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DEPA Trade offers due today, at least 7 players interested

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Five Greek and two international investment groups are expected to submit bids for the DEPA Trade privatization, whose first-round deadline expires today at 5pm.

DEPA Trade was established as a new gas utility DEPA entity for the privatization, offering the Greek State’s 65 percent stake.

Bidders may also submit their expressions of interest online, via email, as a result of restrictive measures prompted by the coronavirus crisis, but will need to follow-up with official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

The local bidders expected to submits bids, all leading energy players, are Mytilineos, GEK Terna, Motor Oil, Hellenic Petroleum (ELPE) and the Copelouzos group.

ELPE plans to submit a joint bid in partnership with Edison, possibly through Elpedison, their joint venture for Greece’s retail energy market, sources informed.

The Copelouzos group is also working on delivering a joint offer, with Czech firm KKCG.

Shell is among the foreign companies looking interested, despite its sale, two years ago, of stakes in DEPA gas supply and distribution companies.

Dutch firm Vitol is the other foreign player believed to have been drawn to the DEPA Trade sale. Vitol had reached the final stage of an ELPE sale with Algeria’s Sonatrach as a bidding partner, but the pair ended up not submitting a binding offer.

Expressions of interest in DEPA Trade may also come from Swiss-based Hungarian firm Met Energy Holding, active in natural gas wholesale trade. This firm is already present in Hungary, Croatia, Italy, Serbia, Slovakia, Spain, Turkey and Ukraine. Qatar’s Power Global is another possibility.

DEPA Trade’s portfolio includes 409,000 customers – households and businesses.

 

Improved Gazprom deal raises DEPA in the eyes of investors

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Lower-price deals sealed or about to be sealed between gas utility DEPA and its international suppliers are among the factors the government is relying on for a successful privatization procedure of the gas utility, a procedure launched yesterday, beginning with DEPA Trade, one of DEPA’s two new entities formed for the sale.

DEPA is believed to have renegotiated a far more favorable supply deal with Russia’s Gazprom, the Greek utility’s biggest supplier.

Forty percent of DEPA’s natural gas orders from Gazprom will no longer be pegged to fluctuating international oil prices. Instead, this percentage of DEPA’s Gazprom orders will be linked to price levels of Dutch gas trading platform TTF, one of Europe’s biggest hubs. Just days ago, prices at TTF were about half those of pipeline gas. The other 60 percent of DEPA’s orders with Gazprom will remain oil indexed.

This development promises to make DEPA’s supply deals with Gazprom far more competitive. Prospective bidders already appear to be warming to the prospect.

Major Greek corporate groups such as Mytilineos, Hellenic Petroleum (ELPE) – already holding a 35 percent stake in DEPA and considering teaming up with its Elpedison partner Edison for the DEPA sale – GEK Terna and Motor Oil are believed to be gearing up for bids. The Copelouzos group’s involvement in the DEPA Trade sale is considered certain – in a partnership with Czech entrepreneur Karel Komarek, holding a key stake in Greek lottery OPAP.

ELPE-Edison granted extra 18 months for troubled Patras license

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Hellenic Petroleum ELPE, the local partner of Gulf of Patras license in western Greece, has been granted an 18-month extension to complete second-phase work at the license. Project delays have been attributed to inadequate port infrastructure and bureaucracy.

ELPE, joined by Edison as a consortium partner for this hydrocarbon project, requested more time to complete the second phase, including exploratory drilling.

The consortium was expected to conduct its first drilling operation at the Gulf of Patras license this year but has been slowed down by insufficient port facilities at the regional Patras and Astakos ports, as well as environmental licensing procedures, according to sources.

ELPE and Edison require adequate port facilities, including storage, to ship in the project’s drilling equipment.

The Gulf of Patras drilling operation is seen as a project that could prompt further hydrocarbon investments, especially if this field’s probable oil deposit, estimated at 140 million barrels, is confirmed.

Bureaucracy and a lack of strategic planning for development of the country’s upstream sector has kept investors at a distance, oil company officials and industry experts have repeatedly noted over a number of years

The regional infrastructure’s inability to serve this venture’s needs has frustrated officials. The Gulf of Patras tender was launched back in 2012.

A previous extension had given the ELPE-Edison consortium until April 2, 2018 to complete the project’s second phase. This deadline has now been extended to October, 2, 2021.

 

Elpedison partners still undecided on joint bid for DEPA Trade

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Hellenic Petroleum (ELPE) and Italy’s Edison, co-owners of energy company Elpedison through a successful 50-50 joint venture, have yet to decide whether they will submit a joint bid for DEPA Trade, a new entity formed by gas utility DEPA as part of its privatization.

The two partners, who now fully own Elpedison following last June’s departure by Ellaktor (22.73%) and Elvalhalcor (1.48%), are keen to place greater emphasis on energy production and retail supply growth at their venture, both in electricity and natural gas.

Investors will be offered the Greek State’s 65 percent stake in DEPA Trade. ELPE controls the other 35 percent.

Elpedison officials have held preliminary talks on the DEPA Trade sale but decided to delay a decision for later on, energypress sources informed. Privatization fund TAIPED has not yet launched the DEPA Trade sale. Bidders are expected to face a March deadline.

The Elpedison partners are believed to have tabled contrasting approaches in their effort to make a joint bid for ELPE Trade, according to some sources. However, both sides have hinted that a solution can be found. An announcement on final decisions will not take long, company officials told energypress.

Both sides have rejected rumors of a breakdown in talks and preparations for separate bids.

If they unite and submit the winning joint bid for DEPA Trade, the ELPE and Edison officials will need to forge a unification plan bringing together DEPA Trade and Elpedison.

 

Trilateral East Med agreement set to be signed in Athens today

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The energy ministers of Greece, Cyprus and Israel are set to sign a trilateral agreement in Athens this afternoon for the development of East Med, a natural gas pipeline to carry gas to Europe via the three countries and Italy.

The pipeline, planned to measure 2,000 km and offer a capacity ranging between 10 to 20 billion cubic meters, promises to reinforce the Greek-Cypriot-Israeli alliance amid times of heightened Turkish provocation in the region.

Italian economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, has forwarded a letter of support for the project to Greek energy minister Costis Hatzidakis.

The Greek minister will sign the East Med agreement today with Giorgos Lakkotrypis and Yuval Steinitz, his Cypriot and Israeli counterparts, respectively. Italy is also expected to eventually join the partnership for this project.

Just hours before this signing ceremony, planned for 15:45, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, will sign a Letter of Intent at the energy ministry.

Importantly, this agreement promises to pave the way for a first commercial agreement reserving natural gas quantities ahead of the East Med pipeline’s construction, as DEPA will commit to purchasing natural gas quantities from Energean, extracting at Israeli gas field licenses. These quantities will represent approximately 20 percent of the East Med pipeline’s initial capacity.

The development prospects of East Med were recently propelled by a decision from IGI Poseidon, a 50-50 joint venture involving DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

An upcoming East Med Gas Forum, to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority, should help add further dimension to the alliance.

The East Med pipeline, planned as a complementary route to other projects in the wider region, stands as the most mature component of an EU plan entailing the development of an energy corridor to connect new energy sources in the east Mediterranean with European markets, including the southeast European market.

 

DEPA, pivotal for Greek energy plan, pushing ahead internationally

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Through its strategic involvement in an array of pipeline and infrastructure projects, Greek gas utility DEPA is becoming a key driver of Greece’s geopolitical upgrade and the diversification of supply sources for the wider region of South-East Europe.

DEPA is establishing its position in the region through a series of significant international projects such as the acceleration of IGB pipeline construction, participation in the IGI Poseidon pipeline  interconnecting Greece and Italy, and, surely, booking capacity in TAP which, from 2020 onwards, will transport Caspian gas to Europe.

Developments around East Med Pipeline are also rapid, with the most recent being IGI Poseidon’s (the 50% – 50% JV between DEPA S.A. and Edison S.p.A ) BoD decision to fast-track the completion of all pending stages that will bring the project to maturity.  The €70 million Feasibility Study is being accelerated, along with every other stage, to complete the East Med pipeline’s design, which will also pave the way for the final investment decision.

All the above are just one part of DEPA’s multifaceted international activity. Prior to that, in October, a bilateral agreement was signed in Sofia for the start of IGB pipeline construction, a project overseen by ICGB AD, in which DEPA has a 25% stake.

The project is expected to go into operation in July 2021, with an initial capacity of 3 billion cubic meters. At first, the entire load of gas will come from TAP that will go into operation within 2020, delivering Azeri gas to European markets, in which DEPA has booked capacity of 1 billion cubic meters. Thus, through IGB, the company will supply the Bulgarian market with Caspian gas, “breaking” for the first time the existing Russian monopoly.

Another major development took place just yesterday, when the company’s Board of Directors approved the participation of DEPA, with a 20% stake, to the equity of GASTRADE, the company developing the FSRU project in Alexandroupolis.

The Terminal is complementary to the IGB pipeline and consists of an FSRU (Floating Storage Regasification Unit), anchored 10 km off the coastal area of ​​Alexandroupolis, with storage capacity up to 170,000 cubic meters of LNG and 22.7 million cubic meters daily regasification capacity, per day (8.3 billion m3 / year), as well as a 28 km long onshore and subsea pipeline system.

The international presence of the company is also enhanced by the Greek-Italian energy interconnection through the IGI Poseidon pipeline, as well as the CYNERGY program that “breaks” Cyprus energy isolation by establishing a natural gas supply chain in the country.

Apart from its participation in international projects, equally important are the company’s long-term supply contracts with Russian Gazprom, Turkish BOTAS, Algerian Sonatrach, IGSC (Azerbaijan) through the TAP pipeline, as well as the procurement of significant quantities of LNG through the global SPOT market, at competitive prices.

DEPA’s CEO, Konstantinos Xifaras, summed up the company’s international role:

“For thirty years, DEPA has been a leading player in the Balkan energy sector, as well as an integral part of the European strategy for energy diversification and security of supply both of Greece and Europe.

At the same time, by deploying multilayered energy diplomacy and participating in major international projects, DEPA establishes Greece as a regional energy hub and upgrades its economic and geo-strategic importance.”

DEPA’s footprint is solid in the domestic energy market as well, where it recently prevailed in a tender process for natural gas supply to PPC in 2020. The company acknowledged as one of the two bidders, with the ability to supply PPC with 2 million MWh.

IGI Poseidon in talks with Israeli firms for East Med agreements

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The IGI Poseidon consortium, a 50-50 joint venture between Greek gas utility DEPA and Italy’s Edison, is engaged in talks with Israeli companies for direct and indirect involvement in its East Med gas pipeline project, planned to transport gas from Israeli and Cypriot fields to Europe via Greece and Italy.

DEPA and Edison are holding talks with Israel Natural Gas Lines Company, Israel’s gas grid operator, which could lead to a stake in the project for the latter, energypress sources have informed.

If these talks come to fruition, then the East Med project’s planned route, covering 2,000 km, will have made an import step towards actualization, securing gas transmission from the Levantine gas field, off the coast of Israel.

Besides its talks with Israel Natural Gas Lines Company, IGI Poseidon signed a Memorandum of Cooperation on December 2 with Tahal group member TMNG, a leading Israeli natural gas EPC company serving as a one-stop shop for natural gas and oil-related projects. This agreement concerns the development of an investment plan for exports of Israeli natural gas quantities to Europe.

However, much work is still needed before the aforementioned deals, or others, begin offering benefits, officials have stressed.

A period of at least two years will be needed before a finalized investment decision can be taken, according to the IGI Poseidon board, which recently approved funding worth 70 million euros for project-maturity studies.

 

Energean SPA for Edison E&P buy awaiting gov’t approvals

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A previously announced conditional sale and purchase agreement (SPA) entered by Energean on July 4, 2019 for the acquisition of Edison E&P from Edison remains subject to relevant government approvals, including the consent of the relevant Algerian authorities in respect of the Edison E&P assets located in Algeria, Energean announced in a statement released today.

Energean notes that Edison has received a letter from the Algerian authorities, which invites Edison to discuss the transaction with Sonatrach. In parallel, discussions are ongoing between Energean and Edison to ascertain any requirement for amendments to the SPA. Energean and Edison are also working to agree an appropriate settlement on the total transaction consideration to take into account any exclusion of the Algerian Asset from the transaction perimeter.

Energean does not expect the Algerian discussions to impact upon its ability to close the transaction on the remaining assets in the Edison E&P portfolio. The required government approvals have already been obtained from UK, Norway, France and Greece.

Approvals from Italy and Egypt are anticipated in the near future. Energean is working to complete the Edison E&P acquisition as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant governments.

The sale of Edison E&P’s UK and Norwegian subsidiaries will be completed as soon as is reasonably practicable thereafter, the Energean statement noted.

DEPA, Edison firm on East Med amid Turkish provocation

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Italy’s Edison, part of the Poseidon consortium formed with Greek gas utility DEPA for the development of the East Med gas pipeline – planned to transport natural gas from Israeli and Cypriot fields to the EU via Greece and Italy – has decided to accelerate pre-construction procedures following escalating provocation from Turkey, energypress has reported.

A decision was reached at a recent Poseidon meeting in Milan to assign all needed project studies, financially backed by the EU, within the next two months for swifter completion of preliminary procedures, and, by extension, the project itself, a 2,000-km pipeline.

Greece’s energy minister Costis Hatzidakis and his Israeli counterpart Yuval Steinitz reiterated their support for the project at a recent meeting.

Turkey, seeking to block the project, recently reached a maritime border agreement with Libya, which EU leaders are set to reject as invalid, insisting the pact interferes with the rights of other countries bordering the Mediterranean Sea.

Cypriot Foreign Minister Nikos Hristodoulidis has received reassurances from Israeli government officials that the country is not involved in talks with Ankara for the development of an alternative gas pipeline, according to a Cypriot newspaper report. Israel remains committed to the East Med plan, it added.

DEPA’s Poseidon stake will be transferred to the Greek gas utility’s division for international projects. DEPA is being split ahead of its upcoming privatization.

DEPA Infrastructure sale to be announced mid-December

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Privatization fund TAIPED is preparing swift privatization action at gas utility DEPA to follow the government’s ratification of a restructuring plan at the company that will place for sale two new corporate entities, DEPA Trade and DEPA Infrastructure, emerging through this process.

A tender offering investors the Greek State’s 65 percent of DEPA Infrastructure – resulting from the Greek State’s equivalent stake in DEPA – will be announced no later than December 15, according to energypress sources.

Hellenic Petroleum ELPE’s 35 percent stake – resulting from the Greek State’s equivalent stake in DEPA – is expected to be included in the DEPA Infrastructure sale, sources noted. The petroleum group has indicated it is not interested in maintaining interests in DEPA Infrastructure. If this is so, then the potential buyer or buyers of DEPA Infrastructure will become full owner.

DEPA Infrastructure is the full owner of Attiki gas distributor, covering the wider Athens area, and DEDA, covering the rest of Greece. DEPA Infrastructure also holds a 51 percent stake in distributor EDA Thess (Thessaloniki and Thessaly). Italy’s ENI is the minority partner in this venture.

DEPA Infrastructure, through all its interests, has lined up a five-year investment program worth 250 million euros. Revenues at DEPA Infrastructure are regulated and worth a total of approximately 130 million euros.

Italy’s Italgas and Germany’s E.ON are believed to be among the potential bidders for DEPA Infrastructure. Belgium’s Fluxys and Spain’s Enagas, both part of a three-member consortium controlling Greek gas grid operator DESFA, may also participate in the DEPA Infrastructure sale.

The announcement of a sale procedure for DEPA Trade will follow and is expected by the end of January.

ELPE is not expected to offer its 35 percent stake to this sale, meaning bidders will most probably be bidding for the Greek State’s 65 percent.

The Mytilineos group, Motor Oil and a partnership comprised of Copelouzos and KKCG, the Czech company holding a stake in Greek lottery company OPAP, are seen as likely participants in the privatization fund’s ELPE Trade sale. International players ENI and Edison have also been mentioned by pundits.

 

LNG bunkering network for key Greek ports discussed in Rome

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The development of an LNG bunkering network covering Greece’s main ports is one of the features included in a Greek-Italian Memorandum of Cooperation signed yesterday in Rome.

Italian officials, driven by increased LNG usage, internationally, proposed the development of LNG bunkering stations at major Greek ports during Prime Minister Kyriakos Mitsotakis’ visit to the neighboring country. The Greek leader was joined by energy deputy Gerassimos Thomas.

Discussion on the development of an LNG bunkering network in Greece goes back a number of years, steered by an EU directive from 2012 focused on the use of cleaner shipping fuel.

Unlike Italian ports, Greece’s ports have lagged behind in this department. In Italy, Edison has pushed ahead with many such investments, big and small-scale.

The objective, in Greece, is to develop a network to cover 15 percent of bunkering needs over the next decade and 25 percent by 2050. Italian know-how would provide valuable support.

Italgas, Italy’s biggest natural gas distributor, has displayed an interest in bidding for DEPA Infrastructure, one of two new gas utility DEPA entities emerging for the gas company’s upcoming privatization.

In a lesser-known development, Greece has received a proposal concerning the use of Italian gas storage facilities, for a fee, until an underground offshore facility south of Kavala is developed to bolster the country’s energy security, according to sources.

The Greek-Italian collaboration plan includes an upgrade of the existing submarine electricity grid interconnection linking the two countries. This line has been plagued by technical problems over recent years, often shutting down for repair work.

ELPE’s Gulf of Patras drilling delayed until ’21, red tape cited

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Exploratory drilling by ELPE (Hellenic Petroleum) at its Gulf of Patras license in western Greece will be delayed until 2021 instead of the first quarter of 2020, as was officially planned, or, late 2020, the unofficial target, primarily as a result of bureaucratic obstacles, according to updates offered by company officials at an EAGE (European Association of Geoscientists and Engineers) event just held in Athens.

The Gulf of Patras license was awarded to a consortium comprising ELPE and Edison through an open-door tender launched in 2012 and completed in 2014. Energean Oil and Gas is also involved as a result of its recent acquisition of Edison’s E&P.

The license area, situated between Kefalonia, Achaia and Etoloakarnania, measures 1,419 square kilometers.

Preliminary research work has been completed, identifying wider areas to be explored, including specific drilling spots.

The delay of a concession agreement for a port in the wider region, needed to facilitate drilling needs, has held back the venture.

ELPE has, so far, unsuccessfully sought concession agreements with four ports, Patras, Kyllini, Aigio and Astakos.

Any port that would accept heavy drilling equipment needs to have included such activities in its official operating plan. The detail has prompted bureaucratic issues for ELPE in its effort to secure a port facility.

The project is a high-cost venture as it will be performed in deep-sea territory. Preliminary estimates put the size of the prospective reserves at 140 million barrels.

 

IGB bilateral agreement for construction start to be signed in Sofia

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A Greek-Bulgarian bilateral agreement enabling the commencement of construction work on the IGB gas grid interconnector is set to signed in Sofia during a two-day meeting scheduled for October 9 and 10.

Complementary agreements concerning the project, the most significant of these being a shareholders’ agreement and a loan agreement with the European Investment Bank (EIB), will also be signed by officials over the two days.

The Greek-Bulgarian pipeline project, measuring 182 kilometers, will link Komotini, in Greece’s northeast, with Stara Zagora. It will serve as a second interconnection point for the Greek and Bulgarian gas systems, in addition to an existing station in nearby Sidirokastro.

The new project, to offer an annual capacity of 5 billion cubic meters, will commence operating at a lower level of 3 billion cubic meters.

The IGB pipeline is planned to be linked with TAP, running across northern Greece. Combined with the Bulgaria-Romania and Bulgaria-Serbia interconnections, the IGB will contribute to the establishment of the vertical corridor through the Balkans and connect central Balkan countries with Caspian gas and the TAP pipeline.

IGB’s planning, construction and operation has been taken on by ICGB, the project’s Sofia-based consortium, a 50-50 joint venture representing the state-controlled Bulgarian Energy Holding (BEH) and IGI Poseidon, involving Greek gas utility DEPA and Edison.

New effort for East Med agreement at Athens energy summit

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Greek gas utility DEPA and Italian energy giant Edison, collaborating on a plan to develop the East Med pipeline, envisioned to link the Greek, Cypriot and Israeli natural gas systems, are looking to take a crucial technical step ahead of construction.

Their YAFA Poseidon joint venture – spearheading the ambitious project, a 1,900-km pipeline stretch with an investment cost of between 6 and 7 billion euros – is gearing up for the launch of FEED (Front-End Engineering Design), environmental and detailed underwater research studies.

The European Commission has approved 34.5 million euros from the EU’s Connecting Europe Facility (CEF), a funding instrument, for these studies. The CEF amount will cover half the cost of the aforementioned preliminary studies, which will push the plan ahead to a mature stage.

The pipeline project is planned to carry southeast Mediterranean natural gas, primarily deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan”, along a route stretching from Israel to Europe.

An agreement between Greece, Cyprus, Israel and Italy, where the pipeline is planned to conclude, is still needed.

East Med plans have been at a standstill ever since the current Italian government announced it was stalling the project.

According to sources, the Greek, Cypriot and Israeli energy ministers will seek to restart procedures and also send out a message of encouragement to the Italian government when they meet at an Athens energy summit tomorrow. US Assistant Secretary Francis Fannon will also participate.

East Med, still at a theoretical stage, promises geostrategic might for Greece, Cyprus and Israel, as well as the USA, on southeast Mediterranean energy matters, especially against Turkey’s opposition to hydrocarbon exploration within Cyprus’ Exclusive Economic Zone (EEZ).

The pipeline plan also promises to break Russia’s dominance of gas supply to the EU.

 

 

Total seeking buyer for its 50% stake in Block 2, west of Corfu

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French oil and gas multinational Total appears to be preparing to sell its 50 percent stake in an offshore license west of Corfu, Block 2, preferring instead to focus on other hydrocarbon interests in Greece, west and southwest of Crete.

Total, the operator of Corfu’s Block 2 license, established a consortium for this venture with Edison and Hellenic Petroleum (ELPE), each holding 25 percent stakes.

This license was signed in October, 2017 following the launch of a tender in 2014 that offered a total of 20 offshore blocks in the Ionian Sea and south of Crete.

Total is in partnership with US major ExxonMobil and ELPE for its licenses west and southwest of Crete.

Recent activity in Cyprus’ Exclusive Economic Zone (EEZ) – an area in which Total has joined forces with Italy’s Eni to take on Block 7 – as well as developments in the wider eastern Mediterranean, has turned the French oil and gas giant’s attention to this region, sources told energypress.

Further changes are expected in the Greek market. ELPE is believed to be seeking partners for exploration and production licenses it has acquired alone.

 

Energean up to 4th in European upstream with Edison E&P deal

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Greece’s Energean Oil and Gas has risen to fourth place among Europe’s independent hydrocarbon exploration and production companies, in terms of proven reserves, following its acquisition of Edison’s E&P, a sale and purchase agreement announced yesterday.

Energean Oil and Gas, a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company, will, as a result, possess 639 million barrels.

Israel’s Delek Drilling, with one billion barrels, and Norway’s Aker BP, with 917 million barrels, and Lundin, also Norwegian, with 745 million barrels, make up Europe’s top three.

Energean anticipates it will capture first place within the next two to three years, in terms of daily hydrocarbon production, expected to rise to 200,000 barrels, when an FPSO at Israel’s Karish and Tanin reserves begins operating.

The company’s Edison E&P acquisition – expected to be finalized by the end of 2019 as it is subject to conditions for transactions of this kind, including Italian Economic Development Ministry approval – stands to place Energean at the forefront of Greece’s upstream as the company will gain licenses in western Greece.

Energean will take over Edison’s stakes in two consortiums, the first with Total and Hellenic Petroleum (ELPE) for Block 2 west of Corfu, and the second with ELPE for a license at the Gulf of Patras.

Energean also holds rights to a license in Etoloakarnania, western Greece, with Spain’s Repsol, the operator, as well as in the Ioannina region, in the northwest.

The Edison E&P acquisition will also broaden Energean’s portfolio, to possess 90 licenses in nine countries.

The agreement also adds 434 million dollars to Energean’s earnings before interest, tax, depreciation and amortization (EBITDA), up from 52 million dollars last year.

 

Edison agrees to sell exploration and production to Energean

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Italian energy giant Edison has announced the signing of a sale and purchase agreement with Energean Oil and Gas to sell the 100% of Edison Exploration and Production (E&P) and its subsidiaries in the hydrocarbons exploration and production business (oil and natural gas). The Edison Board of Directors approved the transaction yesterday.
The price of the transaction is based on an enterprise value of USD 750 million, with an additional consideration of USD 100 million contingent on the commissioning of Cassiopea development gas project in Italy.

Additionally, Edison will be entitled to royalties associated with further potential developments in Egypt that would bring the aggregate value close to USD 1 billion. The transaction also includes the transferring to the buyer of all Edison future decommissioning obligations.

Edison Exploration and Production manages all of Edison’s activities, mining titles and corporate shareholdings in the hydrocarbons business in Italy and abroad. In particular, Edison E&P owns a portfolio of approximately 90 licences in 9 countries in the Mediterranean and Northern Europe, corresponding to approximately 49,000 barrels per day of net entitlement production as December 31, 2018.

Following the transaction, considering the first half 2019 developments, in particular in terms of regulations as well as brent and gas market trends, and the contractual terms currently being finalized, a 400-500 million euros writedown at Group level is expected.

Edison’s Board of Directors has reserved the right to perform suitable analyses to evaluate the possible capital surplus with respect to the guarantee requirements it is
called upon to meet, considering that the transaction means exiting from a highly volatile and capital-intensive segment, with a higher risk profile than Edison’s other strategic businesses.

This is with a view to possibly reducing the ordinary capital to an extent of covering prior losses as well as those that will be recorded in the 2019 financial statements.
Energean Oil and Gas, a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company with operations offshore Israel, Greece and the Adriatic, has committed to guaranteeing a future of development for the E&P business area and its employees, being the ideal operator to unleash all the potential of the business.

The workforce employed by Edison Exploration and Production amounts to 282 people as June 30, 2019.

Edison Exploration and Production counts also to the staff of the Egyptian Operating Company Abu Qir Petroleum (AQP). With regard to the acquired personnel, Energean Oil and Gas is committed to ensuring certain protections, taking into account the specific regulatory conditions governing the employment rules and
the existing market practices in the various countries.

The closing of the transaction with Energean Oil and Gas is expected to take place by the end of 2019 and it is subject to conditions for transactions of this kind, including Italian Economic Development Ministry approval.

The financial resources deriving from this transaction will support Edison’s strategic development plan, which envisages very significant investments in Italy in the 2019-2021 three-year period intended mainly for sustainable production from renewable sources and gas, as well as the strengthening of the Company’s activities in retail market and energy efficiency services.

Edison has a target to produce by 2030 40% of its energy from green sources and an emissions target of 0.26 kilogrammes of CO2 per kilowatt hour produced. In this way Edison contributes effectively to the energy transition providing Italy with a balanced production mix, able to guarantee the security and flexibility of the country’s energy system.

Edison, with 91 hydroelectric power stations (of which 53 mini-hydroelectric), 45 wind farms and 65 photovoltaic power plants, has an installed capacity in Italy of 1,900 megawatts in renewable sources, with more than 4,000 gigawatt hours of electricity generated in 2018 (21% of the Company’s total electricity production, of which 3,000 gigawatt hours from hydroelectric power plants and 1,000 gigawatt hours from
wind farms).

ND, if elected, wants 65% DEPA sale, not split and sale

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The main opposition New Democracy party, if victorious in the July 7 snap elections, intends to privatize gas utility DEPA as one corporate entity, through the sale of a 65 percent stake, rather than through a split-and-sale procedure offering separate trading and infrastructure entities, as has been promoted by the ruling Syriza government, currently well behind in polls.

The role of Hellenic Petroleum (ELPE), holding a 35 percent share of DEPA, will be influential when the time comes to make decisions.

Up until now, ELPE has indicated it would be interested in acquiring a 65 percent stake of DEPA Trade – one of the two DEPA entities envisioned by the government for the utility’s split and sale – either alone or with Italy’s Edison, ELPE’s strategic partner.

However, ELPE’s main shareholder, the Latsis group’s Paneuropean Oil, holding a 45.5 percent share, could revise its stance if DEPA’s new sale procedure is redrafted from scratch, as would most probably be the case with a conservative ND election victory.

During a parliamentary debate in March, ND party representatives clearly opposed Syriza’s plan for a DEPA split, describing it as an unnecessary, excessive and complicated approach that would ultimately suppress DEPA’s market value.

The DEPA split, forged by the energy ministry, is not listed as a bailout term, but the country did commit itself to a reduced retail gas market presence for DEPA. This demand was met some time ago when DEPA withdrew from gas supply firm EPA Thessaloniki-Thessaly and acquired Shell’s stakes in EPA Attiki and EDA Attiki, respective supply and distribution firms covering the wider Athens area.

 

 

Heightened activity, consortium reshuffling as drilling nears

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Following a wider trend observed in the southeast Mediterranean, consortiums holding hydrocarbon exploration and production licenses in Greek territory are moving to reshuffle their line-ups, especially for blocks in the Ionian Sea, as the first local drilling operations in decades draw nearer, energypress sources have informed.

The reshuffling activity, which has not involved blocks off Crete, has been attributed to a search by multinationals for additional partners in consortiums established with Hellenic Petroleum (ELPE) as a means of reducing high costs demanded by deep-water exploration in the Ionian Sea.

ELPE holds exploration and production rights for various blocks in the Ionian Sea through consortiums established with Total, Edison and Repsol.

Video Data Rooms have been set up to enable prospective participants to view seismic survey data for Ionian Sea blocks, as well as technical and financial information.

The current reshuffling activity could produce new consortium line-ups by the end of the year, sources have informed.

Greece’s first drilling operation in several decades, at the Gulf of Patras, is expected to commence early next year. Positive results promise to provide further impetus for more drilling in Greek territory.

 

ELPE, Edison reach deal with Ellaktor for its Elpedison share

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Hellenic Petroleum (ELPE) and Edison, holding an equally divided 75.78 percent share of electricity producer and supplier Elpedison, have finalized an agreement with construction firm Ellaktor for the acquisition of its 22.74 percent share in the retail energy firm.

ELPE and Edison, now a subsidiary of France’s EdF, have submitted an undisclosed offer that has been accepted by Ellaktor, sources representing all three parties have confirmed. An official announcement on the agreement is expected within the next few days.

The agreement will give ELPE and Edison an equal share of Elpedison’s 98.52 percent. Halkor (Hellenic Copper Industry) is the holder of the remaining 1.48 percent.

Ellaktor’s decision to withdraw from Elpedison – part of a corporate restructuring plan pursued by the former’s new administration that includes a focus on renewable energy – triggered a clause in an agreement between Elpedison’s shareholders offering preferential rights to other shareholders in the event of a withdrawal.

Elpedison, whose retail electricity market share was last measured at 3.73 percent, in April, operates two gas-fueled power stations offering a combined production capacity of at least 810 MW.

 

Edison, ELPE preparing offer for Ellaktor’s Elpedison stake

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Hellenic Petroleum (ELPE) and Edison, holding an equally divided 75.78 percent share of electricity producer and supplier Elpedison, are preparing to make an offer for a 22.74 percent share held by construction firm Ellaktor.

Ellaktor has announced a decision to withdraw from Elpedison. ELPE and Edison, both holding preferential buying rights for Ellaktor’s stake, would want to buy it and prevent any rival from become part of Elpedison’s equity line-up.

ELPE and Edison have a limited time period to prepare an acceptable offer. It will need to be made within the summer. If the duo’s offer fails to satisfy Ellaktor, the latter will have the right to seek another buyer.

The current talks between the three companies have been described as positive.

Halcor, the copper tubes division of copper producer ElvalHalcor, holds Elpedison’s remaining 1.48 percent.

Elpedison, whose retail electricity market share was last measured at 3.73 percent, in March, operates two gas-fueled power stations offering a combined production capacity of at least 810 MW. The investment cost for the two units exceeded 500 million euros.

Ellaktor’s decision to withdraw from Elpedison was prompted by a revised business plan shaped by its new administration, whose new focus includes renewable energy.

 

 

ELPE, Edison talks for possible DEPA Trade joint bid at advanced stage

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Hellenic Petroleum ELPE and Italian business partner Edison have reached an advanced stage in talks on whether to jointly bid for a majority stake of DEPA Trade, one of two new entities that emerged from a recent split at gas utility DEPA.

Edison’s existing association with ELPE through electricity retail firm Elpedison makes the Italian company a clear favorite for a role as the petroleum group’s bidding partner for DEPA Trade.

However, if the two sides end up not joining forces for the DEPA Trade tender, ELPE will need to decide on whether to pursue this sale alone or seek an alternative partner, sources at the petroleum group told energypress.

Many details still need to be resolved for the DEPA split. The privatization fund TAIPED has yet to set a launch date for the DEPA Trade tender. Officials at the fund believe the procedure can commence in Maym even if some of DEPA’s split details are not completed this month.

On the other hand, pundits believe investors cannot seriously consider the DEPA Trade tender if the details of what exactly is being sold remain unclear.

DEPA’s shareholders have requested assurances that a DEPA board decision for a transfer of approximately 70 million euros to DEPA Infrastructure, the company split’s other new entity – the Greek State will retain a majority stake in this venture – as a bonus, will not undermine DEPA Trade or force this venture to seek credit solutions. Shareholders may even seek expert advice on whether DEPA Trade could face sustainability issues. Hellenic Petroleum ELPE holds a 35 percent stake in DEPA. The Greek State maintains a controlling 65 percent share through the privatizations fund.

Given the shareholder uncertainties, the DEPA board has promised to offer substantiated backing for its wider plan with support from consulting firm PwC before May 31. A general shareholders’ meeting needs to be held by this date for the DEPA split plan to be completed.

 

 

IGI Poseidon licensing procedures ‘ready by summer’

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The prospective IGI Poseidon gas pipeline, planned to run though Greece’s north and across the Adriatic Sea to Italy as a supply route for Russian gas to Europe, is expected to be fully licensed by the summer, energypress sources have informed.

Regarded as an investment plan of major global interest, IGI Poseidon is now at the public consultation stage after years of preliminary work.

Its developers, the Greek gas utility DEPA and Italy’s Edison, are currently staging a public consultation procedure on the project’s environmental impact study. Interested parties have until March 27 to submit their views.

The Poseidon company intends to make final investment decisions once all licensing and market test procedures have been completed.

DEPA, Edison and Gazprom have signed a memorandum of cooperation to explore the possibility of the project’s link with Turkish Stream, planned to transmit Russian gas to the Greek-Turkish border. Officials are now also looking into whether the pipeline can be connected with East Med, to link the Greek, Cypriot and Israeli systems, and the Greek-Bulgarian IGB route.

RES-focused Ellaktor in talks for sale of its Elpedison stake

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The Ellaktor group has reached an advanced stage in talks with foreign investors interested in acquiring its 22.74 percent stake in electricity producer and supplier Elpedison, sources have informed, a reflection of the corporate group’s intensifying focus on the renewable energy sector.

Last December, the Ellaktor group took over listed wind energy subsidiary El. Tech. Anemos, Greece’s second biggest renewable energy company, as part of a strategy to bolster its position in the RES domain and better adjust to the EU’s decarbonization policy aiming for a drastic reduction of CO2 emissions by 2030 and elimination by 2050.

The corporate group’s takeover of El. Tech. Anemos promises to provide additional cash flow supporting the subsidiary’s investment plan.

The brothers Anastasios and Dimitris Kallitsantsis, who took over the Ellaktor group’s helm last July following a tumultuous battle between the group’s major shareholders, had committed themselves, as a key strategy, to not selling the group’s stake in El. Tech. Anemos but, on the contrary, strengthen the group’s standing in the renewable energy sector.

ELPE (Hellenic Petroleum) and Edison – acquired by EDF – hold a 75.78 stake in Elpedison as a joint venture, Ellaktor holds 22.74 percent, and Halkor has the other 1.48 percent.

 

IGI Poseidon gas pipeline prospects on PM’s Moscow visit agenda

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The development prospects of an IGI Poseidon gas pipeline though Greece’s north and across the Adriatic Sea to Italy as a supply route for Russian gas to Europe, a plan opposed by the US, is expected to be on the agenda of a meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin scheduled for December 7 on Moscow.

The majority of license-related procedures needed by Greek gas utility DEPA and Italy’s Edison for the IGI Poseidon gas pipeline have been completed, the two European firms informed Russia’s Gazprom at a recent three-way meeting in Moscow.

The IGI Poseidon gas pipeline is envisaged to serve as an extension of Turkish Stream.

DEPA and Edison officials are confident a gas pipeline route through Greece, rather than Bulgaria, as suggested by Moscow on occasions, carries definite advantages.

The Greek-Italian pipeline is technically mature as 80 percent of studies have been completed, while license applications have been submitted to energy sector regulatory authorities and Brussels, DEPA and Edison officials informed during their Gazprom meeting.

However, as was made apparent at this three-way meeting, all sides remain concerned as to whether the European Commission will raise objections against the pipeline plan. Washington is pressuring EU member states to find alternative natural gas supply sources not involving Russia.

In Greece, US ambassador Geoffrey Pyatt is taking every opportunity to express America’s opposition to any further penetration by Gazprom of Greece’s energy sector.

Greek energy minister Giorgos Stathakis recently appeared hesitant on the prospect of a new pipeline to transmit Gazprom gas.

Much will depend on the outcome of an upcoming official US visit by Greece’s Alternate Minister of Foreign Affairs Giorgos Katrougalos between December 11 and 14. He will be joined by the energy ministry’s secretary general Mihalis Veriopoulos. DEPA and Edison will be waiting for political decisions concerning their Greek-Italian pipeline investment plan.

 

EDEY presenting five new fields in search for more investors

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EDEY, the Greek Hydrocarbon Management Company, is seeking to draw an increased level of attention from petroleum firms for natural gas and oil exploration through five new offshore blocks, located in the Ionian Sea, off Crete and south of the Peloponnese.

The five blocks, ranging from 8,000 to 22,000 square kilometres in size, were presented yesterday by EDEY chairman Yiannis Basias at a workshop organized by IENE, the Institute of Energy for Southeast Europe.

EDEY has reprocessed related seismic survey data concerning these five blocks and plans to present findings at international conferences and meetings with the objective of generating the interest of oil majors.

The Greek hydrocarbon company’s latest initiative comes at a time of elevated activity among southeast Mediterranean, Black Sea and Adriatic countries, all staging tenders for blocks or conducting surveys and drills.

Global oil industry players have turned their attention to the wider region. Total, ExxonMobil, Repsol and Edison have already established a presence on Greek territory. EDEY is hoping to add to the list.

DESFA, Snam also considering Greek-Italian pipeline crossing

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Greek gas grid operator DESFA and Italy’s Snam, heading an all-European gas operator consortium set to acquire a 66 percent stake of the former, are conducting preliminary research to determine whether an interconnection project linking the Greek and Italian grids would represent a viable plan.

Russia’s Gazprom is seeking to establish a Greek-Italian route for Russian natural gas supply to the EU. The plan being considered by DESFA and Snam essentially constitutes an extension of the Turkish Stream, a gas pipeline project being developed by Russia and Turkey.

The project considered by DESFA and Snam would utilize an existing pipeline running from Kipoi, Evros, on Greece’s northeastern tip, by the border between Greece and Turkey, to Komotini, slightly westward. In addition, a new 613-km section would be constructed from Komotini to coastal Florovouni, Thesprotia, in northwestern Greece, along with a submarine pipeline crossing to Italy.

In another preceding action, Greek gas utility DEPA and Italian energy company Edison have already taken licensing initiatives and are seeking national and EU approval for a corresponding project through their ITGI Poseidon partnership. Gazprom support would be needed.

The DEPA-Edison plan is seen as a purely commercial venture whereas the DESFA-Snam alternative is regarded as a bilateral project that would link the national gas grids of Greece and Italy.

 

ITGI Poseidon seeks license for Turkish Stream Greek segment

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ITGI Poseidon, a partnership established by DEPA, the Greek gas utility, and Italy’s Edison, is moving to develop Turkish Stream’s Greek segment – from a point at the Greek-Turkish borders running across the country’s north for an Adriatic Sea crossing to Italy – as long as Russia’a Gazprom chooses to support this plan as an additional supply route to Europe.

The big question at this stage is whether Gazprom will choose Greek or Bulgarian territory for the continuation of Turkish Stream, whose initial segment is planned to supply the Turkish market.

Roughly one month ago, certain international media outlets reported that Gazprom has chosen Bulgaria as its favored route for the pipeline’s extension beyond Turkey. However, a leading Gazprom official, Elena Burmistrova, chief executive at Gazprom Export, quickly denied these reports, noting that all options are still being examined, including ITGI Poseidon’s extension of Turkish Stream through Greece.

Like the TAP project, Turkish Stream’s extension would be developed as an independent natural gas system without any links to the national grid at any point.

According to sources, ITGI Poseidon has already submitted an application to RAE, the Regulatory Authority for Energy, for a project license as an independent system. Then, as its next step, ITGI Poseidon plans to stage a market test. Gazpom would need to reserve a capacity that makes the pipeline sustainable if the project’s development is to progress.

Three years ago, Turkish Stream’s Greek extension represented a key part of the newly elected leftist Syriza party’s effort to establish closer energy ties with Russia and defy EU obligations. It has since become clear that the project can only be developed within the framework of EU regulations set for independent natural gas systems and terms included in the EU’s third energy package.

At the other end, Russia, too, will seek guarantees from Brussels before reaching any Turkish Stream extension decisions.

Just over a year ago, Gazprom, Edison and DEPA signed an agreement to develop the Southern Corridor at a ceremony attended by Greek Prime Minister Alexis Tsipras.

 

 

Edison considering DEPA distribution network subsidiary

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The participation of Edison’s executive vice president Pierre Vergerio at an Economist conference in Athens this Friday has added further credibility to recent rumors of the French-owned Italian company’s interest in a DEPA subsidiary representing the Greek gas utility’s distribution network to be offered as part of its privatization.

It is believed the DEPA privatization model, still not official, will offer investors a majority stake in a subsidiary representing the gas utility’s commercial interests and a minority stake in another subsidiary covering the distribution network.

Edison is rumored to be particularly interested in DEPA’s distribution network subsidiary, which is expected to be established for the upcoming privatization.

Vergerio, in charge of Edison’s midstream gas, energy management and optimization, is also the managing director of IGI Poseidon, a DEPA-Edison joint venture developing the ITGI project.

A number of major Greek players, including ELPE (Hellenic Petroleum), Mytilineos and Motor Oil, have already expressed interest in DEPA’s prospective subsidiary for commercial matters.

Prior to Edison’s emergence as a possible candidate for DEPA’s distribution network subsidiary, pundits had forecast this part of the privatization would only attract special funds that invest in infrastructure projects offering consistent long-term yields.

Announcements offered to date by Edison officials have gone no further than to inform that the corporation is keeping a close watch on the DEPA privatization developments. A finalized and detailed DEPA privatization model has yet to be delivered, Edison officials have pointed out, adding that decisions on the matter have yet to be reached at the company.

 

 

Greek State, Latsis group touching up ELPE deal with hydrocarbon issues

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Hydrocarbon exploration and exploitation rights either already acquired by ELPE (Hellenic Petroleum) or being sought, for blocks off Crete and in the Ionian Sea, are the focus of final-stage negotiations between the Greek State, represented by the government, and the Latsis corporate group aiming for a deal that will enable the sale, by the privatization fund, of a 51 percent stake and management rights of the petroleum firm to prospective buyers through an international tender.

The Greek State currently holds a 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, controls a 45.47 percent stake.

Once the two sides reach a deal, seen happening any day now, according to pundits, then a 51 percent stake of ELPE will be offered to a strategic investor.

The two sides are believed to focusing on matters concerning how they will share future profits for hydrocarbon exploration and exploitation agreements already signed by ELPE as well as blocks being targeted.

The issue is rather complicated as ELPE holds exclusive rights for certain blocks (Arta-Preveza, northwest Peloponnese) but is a member of various consortiums for all its other hydrocarbon interests.

ELPE and Italy’s Edison have established a 50-50 partnership for a Gulf of Patras block. It holds a 25 percent stake in Block 2 off Corfu. France’s Total holds a 50 percent stake in this venture and Edison controls the other 25 percent. ELPE also holds a 20 percent stake in a consortium that has submitted the only offers for two offshore blocks south and southwest of Crete. Total and Exxon Mobil each hold 40 percent stakes in these initiatives. Also, ELPE and Spain’s Repsol hold 50 percent stakes in an offer submitted for another Ionian Sea block.

Once the government and Latsis group have signed an agreement, TAIPED, the state privatization fund is expected to swiftly announce an international tender. Its terms are expected to shape the turnout of interested investors.

According to the revised bailout, the tender was supposed to have been announced by the end of March. It could be launched this month, barring unexpected developments.

ELPE’s share price has remained relatively steady at levels of between 7.8 and 8 euros over the past month or so despite its privatization prospects. Based on the share’s closing price yesterday, ELPE’s equity-based value is 2.39 billion euros, meaning a 51 percent stake may be estimated at 1.19 billion euros.