Market support measures worth €550m may prove insufficient

A number of electricity market support measures planned by market authorities and firms for the next few months are estimated to be worth 550 million euros, but this may not be enough.

The effectiveness of the measures will depend on the depth and duration of the pandemic-related recession, still in the making.

Should the Greek economy contract by 10 percent this year, as projected by the IMF in a report announced yesterday, and the effects spill over into 2021, as is feared, then the current measures will prove insufficient.

Authorities yesterday announced an initiative offering lighter terms to electricity suppliers for surcharge payments to market operators.

Electricity suppliers will be able to pay 30 percent of their regulated charges marked out for the power grid operator IPTO, distribution operator DEDDIE/HEDNO and RES market operator DAPEEP for the two-month period of April and May over four monthly installments, according to an energy ministry plan. This measure, alone, is estimated to be worth about 200 million euros.

Also, power utility PPC and distribution operator DEDDIE/HEDNO, its subsidiary, appear to have secured European Bank for Reconstruction and Development (EBRD) loans, for next month, totaling between 180 to 200 million euros.

PPC considering €100-200m EBRD loan as recession aid

Power utility PPC may seek a loan from the European Bank for Reconstruction and Development (EBRD) worth between 100 and 200 million euros to cover extraordinary needs seen emerging for both the utility and its subsidiary firm DEDDIE/HEDNO, the distribution network operator, as a result of the pandemic and consequent recession, still in the making.

The extent of the pandemic-related recession cannot yet be determined. Financial support from the EBRD, which has extended loans to PPC in the past, would bolster the power corporation’s cash flow and also provide a safety net for its subsidiary during these uncertain times.

PPC fears the distribution operator’s earnings, resulting from surcharges included in electricity bills, will drop by approximately 30 percent. A growing number of consumers are not meeting payment deadlines for electricity bills.

PPC is also preparing to launch a securitization initiative for unpaid receivables.

 

 

IPTO in talks with financial institutions for Crete link loan

Power grid operator IPTO is currently involved in talks with local and foreign financial institutions for a loan concerning Crete’s major-scale electricity grid interconnection with Athens, a project budgeted at around one billion euros.

IPTO chief executive Manos Manousakis is looking for a project loan of roughly 400 million euros. Talks, so far, with financial institutions, including the EBRD, according to sources, are believed to have made good progress.

Financial institutions contacted so far appear positive on the prospect of  providing financing for the Crete-Athens interconnection but want WACC level and cost-benefit study assurances.

IPTO anticipates financing for the project from three sources, including the 400 million-euro bank loan.

The operator has already allotted 200 million euros for subsidiary firm Ariadne Interconnector, the project promoter. IPTO also expects between 350 and 400 million euros to come from the EU’s National Strategic Reference Framework (NSRF).

A new regulatory framework for the grid interconnection as a national project rather than a PCI project is a significant pending issue that also needs to be resolved.

TAP completes successful €3.9 billion project financing

TAP, one of Europe’s most strategic projects, has successfully completed financial close in December 2018, securing 3.9 billion euros, the largest project finance agreed for a European infrastructure project in 2018, the TAP consortium has announced in a statement.

TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 878 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

Luca Schieppati, TAP’s Managing Director, noted: “With the financial close now achieved, TAP has reached another major milestone of the project’s progress. TAP has voluntarily committed to comply with environmental and social standards required by the international financial institutions. As such, all necessary assessments to substantiate this commitment have been undertaken and met by TAP. This also included a thorough environmental and social assessment. With project financing now concluded, TAP can progress to the final completion of the project and delivery of Shah Deniz II gas in 2020.”

Andrew McDowell, European Investment Bank Vice President responsible for energy, commented: “As the EU Bank, the European Investment Bank recognizes the important contribution to improving security of energy supply in Europe that the Trans Adriatic Pipeline will bring and has provided 700 million euros for this, the largest energy project in Europe currently being built. The EIB is pleased to have been an anchor lender to the project, alongside the EBRD and other leading financial institutions, to successfully finance this complex and ambitious project and welcomes the continued close cooperation between all project partners to ensure that environmental, social and technical best practice is followed.”

Nandita Parshad, EBRD Managing Director Sustainable Infrastructure, remarked: “The Trans-Adriatic Pipeline will set the foundation for an integrated gas market across south-eastern Europe and enhance the region’s strategic status as an energy hub. We believe that gas remains an important transition fuel in this region that can help displace coal and facilitate penetration of renewables.”

The financing is provided by a group of 17 commercial banks, alongside the EBRD and the European Investment Bank (EIB). Part of the financing is covered by the export credit agencies – bpifrance, Euler Hermes and Sace. The project raised EUR 3765 million in third party senior debt with a door-to-door tenor of 16.5 years, combining commercial debt along with development financial institutions (DFI) and export credit agencies (ECA) related financing:

  • EIB Direct Facility, benefitting from a guarantee from the European Union under the European Fund for Strategic Investments EFSI: EUR 700 million
  • EBRD A-Loan: EUR 500 million
  • EBRD B-Loan: EUR 500 million funded by commercial banks
  • ECA facilities, benefiting from comprehensive cover by:
    • Bpifrance Facility, EUR 450 million Euler Hermes Facility, EUR 280 million
    • A SACE Facility, EUR 700 million;
  • Commercial term loan facility: EUR 635 million directly provided by commercial banks without any ECA or multilateral involvement.

Costs have previously been funded in full by TAP’s shareholders: BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

TAP was advised by Société Générale (SG) as Financial Advisor and Allen & Overy as Legal Advisor; lenders were advised by Clifford Chance.

Greek energy exchange set to be established by Monday

The Greek energy exchange company will most likely be founded on Monday though there is a light chance of the procedure being completed by tomorrow.

Procedures concerning the new company’s registration at the General Commercial Registry (GEMI), the single electronic commercial registry, are expected to be finalized tomorrow.

LAGIE, the Electricity Market Operator, is scheduled to hold a general meeting today to formalize decisions concerning the energy exchange company’s establishment.

LAGIE, IPTO, the power grid operator and DESFA, the natural gas grid operator, are expected to participate in the new company with an overall 49 percent stake, while private-sector enterprises, including the European Bank for Reconstruction and Development (EBRD) and the Athens Stock Exchange, the new exchange’s main shareholder, will control a majority 51 percent stake.

The Cyprus Stock Exchange, which has agreed to participate with a ten percent stake, will not be present at this initial stage as Cypriot parliament has yet to approve its involvement. This ten percent stake will be temporarily held by the Athens Stock Exchange and transferred to its Cypriot counterpart at a future date.

Subsequently, the starting shareholders line-up of Greece’s energy exchange will be comprised of three institutions, LAGIE (22%); IPTO (20%); and DESFA (7%), and, from the private sector, the Athens Stock Exchange (31%) and the EBRD (20%).

The participation of independent producers as shareholders of Greece’s energy exchange is not anticipated for now, but such a prospect cannot be ruled out in the future.

Greece’s energy exchange is planned to begin operating next April. In the meantime, the new company will need to be certified by RAE, the Regulatory Authority for Energy, as a market operator for the transitional period leading to the implementation of the target model, envisioning market coupling, or harmonization of EU wholesale markets.

 

Energy exchange establishment June 18, LAGIE approval today

Today’s anticipated approval by the LAGIE (Electricity Market Operator) board of a new subsidiary will mark the beginning of a 40-day process – approximately – leading to the notarization of the energy exchange company’s establishment on June 18, if all goes according to plan.

Following today’s LAGIE endorsement, the new company will be registered at the General Commercial Registry (GEMI), the single electronic commercial registry.

A compulsory one-month waiting period will follow before a LAGIE general meeting is held on June 15 to formalize decisions on various related matters that will have already been resolved going into the meeting.

Any problems that may be encountered by prospective energy exchange company shareholders will be indentified and resolved by the June 15 date, according to the overall procedure’s schedule.

Any interested parties with issues will be excluded and the energy exchange company will be established with all legitimate candidates on board.

A combination of market operators and private-sector enterprises, numbering six in total, are expected to make up the energy exchange’s shareholder line-up. LAGIE (22%); IPTO, the power grid operator (20%); and DESFA, the natural gas grid operator (7%); are expected to be joined by three private-sector companies, the Athens Stock Market (21%); EBRD (21%); and the Cyprus Stock Exchange (10%).

The private sector companies will need to control at least 51 percent of the new energy exchange company as a means of ensuring it steers clear of various bailout-related staff and flexibility restrictions imposed on public-sector enterprises.

All the aforementioned prospective shareholders will most likely be ready to sign the energy exchange’s founding act on June 18. If not, the company will be established with all legitimate contenders. The private sector’s overall majority stake will be maintained in this case, too.

Then, within a three-month period following its establishment, the Energy Exchange will need to be certified by RAE, the Regulatory Authority for Energy, as a market operator for the transition period leading to the implementation of the target model.

The target model envisions market coupling, or harmonization of EU wholesale markets.

 

Energy exchange equity line-up issues delaying preparations

Problems encountered by candidate shareholders of Greece’s prospective energy exchange in their efforts to legalize their participation in the venture are causing set-up delays, energypress sources have informed.

LAGIE, the Electricity Market Operator, has been given a 15-day extension to submit a Greek energy exchange investment plan to RAE, the Regulatory Authority for Energy, by the end of the month.

The operator will then need to stage a general meeting to endorse the new exchange. Its founding act needs to be ready within May, according to a bailout term faced by Greece.

LAGIE envisions an energy exchange shareholder line-up of the power and gas grid operators, IPTO and DEFSA, respectively, itself, as well as private-sector institutions, namely the Cyprus stock exchange, the EBRD, and the Athens Stock Exchange, the venture’s main shareholder.

According to a related law, the private sector will control at least 51 percent of the new energy exchange company as a means of ensuring it steers clear of obstacles and restrictions concerning flexibility and staffing at public-sector enterprises.

If the current complications faced by prospective shareholders are not overcome, then a simpler company may be founded, with the Athens Stock Exchange controlling 51 percent and LAGIE the other 49 percent, as an initial step to avoid missing the deadline, before other institutional shareholders eventually also hop on board.

As part of the transition leading to the implementation of the target model, RAE will need to certify the firm as a market operator within three months of its establishment.

The target model envisions market coupling, or harmonization of EU wholesale markets.

 

 

 

 

Follow-up DESFA bids submitted, WACC level may subdue offers

UPDATE

Two consortiums participating in the natural gas grid operator DESFA’s international tender offering a 66 percent stake submitted their follow-up offers today as first-round offers, both over 400 million euros, were less than 15 percent apart. TAIPED, the state privatization fund, included a term requiring additional bids in such a case to generate the highest possible sale price.

Energypress previously reported:

DESFA, the natural gas grid operator, may have posted a spectacular operating profit increase of 70 percent and impressive cash deposits amounting to 228 million euros, but the firm’s subdued weighted average cost of capital (WACC), as well as the rejection by authorities of a steady WACC level proposal for the operator requested by bidders taking part in an ongoing international tender offering a 66 percent stake, could keep offers below 500 million euros, pundits believe.

Two consortiums participating in DESFA’s international tender are expected to submit their follow-up offers today as first-round offers, both over 400 million euros, were less than 15 percent apart. TAIPED, the state privatization fund, included a term requiring additional bids in such a case to generate the highest possible sale price.

Local officials have been optimistic in the lead-up and expect the new offers to reach close to, or even exceed, 500 million euros.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to participate in the DESFA tender. All three hold key stakes in the TAP consortium. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

Just days ago, RAE, the Regulatory Authority for Energy, set annual WACC levels for IPTO, the power grid operator, at 7 percent for 2018, 6.9 percent for 2019, 6.5 percent for 2020 and 6.3 percent for 2021. This is seen as a precursor for DESFA rates to be set by RAE within the current year.

DESFA’s bidders had sought a steady network usage rate for the gas grid operator during an earlier stage in the tender.

The eligibility of both bidding teams was thoroughly inspected by authorities during the processing stage of first-round offers, which took over a month to complete. As a result, the new offers to be submitted today should be unsealed very quickly, by Friday the latest, unless new funding sources are added to any of the two teams.

In a previous and unfinished sale attempt that also offered a 66 percent of DESFA, Azerbaijan’s Socar was declared the prefered bidder with a bid of 400 million euros. At the time, five years ago, when Greece’s country risk factor was higher, the operator’s 66 percent had been estimated to be worth 330 million euros.

 

New DESFA offers set to be submitted, and unsealed by Friday

Two consortiums participating in an international tender offering 66 percent of DESFA, the natural gas grid operator, are expected to submit improved follow-up offers to TAIPED, the state privatization fund, by tomorrow. Processing work is expected to take a day or two before the follow-up offers are unsealed by Friday.

The additional round of offers is necessary as the initial bids made by the two teams, both over 400 million euros, were less than 15 percent apart. TAIPED, the state privatization fund, included a term requiring additional bids in such a case to generate the highest possible sale price.

Pundits believe the bidding teams have held back their firepower for the tender’s final round. This has raised hopes of a sale price close to 500 million euros, if not more.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to participate in the DESFA tender. All three hold key stakes in the TAP consortium. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

Suma Chakrabarti, president of EBRD, recently met with Greek Prime Minister Alexis Tsipras, stressing his bank plans to invest between 400 and 600 million euros in Greece this year.

In a previous and unfinished sale attempt that also offered a 66 percent of DESFA, Azerbaijan’s Socar was declared the prefered bidder with a bid of 400 million euros. At the time, five years ago, when Greece’s country risk factor was higher, the operator’s 66 percent had been estimated to be worth 330 million euros.

DESFA’s current investment plan offers far more promise than it did five years earlier. Also, the operator’s current cash deposits, estimated at around 200 million euros, are considerably greater than they were during the previous sale effort.

 

 

Improved, follow-up DESFA sale bids expected by April 11

Two consortiums participating in an international tender offering 66 percent of DESFA, the natural gas grid operator, will need to submit improved follow-up offers to TAIPED, the state privatization fund, by April 11.

The additional round is necessary as the initial offers made by the two teams, both over 400 million euros, were less than 15 percent apart. TAIPED included a term requiring additional bids in such a case to generate the highest possible sale price.

Officials are confident that a sale price of close to 500 million euros, possibly more, can be achieved.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to participate in the DESFA tender. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

In a previous and unfinished sale attempt also offering 66 percent of DESFA, Azerbaijan’s Socar was declared the prefered bidder with a bid of 400 million euros. At the time, five years ago, when Greece’s country risk factor was higher, the operator’s 66 percent had been estimated to be worth 330 million euros.

DESFA’s current investment plan offers far more promise than it did five years earlier. Also, the operator’s current cash deposits, estimated at around 200 million euros, are considerably greater than they were during the previous sale effort.

Last week, RAE, the Regulatory Authority for Energy, set a weighted average cost of capital (WACC) level for IPTO, the power grid operator, at 7 percent for 2018, 6.9 percent for 2019, 6.5 percent for 2020 and 6.3 percent for 2021.

RAE’s WACC figures for IPTO are seen as a precursor for similar decisions concerning DESFA. These are expected within the current year.

DESFA bidders, both over €400m, holding back for finale

Offers made by two bidding teams to an international tender offering a 66 percent stake of DESFA, the natural gas grid operator, are both over 400 millon euros but less than 15 percent apart, meaning that an additional round of bidding will be needed.

This has boosted expectations among officials of a final result close to 500 million euros, well over the 400 million euros offered by Azerbaijan’s Socar in an unfinished previous sale effort, also offering a 66 percent stake of DESFA.

TAIPED, the state privatization fund, had set a term requiring follow-up binding bids if initial offers are less than 15 percent apart, the intention being to offer an incentive for higher bidding.

The two teams in contention are holding back for the decisive follow-up round, while the bidding could reach close to 500 million euros, or, ideally, even more, one pundit remarked.

One of the two bids is believed to be close to 450 million euros, while the other is over 400 million euros. It has not been specified which team is behind the higher bid.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to participate in the new DESFA tender. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

Five years ago, during the first sale attempt, DESFA’s 66 percent had been valued at 330 million euros. At the time, Greece’s country risk was higher, while the operator’s investment plan was completely different to the current plan. Also, DESFA’s cash reserves are now much higher, close to 200 million euros. These two factors should push the sale price higher.

Meticulous processing by TAIPED of both bid portfolios delayed the opening of financial offers by over a month. Issues concerning the Spanish-Romanian-EBRD offer are believed to have added to this delay. The privatization fund needed to ensure that Spain’s Reganosa satisfied the tender’s terms, sources informed.

Snam, Enagás Internacional and Fluxys, the three members of one of the two participating consortiums, all hold stakes in the TAP consortium.

Suma Chakrabarti, the president of EBRD, which has joined the DESFA tender’s other bidding team, met with Greek Prime Minister Alexis Tsipras just days ago. The bank head stressed EBRD plans to invest between 400 and 600 million euros in Greece this year.

 

PM, EBRD chief discuss increasing bank’s RES sector involvement

Prime Minister Alexis Tsipras and the president of the European Bank for Reconstruction and Development (EBRD) Suma Chakrabarti discussed the prospect of the bank’s increased involvement in the country’s RES sector, among various issues, at a meeting in Athens yesterday.

The Greek prime minister made note of the country’s economic recovery in progress and the objective to swiften growth rates of small and medium-sized enterprises. Tsipras also highlighted the Greek economy’s benefits as a result of the EBRD’s activities in Greece, noting the bank’s presence will contribute to an acceleration of economic growth.

Chakrabarti, the EBRD head, commended the government for putting the economy back into growth territory and boosting employment, while adding that the bank is determined to continue offering support.

The bank’s involvement will be stretched to 2025 for financial support to small and medium-sized enterprises, the sectors of tourism, real estate, green energy, agricultural food production, as well as investments for improved municipal services.

EBRD financial investments in Greece have reached 2.5 billion euros, making Greece Europe’s fifth highest recipient. A total of 600 million euros of EBRD financial investments are expected to be made in 2018.

During his visit to Greece, the EBRD president also noted the bank intends to establish a branch in Thessaloniki for business services to small and medium-sized enterprises.

Meticulous processing delaying DESFA offer disclosures

TAIPED, the state privatization fund is paying particular attention to detail in its processing and inspection of bids submitted by two consortiums to an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator, a key concern being the need to single out the lead players in each of these two consortiums and the terms they intend to set for their partners.

Though this meticulous inspection process has significantly delayed the disclosure of binding bids, submitted over a month ago, TAIPED is determined to avoid mistakes following an unsuccessful previous effort, not too long ago, to sell a 66 percent stake of DESFA.

The European Commission had expressed concerns that that sale effort’s preferred bidder, Azerbaijan’s Socar, would block rivals from operating in the Greek natural gas market. Brussels had also raised issues as to whether the tender’s outcome breached EU regulations.

The relaunched sale’s local authorities want to avoid any negative reaction from the European Directorate for Competition in this latest effort.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to submit a joint bid for the follow-up DESFA tender. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

The privatization fund has demanded various details from the participants over the past month or so.

The bids made by the two consortiums now appear likely to be opened next week, which would take the procedure deeper into the month. Recent reports had suggested the offers would be opened late this week.

For some time now, pundits have contended the new sale effort could generate offers in excess of 500 million euros, or 25 percent over the 400 million euros offered by Socar in the preceding unfinished attempt.

The natural gas market’s prospects in the wider southeast European region, as a result of new pipeline projects; steady yields promised by DESFA’s tariff level; and the operator’s strong cash reserves have been cited as three main reasons nurturing these high hopes.

 

 

 

DEFSA bids, submitted a month ago, to be opened next week

Following considerable delay prompted by an extensive check of bid details, TAIPED, the state privatization fund, is finally expected to open, late next week, two offers submitted to an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator.

The offers were submitted exactly one month ago, on February 16. As the disclosure date approaches, expectations are high for offers in excess of 500 million euros. Azerbaijan’s Socar had offered 400 million euros in a preceding and unfinished international tender that had also offered investors a 66 percent stake of DESFA.

Commenting on the issue yesterday, energy minister Giorgos Stathakis said the two offers would be “opened up in a week”.

In an effort to offer participants greater incentive for higher bids, TAIPED set a condition requiring an additional round of bids should the current offers, set to be disclosed, be less than 15 percent apart. If the difference between the two bids is greater than 15 percent, then the highest bidder will automatically be declared the preferred bidder.

Three factors have contributed to the upbeat expectations for elevated offers. One of these has to do with the natural gas market prospects in southeast Europe as a result of new pipeline projects and plans in the region. The steady returns promised by DESFA’s tariffs are a second reason. Thirdly, the operator’s substantial cash reserves are another attraction for investors.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys have joined forces as one of the two bidding teams. Their rival team is comprised of Spain’s Regasificadora del Noroeste (Reganosa Asset Investments), Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development.

Diplomats speak out on DESFA ahead of offer disclosures

The financial offers submitted slightly over a fortnight ago by participants in an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator, could be opened by the end of this week, if the required legal and technical inspections of the sizeable dossiers accumulated by two bidding teams have been completed.

Diplomatic interventions, seeking to sway opinions, have surfaced as the disclosure of financial offers approaches.

Italian Ambassador to Greece Efisio Luigi Marras lent support to an offer submitted by a Snam-led consortium, also comprised of Spain’s Enagás Internacional and Belgium’s Fluxys.

“I understand that, especially amid the current economic conditions, price is important for these types of transactions, which is the right thing. However, looking ahead to the future, what counts most is the quality, reliability and strength of a partner chosen,” Marras told the Athens News Agency in an interview.

The US Ambassador to Greece, Geoffrey R. Pyatt, speaking to a group of energy sector authorities, noted that Snam, through its participation in the DESFA tender, is not only interested in the Greek market but the wider network of the western Balkans, all the way to Ukraine.

His comments were interepreted as an indirect form of support for the tender’s other bidding team made up of Spain’s Regasificadora del Noroeste (Reganosa Asset Investments), Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, whose participation could lead to US involvement.

Officials continue to believe that offers could reach, or even exceed, 500 million euros. Azerbaijan’s Socar, the winning bidder of a previous and unfinished attempt to sell a 66 percent of DESFA, had offered 400 million euros.

Follow-up offers could be requested if the initial are deemed to be unsatisfactory.

 

 

Processing, content to delay opening of DESFA offers by about one week

Methodical processing and the amount of content in files containing documents and binding offers submitted to a tender last Friday by two bidding teams vying for a 66 percent stake of DESFA, the natural gas grid operator, has led to a delay in the opening of offers, previously anticipated for today, but now seen requiring several more days of processing, the objective being to ensure offers are complete.

Insiders informed energypress that the offers submitted to this crucial privatization may be opened towards the end of next week.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to submit a joint bid. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

Pundits believe the offers could exceed 500 million euros, well over the 400 million-euro offer made by Azerbaijan’s Socar, the winning bidder of a previous sale effort that was never completed.

In an effort to intensify the rivalry between the two participants, TAIPED, the state privatization fund, has included a term in the tender that would require follow-up bids from both players if their current offers are not more than 15 percent apart. If this limit is exceeded, then the highest bidder will automatically be declared the prefered bidder.

Three factors are behind the optimistic outlook for higher offers in this latest DESFA tender. The natural gas market’s improved prospects in the wider southeast European region as a result of new gas field discoveries and subsequent pipeline plans; a DESFA tariff revision promising consistent returns; as well as the operator’s cash-filled coffer, are all seen driving bidders towards making higher offers.

 

DESFA offers still not opened as officials process documents

TAIPED, the state privatization fund, is expected to have gained a clear picture within the next few days on the level of completeness of offers submitted last Friday by two consortiums to a tender offering a 66 percent stake of DESFA, the natural gas grid operator.

Certain market officials believe that the privatization fund will open files containing the price levels of offers submitted this Friday, but pundits have informed energypress that this prospect is unlikely as authorities must first ensure that all other details, including required certification, are complete.

If additional documents are demanded from either of the two bidding teams, then the offers will not be opened any sooner than the end of next week.

Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys formed a consortium to submit a joint bid. Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

Both teams are seen as formidable participants determined to prevail in the DESFA tender, which has generated hopes among local authorities of strong offers.

Government officials believe a 400 million-euro offer made by Azerbaijan’s Socar, the winning bidder of a previous and unfinished tender that also offered 66 percent of DESFA, could be surpassed. In the lead-up to this latest sale effort, government sources have declared that not a single cent below 400 million euros will be accepted.

ELPE (Hellenic Petroleum), offering its 35 percent stake as part of the 66 percent total, has echoed these thoughts, noting that company shareholders will decide on whether to sell or not based on the price level offered.

 

 

EBRD link to DESFA sale carrying geopolitical dimension

A US effort aiming to limit Russia’s influence over European energy matters is believed to be behind the participation of the EBRD, the European Bank for Reconstruction and Development, in a tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator.

Last Friday morning, just hours ahead of an afternoon deadline set for binding bids, the EBRD board, confirming previous energypress reports, decided it would join one of the two bidding teams in contention for the DESFA stake. The team is headed by Spain’s Regasificadora del Noroeste (Reganosa) and includes Romania’s Transgaz.

This consortium is up against a team led by Italy’s Snam and also comprised of Spain’s Enagas, Belgium’s Fluxys as well as Dutch operator Gasunie, which is expected to withdraw from this four-member team.

Headquartered in London, the EBRD, established in 1991 during the dissolution of the Soviet Union, is currently owned by 65 countries and two European institutions – the European Investment Bank (EIB) and the EU. The role of the US, one of the EBRD’s co-owners, in the bank’s decisions is highly influential.

DESFA’s sale has taken on a geopolitical dimension, as was made apparent at last week’s Athens Energy Forum event. US energy-sector interests in the wider region were made clear at the event. As has been the case in the past, the US, closely monitoring regional developments, is continuing to place major emphasis on a policy pushing for energy source diversification and retreat from the Russian sphere of political and economic influence.

A leading US embassy finance official, speaking at the Athens Energy Forum, noted that the exploitation of energy-sector matters as a means for applying political pressure is a classic Moscow strategy.

The diplomat noted that the two pillars supporting Europe’s energy strategy – source diversification and supply security – are reducing the continent’s dependence on Russia and limiting the ability of any country to exploit the energy sector as a political tool.

Such thoughts strongly suggest that the EBRD’s involvement in the DESFA tender carries a geopolitical dimension, besides boosting the Reganosa-led consortium’s chances.

The levels of the binding offers submitted by the two remaining participants last Friday afternoon are expected to be announced within the next few days.

It remains to be seen whether the wider developments surrounding DESFA are in any way related to growing rumors of a planned capacity increase of over 10 bcm for TAP, as soon as construction of this natural gas pipeline, running across northern Greece, is completed.

 

 

 

DESFA bidders set to make offers tomorrow; pundits spot differences

Two consortiums still in contention for a 66 percent stake of DESFA, Greece’s natural gas grid operator, now have just hours to go before submitting their binding offers to the sale’s tender, whose deadline expires tomorrow.

Any chance of a further deadline extension, requested by the sale’s participants as a result of certain concerns, has been ruled out.

There is no time for delays ahead of a crucial Eurogroup meeting this coming Monday. The DESFA sale is one of the pending issues that needs to display real progress if the bailout’s third review is to be concluded without alarm at the forthcoming meeting.

A team comprised of Italy’s Snam, Spain’s Enagas, Belgium’s Fluxys and Dutch operator Gasunie represents one of the two bidding teams. Spain’s Regasificadora del Noroeste (Reganosa) has joined forces with Romania’s Transgaz, both backed by the European Bank for Reconstruction and Development (EBRD).

Pundits have avoided making any predictions on the price level of offers, a key selection criterion, but they have made a note of quality and financial stature differences between the two consortiums.

Market officials have highlighted that the consortium led by Snam is primarily industrial-based and comprised of Europe’s biggest natural gas companies, all of which possess significant experience in international projects, including TAP, the Trans Adriatic Pipeline now being developed.

In addition, Snam maintains a presence in the Italian, Austrian, UK and French markets, pundits noted. The Italian firm’s portfolio includes 40,000 kilometers of gas pipelines, two LNG terminals, as well as 19 billion cubic meters of natural gas in storage. Consortium partner Fluxys is active in Belgium, Switzerland, Germany and France, while fellow member Enagas, maintaining a presence in Spain, is also active in Latin America.

The rival bidding team’s Regasificadora del Noroeste (Reganosa) possesses two LNG terminals, one in Spain and the other in Malta, as well as 130 kilometers of gas pipelines in Spain. Its partner Transgaz is primarily active in international projects concerning Romania and regional markets.

Given DESFA’s aim to bolster its standing as part of a wider Greek strategy to establish the country as a natural gas regional hub, pundits have pointed out as crucial the need for the Greek operator to benefit as greatly as possible from the application of European practices and, especially, a further expansion of Greece’s natural gas infrastructure.

Besides quality-related factors, pundits have also distinguished financial differences between the two bidding teams. The Snam-led consortium’s financial structure appears to be more compact, while also possessing attributes promising stability, experts have stressed.

Snam’s current bourse value of approximately 13 billion euros, as well as revenues of 2.5 billion euros in 2016, cannot be overlooked. The bourse values of Fluxys and Enagas currently stand at roughly two billion and five billion euros, respectively.

Rival bidder Regasificadora del Noroeste (Reganosa), whose shares are not listed, posted a revenue figure of 58.5 million euros in 2016. The bourse value of bidding partner Transgaz is roughly one billion euros while its revenues for 2016 reached 363 million euros. Despite the smaller numbers, the EBRD’s participation does bolster this consortium’s financial standing.

The government is hoping the rivalry between the two consortiums will generate elevated bids. Azerbaijan’s Socar, the winning bidder of a previous and unfinished DESFA tender also offering a 66 percent stake, had submitted an offer worth 400 million euros.

 

 

 

 

Energean signs $180m loan for Prinos, Epsilon development

Energean Oil & Gas has signed a US$180 million reserves-based senior facility agreement to finance further development of the Prinos, Prinos North and Epsilon oil fields, the company announced in a statement.

The loan agreement was reached with the European Bank for Reconstruction and Development (EBRD), the Black Sea Trade and Development Bank (BSTDB), the Export-Import Bank of Romania EximBank SA (EximBank Romania) and Banca Comerciala Intesa Sanpaolo Romania SA (Intesa Sanpaolo Bank), HSBC acting as the agent bank.

It represents an extension to an existing US$75 million loan signed with the EBRD in May, 2016.

The agreement now includes two facilities: a senior secured reducing revolving credit facility of up to US$105 million with the EBRD and BSTDB as lenders; and a senior secured revolving credit facility of up to US$75 million arranged by EximBank Romania and having EximBank Romania and Intesa Sanpaolo Bank as lenders.

The expansion of the existing loan agreement will support the company’s development program in respect of 41 mmboe (39.5mmbbls oil/6bcf gas) 2P reserves and 23.8 mmboe (22.9mmbbls oil /5.3bcf gas) 2C resources in the Prinos, Prinos North and Epsilon operating oil fields, located offshore Greece (Prinos Basin).

The financing will principally fund the ongoing development of the Epsilon oil field with GSP Offshore S.R.L, the appointed EPCIC contractor, as part of the ongoing Prinos development program that includes the drilling of up to 25 additional wells and construction of two additional well platforms by 2021 to materially increase production.

Energean Oil & Gas CEO, Mathios Rigas, commented: “Energean is delighted to sign this agreement with EBRD, BSTDB, EximBank Romania and Intesa Sanpaolo Bank to support the further development of our North-Eastern Greece assets. We are committed to increasing our investment in the Prinos Basin, where we already have a strong production track record, and are now focusing on developing the Epsilon oil field, which is part of the Prinos Licence.

“We believe this loan agreement is further evidence of the trust placed in Energean by international banks and we believe demonstrates confidence in the Company’s ability to consistently increase value for its shareholders.

“The development program underway at Prinos, where Energean holds a long-term offtake agreement with BP for the entire Prinos production, is part of the company’s wider development plans in the eastern Mediterranean. This includes the company’s flagship US$1.6 billion development project of the Karish field, offshore Israel, as well as development and exploration programmes in Western Greece and the Adriatic. Energean is making strong progress on all fronts and is moving towards fulfilling its goal of becoming a leading independent E&P company in the East Mediterranean region.”

Ihsan Ugur Delikanli, BSTDB President, commented: “We are happy to contribute to this operation bringing substantial development impact to the Greek economy, including export promotion, job creation and increased revenues for the state budget. It is particularly fulfilling to join forces with our partners in supporting Greek businesses. I am pleased to observe the strengthening of cooperation with EBRD and the engagement of Export-Import Bank of Romania in a deal that will increase Greece‘s energy efficiency.”

Eric Rasmussen, EBRD Director, Head of Natural Resources, said: “We are very pleased to be involved in this transaction which will strengthen Energean’s strategic growth plans with the participation of two important new financial partners.”

 

 

EBRD: China capitalizing on Greek energy market openings

A European Bank for Reconstruction and Development (EBRD) report monitoring China’s investments in Europe, whose findings on Greece were presented in Athens yesterday, notes that China, sensing market opportunities, has been able to enter the Greek market after being permitted to do so by European authorities, However, the country is now facing tightening conditions being engineered by the EU, the report mildly suggests.

The EBRD report, authored by Dr. Jens Bastian and funded by the Central European Initiative, an intergovernmental forum committed to supporting European intergration through cooperation among member states, details China’s aggressive investment approach in Greece and places particular emphasis on the local energy sector.

Attention is paid to Greece’s role in China’s wider plans. The report describes Greece as a gateway for Chinese investments in the wider Balkan region. China’s strategy, continuously bolstering the country’s standing abroad, has cultivated aspirations for the Balkan and central European markets, the EBRD report notes.

It also notes that Chinese investors, contrary to other interested parties, have made the most of the subdued investment activity in Greece and shown a willingness to take risks and pursue long-term business strategies.

The EBRD report also points out that reliable ties have been established between Chinese investors and Greece’s political and business communities. As a result, Chinese investors are now placed in the pole position for Greek projects, it notes.

Reference is made to two major Chinese energy-related moves in Greece. One concerns the interest of the China Development Bank (CDB) to reinforce its presence in Greece, primarily through financing energy sector projects, as has been pointed out by the bank’s chief, Hu Huaibang. CDB and the Bank of Greece recently signed a memorandum of cooperation.

The recent entry of SGCC (State Grid Corporation of China) into IPTO, Greece’s power grid operator, as a strategic partner with a 24 percent, is also presented in the report. This agreement ranked as the second largest investment to be made in Greece in 2016. Another Chinese investment, Cosco’s takeover of the Piraues Port Authority (OLP), topped the list.

 

 

EDEY receiving EBRD support for offshore safety rules

The deadline of an international tender launched by the European Bank for Reconstruction and Development (EBRD) for the recruitment of a specialized consultant to offer EDEY, the Greek Hydrocarbon Management Company, guidance in the implementation of offshore safety regulations, a task the hydrocarbon company has taken on, expired just days ago.

EDEY assumed the responsibility of monitoring and implementing offshore safety regulations in 2016 following a Greek energy ministry proposal.

In other parts of Europe, legal obligations for the safety of offshore regulations vary and are covered by either independent agencies or ministries. For example, in Cyprus the task has been assumed by the country’s labor ministry while in the UK and Norway, an independent authority has been charged with the task.

EDEY sought support from the EBRD for the task. The EBRD is offering financial support, assessment of current conditions, and is also staging the international tender, seeking an international expert who will audit Greece’s exisiting offshore facilities and offer training to personnel.

The EBRD expects to reach a decision on the international tender’s preferred bidder in about two weeks.

Energean secures additional EBRD funding for local projects

The European Bank for Reconstruction and Development (EBRD) has increased its financial support offered to Energean Oil & Gas, Greece’s only company producing oil and natural gas, with 20 million dollars of additional funding, Energean announced in a statement.

Energean plans to use the additional funding to support its hydrocarbon exploration work in the Prinos Gulf, northern Greece, as well as in western Greece.

Energean, an independent, privately owned company active in hydrocarbon exploration and production, has focused its activities in the south and east Mediterranean. It currently holds a diversified portfolio with hydrocarbon exploration, development and production projects in Greece and Egypt.

The latest EBRD funding for Energean comes as an addition to a 75 million-dollar loan recently agreed to for an investment program currently in progress in the Prinos area that aims to increase production in the area.

The new loan, highlighting EBRD’s commitment to supporting enterprises in Greece, will also help Energean apply new technologies and proceed with a series of investments to improve its energy efficiency.

The agreement was signed in Athens by Riccardo Puliti, EBRD’s Managing Director and Head of Energy and Natural Resources, and Mathios Rigas, Chairman and CEO at Energean Oil & Gas.

Sabina Dziurman, EBRD’s Country Director for Greece and Cyprus, announced: “Following the first agreement in March, we are pleased to announce that we have signed a new funding agreement with Energean. The new agreement underlines our faith in Energean, a truly unique Greek enterprise that impresses with its major potential, as well as our commitment to the company’s further success.”

EBRD began investing in Greece in 2015 with the objective of supporting the country’s economic recovery.

 

Energean, backed by EBRD loan, set for new investment

Energean Oil & Gas, backed by a financing agreement reached with the European Bank for Reconstruction and Development (EBRD), is planning to submit an investment plan to the energy ministry within the next few days for development of its “Epsilon” offshore oil field, a source of considerable oil-producing potential, in the Gulf of Kavala.

The move to be taken by Energean Oil & Gas is intended to initiate permit issuance procedures for exploration and exploitation of the oil field in northern Greece, as the project will require construction of a new platform, the first to be developed in Greece since 1977.

The investment at the “Epsilon” oil field, which holds half of the 30 million barrels of proven reserves in the Gulf of Kavala, according to research conducted by independent oil and gas reservoir evaluation firm ERC Equipose, is worth 110 million dollars.

Approximately 50 million dollars will be needed to cover the cost of installing the offshore rig at “Epsilon” and pipelines for connection with Energean’s offshore Prinos facility, while roughly 60 million dollars will cover seven scheduled drilling projects.

According to Energean’s schedule, the “Epsilon” oil field may begin producing in the third quarter of 2017.

Energean is currently conducting the most extensive research program in the Gulf of Kavala since 1981, when Prinos began producing. The company has planned to perform a total of 15 drilling projects in the area, seven of which will be staged at Prinos.

Energean expects its production to exceed 5,000 bpd (barrels per day) once these seven drilling efforts have been conducted.

As for the other eight drilling projects, seven will be conducted at the “Epsilon” oil and at Prinos North.

Once all 15 drilling projects have been completed by Energean’s company-owned drilling barge, it is estimated that the project’s total production may reach 10,000 bpd.

Energean also plans to submit a development plan for its Katakolo offshore license in western Greece this coming summer. The company will offer a presentation of the project today, at a one-day conference in Pirgos, organized by regional chambers of commerce and industry. Officials believe the Katakolo licence can begin producing by next winter.

It was announced yesterday that the EBRD will extend financing worth 75 million dollars to Energean as support for the company’s activities in the Gulf of Kavala, an investment budgeted at 200 million dollars in total.

The EBRD loan to Energean is the first to be extended by the bank for investments concerning Greece’s energy sector, which indicates its interest to enter the field. Energean’s extensive research and resulting data, promising both proven and probable reserves, was a key factor in EBRD’s decision to approve the loan.