“Completing the Midstream Puzzle: Exporting Gas from the Eastern Med”

The view from Greece and Italy

Theodoros Kitsakos

Chief Executive Officer

Public Gas Corporation - DEPA

Athens Energy Forum 2017

Energy security challenges & strategic opportunities

Athens Hilton Hotel, 1st February 2017

Company profile

• DEPA with its long presence in the Greek market is a

competitive and dynamic group of companies in the energy

sector.

• Its contribution to the development of the Greek economy

and the protection of the environment is substantial.

• DEPA Group is bringing natural gas to more and more regions

of the country with the continuous expansions of the natural

gas pipelines .

• Having entered into long-term pipeline natural gas and LNG

supply contracts, it supports the supply sufficiency and

security of the country.

• It develops significant initiatives so that Greece can play an

essential role as a hub of natural gas transit to Europe.

Development of the internal gas market

• The administrative and functional unbundling of DEPA's activities

provides preservation of the commercial sector and contracts with

international suppliers in DEPA and

• The establishment of a new 100% subsidiary Gas Distribution

Company DEDA (Rest of Greece) that owns the new gas distribution

networks in new urban areas of Lamia, Euboea, Central Greece etc.

• DEPA is also maintaining the 51% of the Gas Supply and Distribution

Companies of Attiki, Thessaloniki and Thessalia.

• 8 bcm, is the expected added consumption for the next 15 years,

namely an average consumption of 0,6bcm/year, followed by a

subsequent reduction of 50 ktons of emitted CO2.

• The length of the new distribution networks is 1130 km.

• The budget for the construction and operation is 235 million € and

the number of new connections is expected to be 50,000.

• More than 106,000 families, approximately 16,500 professionals and

55 industries will use natural gas to meet their needs.

• During the construction and the operation of the networks, more

than 1,600 jobs and at least 700 new permanent jobs will be

created, respectively.

International concerns about the energy security and

the need for diversification

• France is one of the most important power exporting countries

• 15 November: 70% of France's nuclear capacity available -75% nuclear of

total power capacity

• 19 December: 77% of France's nuclear capacity available

• The deficit in electricity production -French nuclear outage- and 3 of the

Greek lignite plants unavailability impacted the Greek gas market

• January: The Greek energy balance turned from imports to exports

Energy security is defined by the International Energy Agency as an uninterrupted availability of energy sources at an affordable price

ENERGY SECURITY

Solidarity

Diversified sources

Diversified routes

• Under these circumstances, CCGTs had to balance the power market

• Gas demand in Greece was already high due to the above and the

extremely low temperatures of winter

• Thus, the necessity for energy security was highlighted

• Solidarity and accessing diversified sources and routes could ensure

the security of supply

• DEPA is working strongly at this direction with international projects

that provide access to new sources and routes

January:

500MW (export)

Before December:

1000MW (import)

Greece – The Gateway to Europe

EastMed IGB

TAP SEEC

LNG

LNG

Other Interconnectors LNG Terminal

EastMed IGB

Italy

Croatia

Romania

Bulgaria

Russia

Turkey Greece

Montenegro

B&H

Slovenia

Serbia

FYROM Albania

Hungary

Kosovo

LNG

LNG

TAP SEEC East Med IGI Offshore IGI Onshore

IGB Other Interconnectors LNG Terminal

IGI

Egypt

Greece – The Gateway to Europe (2)

■ Southern Gas Corridor / TAP

– SGC underpins regional Market development and integration

– DEPA is a significant stakeholder of the Southern Corridor as a

buyer of SD2 gas and as a sponsor of IGB

– The timely realization of TAP will enhance the connection of

SEE with mature Central European markets

– Construction started on 17 May 2016

■ IGI Poseidon

– A mature project (included in the 2nd PCI list), ready to take

FID as soon as gas resources are secured

– Applied for 3rd PCI list

– May transport natural gas from Russia or alternatively from

Iran, East Mediterranean, Middle East and/or Caspian areas

(Kurdistan, Iran, Turkmenistan) to Italy and Europe

Key projects will enhance national and regional energy security and may catalyze a gas trading hub in Greece

Unlike purely geopolitically driven pipeline plans, those

proposed here are realistically based on business merit.

DEPA’s contribution:

South East European Corridor:

the revival of Turkish/Greek Stream project

IGI Offshore

IGI Onshore

• A practical option that may benefit from existing

work in the IGI onshore & offshore pipeline

projects

• Existing supply contracts into Italy could be

easily diverted to SEEC and enhance the project

viability

• MoU among Gazprom, Edison and DEPA signed in

Rome on 24 February 2016 foresees cooperation

in assessing and possibly developing a new supply

route for Russian gas to Europe

• Joint working groups are making progress on the

development and implementation of actions

• Basis is the well advanced IGI Poseidon pipeline,

connecting Greece to Italy

• The parties involved are strongly committed to

the project

• The development of this new supply route shall

be pursued in full accordance with EU legislation

■ FSRU Alexandroupolis (LNG Terminal in Northern Greece)

–Will ease global LNG supplies into the SEE region through its

proximity to the IGB

– It is included in the 2nd PCI list and developed together with

international partners/investors

– Initial meeting among potential shareholders (Gastrade, DEPA,

BEH, Cheniere) on structure and steps ahead took place on 16 May

2016

– Gaslog has taken a 20% stake in Gastrade (December 2016)

– FID to be taken in 2017

■ IGB

–Will connect Bulgaria with LNG and gas from the Caspian and the

Middle East through existing and new pipelines (i.e. TAP) and the

Greek existing (Revythousa) and planned LNG terminals

– Is included in the 2nd PCI list and CESEC list and it is an integral

part of the Vertical Corridor contributing to the security of supply

of regions of poor diversification

– FID taken on 10 December 2015

– 5 bidding offers were received on a long term basis for the

successfully ended on 30th Nov. 2016 bidding phase of the market

test

– A new allocation procedure is assessed for the remaining capacity

not allocated during the bidding phase of the market test, based

on requests by participants

– Applied for 3rd PCI list

– Start of construction scheduled for S1 2018

Italy

Croatia

Romania

Bulgaria

Russia

Turkey Greece

Montenegro

B&H

Slovenia

Serbia

FYROM Albania

Hungary

Kosovo

LNG

LNG

TAP SEEC East Med IGI Offshore IGI Onshore

IGB Other Interconnectors LNG Terminal

IGI

Egypt

Dynamics of a second LNG imports facility in

Alexandroupolis and the Progress report on IGB

Progress report on IGB Project: Overview

IGB is a 32” diameter, 182km cross-country high pressure gas pipeline between Komotini (Greece) and

Stara Zagora (Bulgaria): approx. 31 km of the route is in Greece, 151km in Bulgaria.

Capacity

Technical capacity is planned to be up to 3 bcm/y, with the

possibility for future increase up to 5 bcm/y through the

installation of a compressor station; MOP is 75 bar;

CAPEX

The construction phase CAPEX is expected to be for capacity up to

3bcm/y. Currently the preparatory works for starting the

construction are ongoing.

EU Support

IGB is listed among the PCIs and is beneficiary of a grant in the framework of the

EEPR (European Energy Program for Recovery) applicable until the envisaged COD;

IGB is one of the 7 top CESEC (Central and South-eastern European gas

Connectivity) Projects for energy security.

National Status

The Project has been designated as a Project of “National Priority” under

Bulgarian Council of Ministers’ Decisions No.615/14.07.2009, No.452/07.06.2012

and under Greek Law 4001/2011.

Commercial

Operation

The targeted commercial operation is in 2020 (earliest possible

from technical perspective) in line with guideline from respective

governments

Technical and Permitting Activities

EIA approvals in Greece and Bulgaria Obtained

Detailed routing for construction (Spatial

Plans), including permits

In Greece, Approved

In Bulgaria, Approved

FEED / Engineering Design work

In Greece: completed

In Bulgaria: Engineering package has been fully

developed and gone through approvals by 3rd

parties; the procedure for definitive approval by

the Ministry of Regional Development & Public

Works approved (26/01/2016)

Permits Technical Assessment achieved in both Countries.

Land and Right of ways acquisition ongoing in

Bulgaria: the completion of the acquisition

procedure will allow ICGB to obtain the

construction permits for the Bulgarian Territory,

by the end of this year.

Progress report on IGB Project:

Status & Ongoing Procedures

Market studies - Transposing Directive 2009/73/ЕC and the activities subject to

licensing

The EU 27 Gas TSO market study was assigned through the

publication of a Tenders Announcement sent to preselected

candidates. The selection was done through a ranking with

quality/price score.

ICGB is yet to apply for a license for natural gas transmission

and its licensing will be done in accordance with the new

rules of the Energy Act, respectively in accordance with

Directive 2009/73/ЕC transposed through it.

According to the Exemption grant practice,

exempted pipelines are recognized as

performing gas transportation activities only

from COD (Commercial Operation Date) after

the obtainment of the ITO certification.

Final Investment Decision

FID taken on 10 December 2015

The FID, taken on 10 December 2015, commits the

shareholders to provide the capital required to

complete the construction phase, once regulatory,

permitting, financing and exemption milestones

will have been attained, as currently scheduled,

within 2017, targeting COD (Commercial Operation

Date) in S1 2020

Progress report on IGB Project:

Status & Ongoing Procedures

The feasibility of the East Med Gas Pipeline

■ EastMed

– European market constitutes a lucrative monetization option

since it is a premium market with potential supply gap.

– The opening of a new Energy Corridor is fundamental for

Europe’s energy security.

– Following the feasibility study already executed, EastMed

pipeline is a viable export option via Cyprus, Crete mainland

Greece and Italy (connecting to IGI Poseidon Pipeline).

– It is included in the 2nd PCI list.

– Pre-Front End Engineering Design studies and surveys

underway, co-financed by EU CEF program

– Pre-FEED technical studies were concluded in 2016.

– IHS-CERA assessed, in an independent manner, the

competitiveness among the other available export options in

the region - preliminary results were obtained in June.

– IGI Poseidon S.A. and Noble Energy International Ltd signed a

Cooperation Agreement concerning the EastMed pipeline in

June 2016. Second working group took place on 20-

21/09/2016

– Applied for 3rd PCI list

– CEF application in Q3 2017 for FEED and DMS (Detailed

Marine Survey) activities

Italy

Croatia

Romania

Bulgaria

Russia

Turkey Greece

Montenegro

B&H

Slovenia

Serbia

FYROM Albania

Hungary

Kosovo

LNG

LNG

TAP SEEC East Med IGI Offshore IGI Onshore

IGB Other Interconnectors LNG Terminal

IGI

Egypt

Thank you for your attention!