This is the design of the new terminals LNG in Europe as a result of an overreaction to the panic caused by the shortage natural gas after Russian invasion of Ukrainewhat can lead to excess storage capacity and investment downtime?

There was a big discussion around this issue within Europe and at the level of international analysts, as the demand for natural gas decreased by 17%, and RES will continuously increase their share of the energy mix as part of the European strategy to reduce pollutant emissions by 55% by 2030 and zero by 2050.

Only Germany, which did not have a single FSRU until 2022, has planned an investment of 9 billion euros and has already commissioned the first of four planned FSRUs in the midst of the energy crisis. In total, 14 new FSRUs are being built or an investment decision has been made in Europe. But as analysts at the Institute of Energy Economics and Financial Analysis (IEEFA) note, if current infrastructure plans are implemented, the capacity of LNG terminals across Europe (including the UK, Norway and Turkey, which are closely connected to the EU natural gas market) could exceed 400 billion cubic meters.

But as European demand has fallen and renewables expand, actual LNG demand in 2030 could fall to 150 bcm, creating a gap of 250 bcm. unused LNG capacity. Europe, according to IEEFA analysts, should think about abandoning some of the planned projects.

The discussion inevitably affects the course and prospects of four private investment projects for new LNG terminals in Greece. This is the second FSRU of Alexandroupolis (Kopelouso group), “Dioriga GAS” in Corinth (motor oil), Elpedison in the port of Thessaloniki and Mediterranean Gaza in the port of Volos. As they progress, together with Revitoussa and the already under construction Alexandroupolis (Gastrade) station, which is expected to be in trial operation by the end of the year, they will increase Greece’s annual LNG transshipment capacity to 25 tonnes. bcm m., i.e. about four times more than the current need.

In total, 14 new FSRUs are being built or an investment decision has been made in Europe.

Of course, FSRU’s new plans mainly “see” the Balkan markets and a strong demand for the replacement of Russian gas, the path that Revitussa “pointed out” during the crisis period. While demand for natural gas in the domestic market fell by 19% in 2022, the total amount of natural gas entering the Greek system increased by 11.11%. 34.27% of the amount of natural gas entering the Greek system in 2022, according to DESFAwas sent for export, mainly to the Bulgarian market.

Investors seem to be overestimating the prospects for new FSRUs and are in no hurry to make final investment decisions. It is widely believed in the energy market that not all projects will be implemented. Even the most mature projects, such as the Gas Pipeline in Corinth, arouse skepticism among investors. “We didn’t say we weren’t moving forward. We’re just saying we’re still learning a lot of the details because the environment has changed. They included it in strategic investments, on the one hand, which is very positive, the market test went well. But, on the other hand, the ships have become more expensive and also hard to find… So we just need a little more time before we make a final decision,” Petros Tsannetakis, Deputy CEO of Motor Oil, told analysts about this.

“Decisions to create a sustainable and secure energy system should be based on long-term and sustainable planning, not on short-term or temporary conditions,” indicated in “K” DESFA Managing Director, Maria Rita Galliwhich, however, based on the prospects for exports to the Southeast Mediterranean and the capacity of the national transport system, estimates that there is “room for another FSRU” in Greece.

The Kopelouzou Group is also evaluating new parameters before making an investment decision on a second FSRU in Alexandroupolis, which will be exclusively export-oriented, with the Ukrainian market as the main buyer. “We are looking into this, it is not an easy matter,” team leader Dimitris Kopelouzos tells K, pointing to competition from Turkey. However, he is optimistic about the project’s prospects based on ongoing informal market testing.