DESFA’s proposal for the rates to take effect in 2027 will result in increases in natural gas costs that will be passed on to consumers, warn Motor Oil and DEPA Trading, in the context of the RAEY public consultation on the Operator’s new tariffs.
Both companies believe that DESFA is passing on excessive costs to natural gas importers, with DEPA calling for reductions at entry points and Motor Oil emphasizing the need to freeze transmission charges at the country’s entry points for at least the next three years, so as not to further burden consumers and industry.
“If the increase in supply costs for importers—which has already risen by approximately 30% between 2024 and 2027—continues, this burden will subsequently be passed on to domestic natural gas and electricity consumption,” warns the Vardinoyannis Group.
In fact, MOI proposes to RAEY that, in order to offset the increase in charges at system entry points, capacity charges at domestic exit points be reduced by 30% accordingly.
DESFA’s proposal for its new tariffs—which essentially involves not applying seasonal rates and discounts at the entry points of the Revythousa LNG facilities and the Alexandroupolis FSRU—has drawn reactions from the two system users. At the same time, it proposes that short-term multipliers be maintained at the same levels as in 2026, except at exit interconnection points, where it proposes lower multipliers to encourage exports that will ultimately increase system usage, thereby reducing tariffs.
In the case of DEPA, the company’s view is that DESFA’s proposal will result in 5% increases in charges at the entry points of the Greek natural gas transmission system and 13.60% for LNG starting next year, while charges at exit points will decrease by approximately 14%.
“This results in an increase in the cost of natural gas entering the National Natural Gas System (NNGS) and, by extension, in the Greek gas market in general,” the company notes.
DEPA’s argument is based on the fact that “…for the year 2027, all auctioned LNG time slots have been allocated, while at the other entry points (Sidirokastro, Nea Mesimvria, and Amfitriti), long-term capacities have already been allocated at a rate of 65–100% through auctions in previous years..."
Therefore, as the company states, “there appears to be no obvious case of under-utilization that would justify the proposed increase in tariffs at the Entry Points.”
It even refers to a reversal of the data on which users’ investment decisions were based. “Furthermore, any decisions by Users to commit Entry and LNG capacity in the Operator’s respective auctions for 2027 were made based on different data; therefore the proposed increase in entry tariffs alters importers’ financial data and affects their commercial planning,” it states. It also calls for a review of how revenue from over-recovery is allocated.
Warnings of increases from MOI
In the case of Motor Oil, the company acknowledges that the Operator’s proposal to reduce capacity charges at export-oriented interconnection points is a step in the right direction, “...because only in this way will energy flows through DESFA’s network increase, while this approach reinforces the strategic role Greece is called upon to play as a regional gateway for LNG imports and re-exports.”
However, he notes that for the Operator’s policy to have a real impact and for LNG exports to cross-border systems to become commercially viable—that is, to enhance the competitiveness of the Vertical Corridor—“…it is not enough for DESFA to reduce transmission charges; a corresponding approach must also be adopted by the other Operators, with corresponding reductions in charges at the interconnection points."
And he calls for “the same 30% discount to be applied to all domestic-use products instead of the 14% calculated in DESFA’s proposal, in order to ensure equal cost signals between export and domestic use of the system, without creating distortions to the detriment of the domestic market and Greek consumers.”
Otherwise, MOI warns that passing on increases to end users will have the inevitable result of shifting the additional costs to end consumers, households, and industries, with all that this entails.