A direct reading of the latest developments concerning the pending sale of DESFA, Greece’s natural gas grid operator, leads to the conclusion that the tender held in 2013 and won by Azeri energy company Socar will not be completed.

The dwindling possibilities of the procedure’s completion have been drastically reduced as a result of yesterday’s departure by Anar Mammadov, managing director of Socar Energy Greece, in reaction to Greek energy minister Panos Skourletis’s recent submission to parliament of an amendment that drastically reduces the operator’s regulatory asset base (RAB), used to determine the operator’s revenues, including retroactive payments.

As things stand, Socar is now one step away from pulling out of the DESFA agreement. The Azeri energy company has warned it would do so if the amendment, intended to prevent excessive network usage fee increases, is ratified in Greek Parliament.

Socar had agreed to purchase a 66 percent stake of DESFA after winning an international tender in 2013 but, more recently, the deal was delayed when the European Commission ordered the Azeri company to surrender a 17 percent share and offer it to a certified European operator. This would limit Socar’s stake to 49 percent.

Socar’s withdrawal would automatically cancel the tender and require the launch of a new one.

Also, a Socar guarantee expires at the end of August. If not renewed, the tender, staged by TAIPED, the State Privatization Fund, will be declared void, prompting the need to start afresh.

This would provide the government an opportunity to negotiate new terms for DESFA’s sale with the country’s international creditors. The current tender was shaped under a preceding administration. A formula based on a sale procedure recently agreed to by the government and lenders for IPTO, the power grid operator, could be implemented. The IPTO sale entails selling 24 percent to a strategic investor, transferring 51 percent to the Greek State, and offering the remaining 25 percent through the bourse.

Given the solid bilateral ties binding Greece and Azerbaijan, a political effort could be attempted to keep the Azeri interest in DESFA alive, but this is highly unlikely. Socar would need to accept the DESFA revisions and acquire a 49 percent share, leaving 17 percent for Italy’s Snam, and 34 percent for the Greek State. Though unconfirmed, it is believed Socar has reached an agreement with the Italian company, in the event that the DESFA sale is pushed to the end. However, Snam, too, is not happy with the DESFA revisions.

Socar and Snam each hold 20 percent shares in the TAP (Trans Adriatic Pipeline) consortium, developing a natural gas pipeline to carry Azeri natural gas across northern Greece and Albania, then through the Adriatic Sea to Italy.