Gas market’s future shape not finalized, despite third review agreement

The future look of Greece’s natural gas market, including the role to be played by DEPA, the public gas corporation, remains murky despite an energy-sector agreement just reached between government officials and the country’s lenders as part of the bailout’s third review.

The deal, announced last Friday, goes no further than to state that gas market details will be based on arrangements to be agreed upon between DEPA and its EPA supply company partners, Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures.

The country’s lenders, especially the European Commission, have been pushing for dominant DEPA to loosen its control of both the wholesale and retail natural gas markets.

Though the details still remain unclear, certain facts do offer an outline as to how things will stand.

DEPA can be expected to withdraw from EPA Thessaly-Thessaloniki and retain interests in EPA Attiki, serving the wider Athens area. The lenders appear to have agreed to a Greek proposal calling for DEPA’s increased stake in EPA Attiki. Energy minister Giorgos Stathakis has already made clear DEPA stands to gain greater control of the EPA Attiki board.

It is also known that Shell is negotiating its way out of EPA Attiki.

In addition, an internationally recognized consultant will be hired to conduct an evaluation of the EPA ventures as a negotiating base for the expected changes. The consultant will also be tasked with evaluating the value of premature monopoly losses imposed on EPA Attiki and EPA Thessaly-Thessaloniki. These monopolies will cease to exist in the retail natural gas market as of January 1 as a result of market reforms being applied.

DEPA still needs to negotiate a price for its EPA Thessaly-Thessaloniki withdrawal and, once having done so, will need to use the amount to be received to compensate Shell for its expected departure from EPA Attiki. DEPA will also be expected to use part of its 320 million-euro amount in cash reserves.

DEPA, Shell and ENI have been engaged in negotiations since last summer. The hardline approach of DEPA’s recently ousted leadership had not helped the negotiators find common ground. In fact, gaps widened during the process.

According to sources, ENI has shown willingness to compromise but was not backed by Shell.

Despite the difficulties, agreements between all three companies appear to be on the final stretch.