A European Commission investigation into whether an agreement between DESFA, the country’s natural gas grid operator, and Azeri company Socar, for the latter’s acquisition of a 66 percent stake in the Greek gas company complies with EU law, has remained stagnant since January, according to energypress sources.
With a June deadline approaching for the Azeri side’s binding offer, the lack of any progress over the past few months raises questions as to whether Socar remains truly interested in finalizing the DEFSA deal, as it has contended with every opportunity, or is seeking a soft departure without prompting wider repercussions.
Socar holds a 20 percent stake in the TAP consortium currently developing the Trans Adriatic Pipeline project to transmit Azeri gas to Europe via Greece.
According to sources in Brussels, the European Commission has asked Socar to surrender a 17 percent stake of DESFA to a European company, which would leave the Azeri firm with a minority 49 percent stake. Socar had initially responded negatively to the request, but subsequently announced it would consider the prospect, prompting the EU to halt its investigation in January. But there has been no further news from the Azeri company ever since.
Older reports had mentioned Belgian company Fluxys, as well as three other firms, from Spain, Germany, and Bulgaria, as possible buyers of the 17 percent stake. However, ensuing increased political uncertainty in Greece, and concerns as to whether the country will remain a eurozone member, may have disencouraged both Socar and possible buyers of the 17 percent stake in DESFA. Whatever the case, EU officials have declared the ball is no longer in their court.
As for Greece’s stance, Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis has repeatedly noted final decisions on the matter would await a European Commission verdict. Lafazanis has insisted, both before and after Greece’s snap elections last January 25, that the country will not proceed with any energy-sector privatizations.
The DESFA deal’s seeming debacle is expedient for all sides involved. The recently elected Greek government has never wanted the country to lose control of any of its networks; the European Commission’s Directorate-General for Competition has not embraced the prospect of a non-EU country acquiring control of an EU energy company; and, finally, the Azeris, themselves, are probably seeking a trouble-free way out of the deal. In short, both Brussels and the Greek government, for different reasons, seem to be covertly assisting Socar’s escape from the DESFA deal without being held accountable for the demise.
Completing the picture, Azerbaijan’s economy has been hit hard over recent months by the fall in crude oil prices. On February 21, the Azeri central bank devalued the country’s national currency, the manat, by 33.5 percent. Prior to this development, Azerbaizjan’s credit rating was downgraded by Standard & Poor’s in late January. In addition, Socar’s credit rating was also downgraded a few days later.
An overwhelming 95 percent of Azerbaijan’s exports concern oil and gas sales and generate 70 percent of the state’s revenues.