Geopolitical factors to restrict ELPE tender participation

Geopolitical factors constraining the range of participants in order to safeguard matters such as national and regional security will inevitably be incorporated into the terms of an international tender offering 50.1 percent of ELPE (Hellenic Petroleum), expected to be announced by TAIPED, the state privatization fund, any day now, possibly even today.

Though the terms to be applied to the ELPE tender remain unclear, Russian, Iranian and Chinese players, for example, stand little chance of emerging as candidates, given the current geopolitical climate in the southeast Meditteranean, polarized by US-Russian tension.

Also, European powers such as Germany, France and Italy have been requesting increasingly strict measures from Brussels for protection of strategically important European enterprises against Chinese acquisitions. ELPE belongs to this category.

In the past, Russia’s Rosneft and Lukoil, Iran’s NIOC and a number of Asian petroleum groups have expressed interest in ELPE.

For potential buyers, ELPE clearly represents a platform offering market penetration opportunities in the wider region. New hydrocarbon discoveries in Egypt, Cyprus and Israel have increased the regional importance of ELPE. The two Russian firms Rosneft and Lukoil currently dominate the region.

Echoing this growing regional interest, the Greek State managed to forge an agreement through which it will maintain a 36.25 percent share of ELPE’s hydrocarbon interests following the sale of ELPE’s 50.1 percent share to strategic investors.

The Greek State currently holds an overall 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, controls a 45.47 percent stake. The co-shareholders recently struck a deal, enabling the tender, offering 50.1 percent, to proceed. The Greek State and Paneuropean Oil will each end up with 15 percent stakes.

ELPE’s value, based on yesterday’s closing share prices, is 2.56 billion euros, meaning a 50.1 percent should exceed 1.2 billion euros. The sale of a majority stake could fetch more than 1.5 billion euros. ELPE posted a record operating profit of 834 million euros for 2017.