Greek independent energy consortium M&M Gas has secured a spot cargom from Norway’s state-owned producer Statoil. The cargo is due to arrive at the country’s Revithoussa terminal on 12 February aboard the 173,000cmb Stena Clear Sky, ICIS shipping information LNG Edge showed. Greece has not received a spot cargo since March 2015, when M&M Gas also purchased volumes from Statoil.

The copmany is extremely price sensitive at the moment. As an alternative, an independent buyer in Greece can purchase volumes from the incumbent gas importer DEPA at around $5.35/MMBtu. In order to compete with this price, the buyers cannot afford to pay more than $4.60/MMBtu as regasification and transportation costs would have to calculated into the final price.

M&M Gas is understood to have taken advantage of the weak global market to import gas independently. The company has access to its own gas-fired power generation capacity. One source active in the market said that the deal was concluded below $5.00/MMBtu and could have incorporated NBP either as guideline basis or basis for indexation.

M&M Gas is understood to be seeking another cargo for delivery in March. While the company is in discussions with several sellers, prices have rebound because of the outage of Russia’s Sakhalin-2 project in northeast Asia, which has limited the opportunities at the moment. Moreover, sources in Greece estimated that when wholesale prices are revised in April, they will drop by $0.80-0.90/MMBtu on the basis of prevailing crude prices. DEPA’s gas basket is crude linked and indexed to oil and oil products.

DEPA has contracted around 3 billion cubic metres from Russian gas producer Gazprom for delivery via pipeline in 2016. The company is not yet able to utilise all of the gas it has taken under its take-or-pay obligations.

“So far this year, DEPA is structurally long. Unless there is a force majuere situation with severe supply implications, there is virtually no chance that it will import spot volumes this year,” a source in Greece said.

This means that in order to compete against DEPA, an independent buyer in Greece is unlikely to pay above $3.80/MMBtu for delivery in April. Given the widespread between March and April, the independents are unlikely to enter the market unless prices slip below $4.00/MMBtu.

“While such price collapse can take place later in the year, we are just not there yet. Asia is still bidding above $4.00/MMBtu for April deliveries,” a source said.

Egypt could present opportunities

Egypt’s incumbent gas buyer EGAS has signed deferrment agreements with a number of current suppliers, a seller active in the Mediterranean said.

The state-owned compoany is having payment issues and UK-based oil and gas company BP has already suspended LNG deliveries after the buyer failed to pay for a delivery.

However, the other suppliers have signed a 90-day payment deferrment agreement last week, in hopes that the company will receive funds from international institutions via the country’s government. Several traders have doubted these prospects.

“I don’t see how the situation will change over next three months,” a market source said.

If EGAS indeed further defaults on payments, cargoes designated for the country are likely to be diverted eslewhere. Given proximity of Greece and Turkey, one seller said that signing a put option with the buyers would give a supplier to Egypt some security.

Egypt is still considered a premium markets and the short-positions on the basis of awards from two supply tenders held in 2015 are likely to have been covered at premium levels.

“Ultimately, diversion from Egypt is likely to result in a net loss given the direction of today’s market, but it’s a question of how much you are going to lose,” a Europe-based trader said.
Source: ICIS