Delayed Launch of LNG Terminal in Alexandroupolis
The floating LNG terminal in Alexandroupolis was initially scheduled to start operating in May, but was later postponed to June. Gastrade recently mentioned that it will be operational in the last quarter of the year. However, a source from the operator Gastrade told Montel that there is still no specific date planned for the launch.
In the end, the terminal will supply both the domestic market and other countries, including the Vertical Gas Corridor initiative – connecting Greece with Bulgaria, Romania, Hungary, Slovakia, Moldova, and Ukraine – and is considered a solution to diversify gas sources and strengthen energy security in the region.
The urgency of diversifying away from Russian gas
The Bulgarian Minister of Energy recently called for swift action from Gastrade to enable the start of commercial operations. While any immediate impact on the dynamics of the European market or prices is not expected – given sufficient regional supply and relatively high storage levels – further delays after the fourth quarter could have a significant effect if there is a strong cold spell.
Challenges in Gas Supply to Europe
Participants in the market have expressed concerns about the expiration of Russia’s transit agreement for gas delivery to Austria and Slovakia through Ukraine at the end of this year. It is unlikely to be renewed, creating uncertainty in the market.
“Another issue is the transit contract that expires at the end of the year, leaving Slovakia and Austria to seek alternative gas supplies,” said Olumide Adaji, senior gas analyst at LSEG.
European imports of liquefied natural gas are expected to cover half of the nearly 14 billion cubic meters of Russian gas. This poses a challenge for the region’s energy security.
Impact of Ukraine Gas Transit Agreement on European Gas Market
Recent reports indicate that Ukraine may not renew its gas transit agreement, potentially leading to the loss of gas flows that are vital for Europe. Despite the uncertainty surrounding gas deliveries this winter, the European gas market remains relatively stable, with the Dutch TTF market experiencing only a slight contango.
Contracts for June were trading at 32 EUR/MWh, while prices for the fourth quarter are at 36.36 EUR/MWh. Looking ahead to 2025, prices are expected to increase to 38.08 EUR/MWh. These fluctuations in prices are considered normal for future contracts, reflecting the ongoing negotiations and potential disruptions in gas supply.
