History. The introduction of natural gas into Greece

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2 History The introduction of natural gas into Greece was made possible thanks to a strong national effort that initiated in the early 1980s and still goes on. Natural gas diversified and upgraded the overall energy balance of Greece, in line with the European Union energy policy guidelines, deriving multiple benefits for the country. Archaeological finds unearthed during excavation works carried out for the construction of the natural gas pipeline.

3 The then Prime Minister Andreas Papandreou, along with the minister of Industry Energy and Technology Minister Anastasios Peponis, had set a solid base for the development of Natural Gas Industry and proceeded with the signing of the October 7, 1987 Interstate Agreement between Greece and Russia (then Soviet Union) under which a gas supply contract was signed between respective companies in July It had preceded, in February 1988 the signing of liquefied natural gas contract (LNG) between the competent energy authorities Greece and Algeria. Public Gas Corporation (DEPA) S.A. was established in September 1988 as a subsidiary of the then Public Petroleum Corporation of Greece (DEP) S.A. Construction works started in mid for the high pressure gas pipeline from the Greek-Bulgarian border to the greater Athens area (512 km). In 1994, the first agreement for sales of natural gas was signed between DEPA and the Public Power Corporation (PPC DEH in Greek), the country s largest natural gas consumer, which formed the base for developing a natural gas market in Greece. In 1995 the Legal Framework of Gas operations was published, providing for the creation of Gas Distribution Companies in Greece. In 1996 the basic transmission system was completed and tested with the first gas flow. In November 1996 the first customer (Hellenic Sugar Industry) was supplied by the network. In 2000, the Liquefied Natural Gas facilities were completed in Revithousa island and the first cargo of LNG arrived in Greece from Algeria. DEPA and BOTAŞ (TGI). Construction works of TGI Gas Pipeline started in 2005 and operation commenced in Agreement was signed between Greece and Italy regarding the promotion and implementation of the Greece - Italy Interconnector as a continuation of the Turkey - Greece Interconnector. A similar tri-lateral Interstate Agreement was signed in 2007 among Italy- Greece - Turkey. Deregulation of the domestic gas market was effected through Law 3428 ratified by the Parliament in Based on this a legally unbundled TSO Company (DESFA SA) was formed in 2007 under a Presidential Decree as DEPA s subsidiary. Law 3428 stipulates the operational independence of the two companies, and within this framework, all DESFA Board Members are appointed by the Greek government for the first ten years from DESFA s establishment. Full ownership and control of the National Natural Gas Transmission System, including the LNG Terminal, was transferred to DESFA. In 2008, the Greece-Italy offshore gas pipeline company (ITGI Poseidon S.A.) was incorporated. In 2010, agreement was signed between ITGI Poseidon S.A. and Bulgarian Energy Holding (BEH) for the realization of the Greece- Bulgaria Interconnector following the previous signing of an MOU between respective parties. Full control of the National Natural Gas Transmission System, including the LNG installation, was transferred to DESFA. In the same year, an international tender was carried out to select the private investors for the establishment of the two first Gas Supply Companies (EPAs) in Thessaloniki and Thessalia. DEPA holds a 51% stake in the above companies, while the remaining 49% and management rights belong to the private investor. In 2001, under the same procedure, the third Natural Gas Supply Company (EPA) was established in the region of Attica. In 2003, a Gas supply contract, from Turkey to Greece, through the Turkey - Greece Gas Interconnector was signed between 04 05

4 National Natural Gas Transmission System map 06 07

5 08 DEPA Group

6 DEPA Group: DESFA S.A. The Administrator of the Natural Gas System (DESFA) S.A. was established in March 30, 2007 as the greek TSO. Its scope is to operate, maintain, manage, exploit and develop the National Natural Gas System (ESFA) and its interconnections, ensuring that the system is financially viable and technically reliable to meet customers needs in the safest way. EPA Attica S.A. The Gas Supply Company (EPA) is owned by the DEPA group together with Attiki Denmark, a strategic investor led by Shell GAS, with stakes of 51% and 49% respectively. The management of the EPA is carried by the Investor. Its main scope is to develop and supply with natural gas the broader Athens region through medium and low pressure gas networks. EPA Thessaloniki S.A. The Gas Supply Company (EPA) Thessaloniki is owned by the DEPA group, and ENI Hellas spa, with stakes of 51% and 49% respectively. Its main scope is to supply with natural gas the Thessaloniki region through medium and low pressure networks. EPA Thessalia S.A. The Gas Supply Company (EPA) Thessalia is owned by the DEPA group, and ENI Hellas spa, with stakes of 51% and 49% respectively. Its main scope is to supply with natural gas the Thessalia region through medium and low pressure networks

7 DEPA s new organizational structure IGI POSEIDON Newly - established ITGI Poseidon S.A. is a joint venture between DEPA (50%) and Italy s Edison (50%). The company has undertaken the design, finance, construction and, later, operation and maintenance of the Greece- Italy underwater natural gas pipeline, along with a natural gas compression station on the western Greek coast. This pipeline is part of the ITGI (Italy-Turkey-Greece Interconnector) which will allow gas produced in the Gaspian region to flow to Europe. In an effort to respond to the new conditions prevailing in the deregulated natural gas market, DEPA recently adopted a new organizational structure, by which the multiple hierarchy levels were abolished, in line with an organization philosophy based on the company s value chain. This structure enhances staff and executive responsibility, strengthens horizontal cooperation of organizational units, simplifies decision-making procedures, and focuses on the customer. DEPA Organizational Chart 12 13

8 Following a steady path of strong growth in the past 20 years, DEPA is today a modern group of companies of strategic importance for Greece, with a strong presence in energy developments of the broader region. DEPA maps out its strategy and vision, so as to: Preserve its leading position in the domestic market, under competition conditions. Promote Greece into an energy hub to the benefit of energy supply security, as well as into an energy price-setting point in SE Europe, through purchases and sales of gas in the deregulated market, serviced by an interconnected system of international pipelines. Expand urban natural gas networks around the country to the benefit of end-users. Expand the use of natural gas into new applications, while boosting DEPA s commercial activities inside and outside of Greece. Strategic Objectives 14

9 Domestic Activities Sales DEPA sells natural gas to: Electricity producers Large consumers with an annual consumption of over 10 million m 3 Existing Gas Supply Companies (EPAs) End-users in regions where Gas Supply Companies have not yet been established The Natural Gas Vehicles sector DEPA aims to a continuous improvement of its commercial activities. It adjusts its commercial and pricing policies to the market s new institutional framework, it makes new contacts with major potential customers and offers perfect services for the technical support of its existing customers. 16

10 Natural gas sales 2009 Natural gas consumption sectors Total: 3,4 billion m 3 0,5% 0,9% 0,1% 1,2% 12,6% 8,2% 14,7% 61,8% Domestic-Commercial Sector Natural gas activities relating to the medium and low pressure (19/4bar) gas distribution networks servicing all types of customers within specific geographical areas with annual consumption threshold up to 100 Gwh have been assigned to the Gas Supply Companies (EPAs). Specifically, through international tenders, the natural gas network in the greater Athens area (Attica) is under the jurisdiction of EPA Attica. Similarly, the town networks in the cities of Thessaloniki, and Larrisa, Volos, Karditsa and Trikala are under the jurisdiction of EPA Thessaloniki and EPA Thessalia. Power Generation Industry Thermal use Industry Chemical use Compressed natural gas (CNG) for use by vehicles Co-generation Domestic Commercial Vehicle Gas TSO self consumption Transit Gas The acute problem of air pollution in cities dictates a switch to more efficient fuels which are environmentally friendly. In this regard, DEPA s long-term objective is to boost the use of natural gas in public transport. Commercial Activity Sales Natural gas volumes in 10 6 m ,6% 36,7% 61,7% ,419 0,9% 28,9% 70,2% 1,906 1,883 2,022 1,5% 75,5% 4,0% 76,1% 5,7% 2,287 2,514 7,0% 8,5% 23,0% 19,9% 19,7% 20,1% 19,5% 2,670 3,117 3,822 4,001 12,6% 12,2% 3,373 Power Generation Industry EPA (domestic commercial) 11,4% 20,7% 74,6% 72,9% 72,0% 67,9% 12,8% 17,5% 14,2% 15,8% 16,8% 21,4% 69,8% 73,6% 71,6% 61,8% Currently, DEPA owns and has put in operation two Bus Refueling Stations supplying 20% of public transportation buses in the Attica region with compressed natural gas (CNG). The first station, was put into operation in January 2001, while the second, in January Every day, as many as 416 natural gas public transportation busses are refueled at the stations, along with 106 municipal garbage trucks. In parallel, DEPA is taking actions to substitute conventional fuels by natural gas for professional vehicle fleets in Thessaloniki. DEPA recently started retail sales of natural gas for use by private family cars, an activity which is expected to draw a significant number of new customers since natural gas is priced lower than petrol and diesel. DEPA s planning includes the expansion of the CNG stations network, in cooperation with other companies, in Athens and Thessaloniki, as well as on several points along the national network. The use of natural gas by private passenger cars is today an effective solution to the air pollution problem facing in many urban areas

11 Natural gas consumption sectors Power Generation Gas Combined Cycle technology for power generation and Electricity/Heat cogeneration is the optimal choice in energy-consuming industries, both in terms of cost saving and environmental impact. Natural gas share in Power generation increases, taken the combined benefits produced by gas emition in current gas turbines. Public Power Corporation (PPC) is DEPA s largest customer in the sector of power generation, with annual gas consumption of over 1.68 billion m 3 in So far, natural gas is being used in four PPC power stations. Besides PPC, DEPA supplies with natural gas a number of Independent Power Producers (IPPs). Public Power Corporation (PPC) station in Lavrio In 2004, the first private backup power station was connected to the National Natural Gas System. The 148-MW power station is of an open cycle type, and is owned by Iron Thermoelektriki S.A. Elpedison station at Thisvi Viotias Industrial Park A 390-MW Combined Cycle Power Station, owned by Elpedison Energiaki S.A., has been operating and supplied by DEPA since May A 334-MW natural gas Power Co-generation station began operation in May 2008, covering the needs of Aluminum of Greece, in Viotia. A 435-MW Power Station, owned by Iron II Thermal Power Station Viotias S.A., started operation in Thiva, in January 2010 and the second 412-MW Elpedison plant began operation in April 2010, at the Thisvi Viotias Industrial Park

12 Natural gas consumption sectors Industrial DEPA customers by region Industrial Sector The industrial sector refers to consumers with an annual consumption equal or above 2,200,000 KWh Gross Calorific Value of natural gas (approximately 200,000 Nm 3 annually), whose activity is either production or manufacturing. Natural gas offers industry increased efficiency, with less emissions, while a large number of small and large businesses using natural gas can effectively cut operational costs and upgrade their production procedures, eventually leading to improved quality of their final products. Natural gas can be either for thermal or chemical use (as a raw material for the industry), as well as in Electricity Heating Co-generation systems, which simultaneously generate usable electric power and thermal energy. The energy generated can be both for thermal use and cooling or air-conditioning. Attica 5 Thessaloniki 5 Imathia 4 Komitini Industrial Park 15 Drama Industrial Park 4 Xanthi Industrial Park 10 Kilkis Industrial Park 30 Kavala 1 Magnhsia 2 Serres 10 Pieria 1 Larisa 1 Lamia 8 Boetia 74 Korinthia Natural gas is today used for combined heat and power in industrial sectors like food, metallurgy and textiles, in large greenhouses, as well as in the major commercial sectors (hospitals, hotels, etc). Currently, total industrial use of natural gas in regions where a network is available is approximately 90%. DEPA has signed natural gas sales contracts with 167 small and 25 large industrial units (of an annual consumption of over 100 GWh). ELVAL installations in Oinofyta Viotias. ELVAL Industry - Furnace. CHALIVOURGIKI (STEEL INDUSTRY) installations in Elfsina Attikis. Panoramic view of the Hellenic Fertilizers and Chemicals Industry (ELFE), Nea Karvali

13 Network expansion to new regions throughout Greece DEPA is planning to establish three new EPAs in the provinces of Central Greece, Central Macedonia and Eastern Macedonia & Thrace. The relevant international tender procedure to attract private investors and to establish the new companies in 2011 is already under way. 24

14 Existing and new distribution companies (EPA) Existing: Attica, Thessaloniki, Thessalia (in red color) New EPAs: Sterea Ellada & Evia (orange color) Central Macedonia (green color) Eastern Macedonia & Thrace (blue color) 26 27

15 DEPA closely monitors and evaluates global trends in the natural gas market, while developing a long-term strategy aimed at further diversifying its list of suppliers. Through contacts and new agreements, the company secures enough quantities of natural gas at competitive prices, to meet the country s current and future needs. Currently, DEPA receives supplies of natural gas on the basis of long-term contracts from the following sources: - Russia s Gazprom Export: delivers the largest part of natural gas supplied to DEPA at the Greek-Bulgarian border. Such quantities currently amount to approximately 3 billion m 3 annually. - Algeria s Sonatrach: supplies DEPA with liquefied natural gas, delivered at the Revithousa Terminal. Annual contracted quantities range between 500 and 700 million m 3 of regasified LNG. - Turkey s BOTAŞ: annual natural gas deliveries amount to about 750 million m 3. In addition, DEPA buys some cargos of liquefied natural gas from the spot LNG market, on the basis of agreements with other companies. In 2009, the total quantities of natural gas bought by DEPA amounted to 3,379 million Nm 3. Of these, 2,588 million Nm 3 accounted for pipeline gas and 791 million Nm 3 for liquefied natural gas. Natural gas supplies 28 LNG vessel, Revithousa

16 Natural gas market competition Natural gas currently contributes by 12% to the country s energy balance, and the rate is expected to increase further. By actively participating in the debate for the gradual restructuring of the domestic natural gas market and the formation of a new regulatory framework, DEPA s contribution aims to the creation of a market environment of fair competition for all parties involved in a balanced and distortion-free liberalized gas market. Preserving its leading position in this new setting is a challenge for DEPA. Safe supply The new liberalized and competitive market and environment requires that the system is uninterruptedly supplied. In the 15 years of DEPA s commercial operation there has been no incident of supply disruption. Even in the case of the Russian-Ukrainian crisis in January 2009, DEPA managed to meet the needs of the domestic and regional markets, by utilizing the potential of the extensive range of supply sources and the long-standing relations of trust developed with its suppliers. The signing will supply contracts under competitive terms to the benefit of the end-consumer will remain as one of DEPA s strategic. The company will also seek to diversity its choices with regard to supply sources and routes. 30

17 DEPA does not limit its activities to the Greek market, as its targets include expansion to the wider Balkan region, through interconnections with neighboring countries. By undertaking the construction of major interconnecting pipelines, through partnerships with international companies, DEPA actively participates in the major task of transporting natural gas from producing countries in the East to Western Consumers. International partnershipsagreements 32

18 Greece-Italy Pipeline land section The project to construct the onshore section of the Greece-Italy pipeline from on the Greek mainland undertaken by DESFA and, when completed, it will be a part of gas transmission system in greece. Greece-Bulgaria pipeline In April 2010, an agreement was signed in Thessaloniki for the establishment of the company which will undertake the construction of the natural gas Greece-Bulgaria Pipeline (IGB). The Greece-Italy Pipeline agreement was signed between IGI Poseidon S.A. and Bulgaria Energy Holding. Underwater Greece-Italy Pipeline The IGB starting point will be the outlet of ITG in Komotini and from there on to Stara Zagora in Bulgaria. Total length 168 km. Its initial transport capacity is estimated at 3 to 5 billion m 3 annually, which could be expanded depending on gas availability and demand and supply conditions. This is a new underwater pipeline that will connect the Greek and Italian natural gas transportation systems, complementing the Turkey-Greece pipeline already in operation, and completing the Turkey-Greece-Italy interconnector (ITGI). The Greece-Bulgaria pipeline is a branch of the Turkey-Greece-Italy pipeline (ITGI), which will supply Europe with over 8 billion m 3 of natural gas annually, coming from Caspian states. The Greece-Italy pipeline will create a new, southern route to supply natural gas to Europe, to meet the increasing energy demand. The project is expected to be operative in It has been designed to transport more than 8 billion m 3 of natural gas annually, thus contributing to energy security and diversification of European energy supplies. The company IGI Poseidon S.A. was incorporated in Athens in 2008, with its mission being to design, construct and operate the underwater pipeline and relevant facilities. DEPA and Edison each hold a 50% stake in the company

19 DEPA is among the largest investors in Greece, with total funds invested exceeding 3 billion euros. Today, DEPA is a financially strong company with its fundamentals placing it among the country s leading firms Sales 1.072, ,51 974,73 EBITDA 157,77 216,02 165,51 Gross Profits 103,63 166,39 104,04 *in million euros Company results 36

20 Environment Environmental protection is among DEPA s top priorities as a group. The company s main objective is to minimize the impacts on the landscape caused by construction works, to preserve natural resources and to contribute to the quality of life for people where the group companies are active. The strictest environmental standards stipulated in the Greek and European laws for construction and operating gas infrastructure are applied. In addition, all the required safety measures in accordance with international standards are applied to prevent the risk of accidents and to safeguard healthy working conditions. 38

21 DEPA involves in a many-faceted social activity aimed at contributing to the progress and well-being of the local communities where it is active. It undertakes or supports initiatives focusing on the environment, culture, sports, and social solidarity. DEPA seeks to maximize the company s value through transparent procedures and effective management of its resources to the benefit of all stakeholders. Corporate social responsibility 40

22 Cooperation Growth Prospects

23 PUBLIC GAS CORPORATION (DEPA) S.A. 92 Marinou Antipa Ave. GR Heraklion Attikis Tel.: Site: