What does the DEPA-Gazprom agreement mean?

By Harry Floudopoulos

The negotiations between DEPA and Gazprom for the new gas supply agreement started yesterday, last September. The painful discussions with the Russian company, which reached even a political level, after the Greek request for better terms, was conveyed by both the Minister of Energy K. Skrekas and the Prime Minister K. Mitsotakis himself during the meeting he had with Russian President Vladimir Putin, reached an agreement structure with positive terms for the Greek side.

Thus, according to information, despite the fact that Gazprom had initially requested a complete change in the terms of the agreement, in order for the price to be set at 100% of the TTF gas exchange price, the Greek request was finally accepted to be included in a percentage. 20% the international oil price and 80% the TTF, for the first year of the 4-year agreement.

For the second year, ie 2023, the agreement provides for a price connection of 85% with TTF and 15% with oil. It is noted that throughout the duration of the agreement, until 2026, DEPA will supply a fixed amount of 2 billion cubic meters.

It is emphasized that according to the oil formula, the resulting price for natural gas is, according to current data, much lower than the stock market price for natural gas. This practically means that DEPA for 2022 will be supplied by Gazprom with a quantity of 2 billion cubic meters, with a significant discount, against the TTF price.

What does this mean for the market and consumers? A significant margin is created for DEPA so that it can transfer a significant part of the benefit from the agreement to the market, whether it is for household consumers, through gas supply companies, or for industrial customers and generators.

Of course, the amount of the benefit that will result will be examined per month, depending on the revenues of DEPA and the course of gas prices. However, it is clear that the intention of the company’s management to reconsider the amount of discounts to residential and industrial customers, based on the new data that have emerged from the agreement.

Besides, in the last two years it is characteristic that DEPA has returned to the market an amount that reaches 175 million euros. This is the 120 million euros that resulted from the positive development of the arbitration with the Turkish Botas, while since last September the company has returned to the market another 55 million euros through the discounts it gives to the home consumers.

Finally, it is worth mentioning that with the agreement with Gazprom, DEPA strengthens its position in the Greek market as it acquires a competitive advantage, having access to significant quantities of gas at competitive prices below market prices.