Azerbaijan’s Socar sets eye on Greek gas company

BAKU - Reuters

A worker sits at the reception desk of the state television headquarters in Athens. Junior partners in the ruling coalition insist on the reopening of the ERT. AFP photo

The Azeri state energy company Socar said it has started talks with the Greek government on purchasing the country’s natural gas grid operator DESFA, the asset of the national gas firm DEPA, after being the only bidder in a failed tender for the asset sale.

“The tender procedure on the privatization of DESFA is over and Socar has started talks with the Greek government,” Socar president Rovnag Abdullayev told reporters on June 15.

“It means that the whole natural gas distribution system of Greece will be in our hands soon.”

Abdullayev said a purchase of Greek assets would “strengthen the export potential of Socar.”

Socar wants to increase the level of its gas distribution in Greece, from 17 percent at present, and deliver gas from the major Shah Deniz field off Azerbaijan to the European country.

The contestants were to submit binding offers to purchase Greece’s gas transportation system operator DESFA on June 10, but only Socar of five participants submitted an offer.

Greece actually failed to attract any binding bids for its natural gas firm DEPA earlier this month, meaning a key sale to meet the country’s privatization targets under its international bailout had floundered.

Gazprom out of process

Russian energy giant Gazprom, which was considered the main contender for purchasing DEPA, decided not to put forward a binding offer. A representative of the gas holding said Gazprom had not received sufficient guarantees that DEPA’s financial situation will not deteriorate by the end of the transaction. Gazprom noted it was worried about DEPA’s financial position, but Greece said the Russian firm may have been discouraged by fears that the EU would impose stringent conditions.

The process of selling DEPA and gas transportation system operator DESFA is regarded one of the key points of the Greek privatization program. Greece expected to receive around 1.5 billion euros from the sale.

DEPA Holding is engaged in wholesale and supply of natural gas to major customers. Through its subsidiary DESFA the holding owns the national gas transportation network and regasification terminals. In addition, DEPA owns 51 percent of the companies on the retail sale and deliveries of natural gas to small and medium businesses and private customers in Greece.

There is a strategic partnership between Turkey and Azeri Socar, which gained speed with the privatization of Petkim in 2008 and would be enforced by Star Refinery and the Trans-Anatolian natural gas pipeline project (TANAP). Turkey has a 20 percent stake in TANAP, while Socar holds 80 percent.

Construction of the TANAP pipeline, which will be built from the Turkish-Georgian border to Turkey’s border with Europe, is expected to start at the end of 2013 and the project’s first phase is estimated to be ready by the end of 2017 or early 2018.