminal Russia

8 The Greece Bulgaria Interconnector (IGB) FEED / Technical Design are completed Line pipe & LLI procurement procedure is in progress FID to be taken in November 2015 and construction to start in 2016 New Market Test to be launched immediately after FID First gas is expected to flow in 2018

9 Greece: a gate of LNG for SE Europe The existing LNG Terminal Revythousa could immediately serve the SEE market through Kulata / Sidirokastro, via virtual or physical flow, as soon as the Interconnection Agreement between Bulgartransgaz and Desfa is signed. The planned LNG Terminal in Northern Greece would consist an attractive commercial option, due to its proximity to a number of LNG producers, flexibility, scalability and the ability to meet all relevant environmental, safety, social, legal and regulatory standards. The LNG Terminal in Northern Greece will be able to send out LNG into Greece and from there, in conjunction with IGB, TAP and ITG, to SEE and Turkey. It will allow SEE region to have easier access to more LNG capacities.

10 The LNG Terminal in Northern Greece The LNG terminal in Northern Greece: Comprises: - An LNG FSRU - A Mooring and a Pipeline system The FSRU will be stationed in the sea of Thrace, 17,6km SW from Alexandroupolis Port. The pipeline comprises a 24km offshore section and a 4km onshore section and it will connect with the NNGTS 5,5km NE of Alexandroupolis. Will have a storage capacity of 170,000m 3 and a send out capacity of 6 bcma. Slovenia Hungary Romania Croatia B&H Serbia Italy Montenegro Bulgaria Kosovo Albania FYROM LNG Greece LNG LNG Terminal in Northern Greece Turkey Russia The LNG Terminal in Northern Greece is included in the Commission's proposed 2 nd PCI list. FID 3Q 2016 Construction starts 1Q 2017 Project Commissioning 1Q2018 TAP Turkish Stream East Med IGI Poseidon IGI Onshore IGI IGB Other Interconnectors LNG Terminal

11 EastMed Pipeline Overview The EastMed project is an offshore/onshore gas pipeline directly connecting the East Mediterranean gas resources to the European gas system via: Poseidon pipeline granting the access to Italian market and IGB pipeline to Southern-East European markets. The project can be designed to transport up to 14 billion cubic meters per year. The project for its strategic relevance is included in the Commission's proposed 2 nd PCI list. Greece Peloponnese EEZ Greece Crete Turkey EEZ Turkey EEZ Cyprus Cyprus The Feasibility Study completed by JP Kenny pointed out that, despite the challenges of the project, the length and the deep water, the pipeline construction is feasible. Offshore Onshore EEZ Egypt On May 2015, the contract for the Pre-FEED studies was awarded to the IntecSea-C&M Engineering Consortium. The performance of the Pre-FEED activities will be co-financed through the CEF program with 2 M. The Pre-FEED activities are expected to enhance the maturity of the project, with detailed and complete technical and economic assessment, enabling the project promoter to provide reliable data for the selection of the PCI as preferred export route.

12 Poseidon Pipeline The Poseidon pipeline is a multi-source import project that will contribute to the European diversification and security of supply in the framework of the Southern Gas Corridor. The project current design comprises a 207 km long offshore pipeline, linking the Italian and Greek gas networks crossing the Ionian Sea, with a diameter of 32 inch and a maximum depth of 1370m. The pipeline is designed to transport up to 14 billion cubic meters of natural gas per year from East Mediterranean, Middle East and/or Caspian areas to Italy and Europe through Turkey and Greece. Possibility to increase the maximum capacity to 20 bcm under assessment. Diameter: Capacity: 32 inch bcm/y The project received the support of the Italian and Greek Governments and has been included in the Commission's proposed 2 nd PCI list.

13 Impact of Market Integration to SEE The utmost enablers for Gas to Gas competition are Interconnectivity and Market Integration. Projects will play a significant role and will have a great impact in the region since they will address the region s needs for Security of supply and promote gas to gas competition. Slovenia Hungary Romania Croatia B&H Serbia Italy Montenegro Bulgaria Kosovo Albania FYROM Russia DEPA is endeavoring to secure gas quantities for the regional market at competitive prices. Greece LNG Turkey DEPA is committed to integrating the SEE market to the benefit of business and households. Synergies between TANAP, TAP, the LNG terminal in Northern Greece, the IGB and the interconnectors between Bulgaria-Rumania and onwards to Hungary could significantly contribute to this objective. TAP Turkish Stream East Med IGI Poseidon IGI Onshore IGI LNG IGB Other Interconnectors LNG Terminal