Repsol, Eni among investors interested in ELPE’s 50.1%

Repsol is seriously considering taking part in an international tender offering 50.1 percent of ELPE (Hellenic Petrolem), announced just days ago, energypress sources have informed.

The Spanish company, already active in Greece’s hydrocarbon exploration and production market, recently formed a partnership with ELPE to submit a joint bid for an offshore block in the Ionian Sea.

Repsol meets all the ELPE tender’s strict criteria – financial, technical and geopolitical – set by TAIPED, the state privatization fund, in association with the sellers, the Greek State and Paneuropean Oil, a member of the Latsis group.

The Spanish firm maintains a strong presence in the refining sector. Its investments in this domain have totalled some 4 billion euros over the past few years. Repsol operates six industrial refineries. In 2016, Repsol’s assets were worth a total of 39.2 billion euros while the enterprise posted a total turnover figure of 36.3 billion euros and an operating profit of over two billion euros.

In the exploration and production field, Repsol has certified deposits of 2.3 billion barrels and is producing 690,000 bpd. Its refining capacity exceeds one mllion bpd.

Another major European petroleum firm, Italy’s Eni, is also believed to be closely monitoring the ELPE tender.

According to the tender’s terms, investors must be able to prove they possess readily available investment amounts worth at least two billion euros.

TAIPED reserves the right to eliminate any interested investor if such a course of action is deemed necessary by the Greek State for protection of national interests, energy securtity and energy supply.

A May 18 deadline has been set for first-round offers. Interested parties have until May 9 to enquire about the international tender’s terms.

 

 

 

Holding company plan tabled for DEPA privatization

DEPA, the public gas corporation, and local partner Shell are aiming to finalize and announce an agreement by the end of the month, possibly within the current week, for the latter’s withdrawal from their EPA Attiki and EDA Attiki gas supply and distribution joint ventures serving the wider Athens area.

Though details have not been disclosed, the imminent agreement is said to be worth nearly 150 million euros. Shell currently holds 49 percent stakes in these partnerships.

DEPA has already reached an agreement for Greece’s north for a still unspecified retreat from EPA Thessaloniki-Thessaly. This venture’s Italian partner Eni, currently holding a 49 percent stake, is expected to increase its share.

Once both agreements have been finalized and announced, a bailout-required privatization plan for DEPA will proceed.

TAIPED, the state privatization fund, has agreed that the original DEPA plan, entailing the sale of a 65 percent stake, is not an ideal option, DEPA officals told energypress.

A preferable alternative, or establishment of a holding company comprised of three subsidaries that could be partially listed on the bourse, has been presented by DEPA to TAIPED. The position of the lenders is not known.

According to the proposal, one of the three subsidiaries would control the networks, the second would be responsible for commercial matters, and the third would remain under the holding company and control major energy projects.

Preliminary DEPA privatization procedures lacking urgency

Preliminary procedures needed for the privatization of DEPA, the Public Gas Corporation, are not making satisfactory progress, officials monitoring the procedure have observed.

A formula for a reduction of the gas utility’s retail gas market presence has been established, but beyond that, little progress has been achieved. Officials at the finance ministry and TAIPED, the state privatization fund, are still awaiting the next vital step leading to this plan’s actualization, dependent on DEPA and its two supply and distribution partners Shell and Eni.

For quite some time now, DEPA and Shell have agreed on a road map for the former’s acquisition of the latter’s 49 percent stake in EPA Attiki and EDA Attiki supply and distribution ventures covering the wider Athens area. DEPA currently holds a majority 51 percent stake. However, as the weeks go by, the two sides have yet to agree on a sale price for the stakes held by Shell in these ventures.

DEPA and Shell have agreed on an evaluation formula concerning this transaction, as well as a back-up plan should there be any disagreement on the price.

The two sides are expected to have agreed on a sale price by the end of March, according to the bailout schedule. The evaluation process leading to this price tag has yet to be launched in earnest.

Besides the Shell partnership, DEPA also needs to finalize a deal with Italy’s Eni, which holds a 49 percent in EPA Thessaloniki-Thessaly. DEPA intends to sell all or most of its 51 percent share in this venture to Eni. DEPA’s future in EDA Thessaloniki-Thessaly remains unclear.

Alternative plans supported by the energy ministry for DEPA’s privatization appear to have waned, meaning that an initial plan for a strategic investor to acquire the Greek State’s 65 percent stake in DEPA will be pursued.

The finance ministry’s position on the DEPA privatization, as well as that of ELPE (Hellenic Petroleum) is pivotal. Finance Minister Euclid Tsakalotos is well aware of how seriously the lenders view these privatizations for the bailout procedure, including prospective relief measures.

A lack of cohesion amid the government’s ranks on the privatizations has become apparent. Just days ago, when he emerged from a meeting with lenders on the privatizations, Tsakalotos, when enquired about the DEPA alternatives proposed by Stathakis, the energy minister, responded: “Ask him”.

Oil majors set for Crete block offers, milder Ionian interest

With just days remaining before deadlines for tenders offering exploration and exploitation rights at a total of three offshore blocks off Crete and in the Ionian Sea, five petroleum firms, including three international oil majors, took part in an exploration security-related meeting held by EDEY (Greek Hydrocarbon Management Company) yesterday, which suggests they will be submitting offers.

Exxon Mobil, Total and ELPE (Hellenic Petroleum), whose interest in the Greek market prompted EDEY to offer two offshore blocks off Crete, Repsol, following developments for Ionian Sea investments, and Energean Oil & Gas, whose interest in the Ionian Sea area led to the other EDEY tender, all participated in the hydrocarbon company’s meeting, ahead of the deadines for the three tenders, expiring this coming Monday.

The interest expressed by investors for the two Cretan offshore blocks appears to be greater.

Noble Energy and Israel’s Delek, which have visited a related virtual room set up for the tenders by EDEY for information, were not represented by any officials at yesterday’s meeting. It remains to be seen whether these absences mean that the two firms will not submit offers on Monday.

At this stage it appears that a three-member consortium made up of Exxon Mobil, Total and ELPE, as well as Italy’s Eni, already active in Cyrpus, will submit offers for the Cretan blocks. A third offer from Noble and Delek would come as a surprise.

Eni recently had to deal with Turkish intervention in Cypriot waters, which has delayed the firm’s drilling plans for that area.

As for the one Ionian Sea block being offered, Spain’s Repsol has displayed a consistent interest, despite negative reactions by local authorities and citizens against nearby exploration work, with Energean, in the Ioannina area, northwestern Greece.

In an Oil & Gas Journal article published last month, two EDEY officials informed that areas west and southwest of Crete have shown serious signs of deposits.

The northwest part of the Ionian Sea, the location of the third block being offered, has also shown hydrocarbon potential as it shares similar geological characteristics with the southeast Adriatic Sea, already producing.

 

 

 

 

DEPA, Shell agree on road map for EPA, EDA Attiki transfers

DEPA, the public gas corporation, and Shell have set out a road map for the former’s acquisition of the latter’s 49 percent stake in their joint venture EPA Attiki, the gas supplier covering the wider Athens area, as well as a formula resolving any financial differences between the two, should a disagreement emerge.

The two enterprises, which have commissioned the same evaluator, have agreed on an evaluation process, energypress sources have confirmed.

DEPA and Shell have spent months negotiating the Greek gas utility’s interest to bolster its retail presence in the wider Athens area through an acquisition of Shell’s 49 percent share of EPA Attiki, for supply, as well as a corresponding stake in EDA Attiki, for distribution.

The European Commission has accepted DEPA’s interest to maintain its retail market presence in the wider Athens area.

As for the retail gas market in Greece’s north, an agreement has been reached for DEPA’s retreat, through the gas utility’s full or partial sale of its 51 percent stake in EPA Thessaloniki-Thessaly to Italy’s Eni, currently holding a 49 percent share of this venture.

All the aforementioned matters need to be finalized by the end of March, but evalution details must be settled well in advance.

Energy Minister Giorgos Stathakis has noted that the bailout’s third review agreement offers leeway for alternatives.

In a recent interview, the minister informed that negotiations concerning the energy sector’s privatizations have not concluded. Each case is being treated separately, he noted, adding that proposals for alternatives forwarded by consultants are currently being examined.

Energy sector privatizations are pivotal to the agenda at TAIPED, the state privatization fund. Some of these energy sector sales represent a key part of this year’s privatizations target, aiming for revenues of two billion euros.

 

 

 

TAIPED pushing ahead with DEPA sale, much work needed

TAIPED, the state privatization fund, is keen to push ahead with the privatization of gas utility DEPA, but the sale’s timely launch, expected in March, according to the latest bailout terms, will not only depend on the fund’s intentions.

In essence, this privatization’s punctual progress is dependent on Shell and DEPA, currently engaged in advanced talks for the Dutch firm’s sale of its 49 percent stake in retail gas supplier EPA Attiki. DEPA holds a 51 percent stake in this venture and wants to increase its hold.

The DEPA privatization, to offer 65 percent stake of the gas utility, cannot proceed unless the Shell and DEPA dealings over EPA Attiki have been finalized. Also, the European Directorate for Competition will need to endorse any EPA Attiki changes.

A well informed source has informed that Shell and DEPA are close to agreeing on a price for EPA Attiki’s 49 percent. The price gap is believed to have narrowed significantly. For quite some time now, it has been rumoured that Shell has requested a sum of around 150 million euros.

Rothschild, acting as DEPA’s consultant, and Lazard, representing Shell, are expected to appoint a common evaluator for an official price estimate. The evaluation process is expected to take at least one month to complete. Then, the two sides will still need to agree on a price before competition authorities in Athens and Brussels decide whether DEPA’s continued presence in the retail gas market raises any obstacles.

Given all these requirements, the DEPA privatization’s launch date, scheduled for March, should prove to be an extremely difficult target date.

The Greek government is eagerly anticipating a finalized deal between Shell and DEPA as a reinforced retail and distribution role for DEPA through EPA Attiki would undoubtedly heighten the interest of investors once the gas utility’s privatization is launched.

The government and country’s lenders appear to have reached a compromise deal on DEPA’s reinforced role in EPA Attiki in exchange for DEPA’s sale of its 51 percent stake in EPA Thessaloniki-Thessaly to Eni.

If so, DEPA will remain a powerful enterprise commanding three major fronts. Besides gaining a retail and distribution monopoly in the wider Athens market, the utility will also stand as a key gas importer and control gas distribution in all parts of Greece not covered by the EPA firms, through DEDA.

If the European Directorate for Competition does not endorse DEPA’s anticipated new role, then TAIPED, the privatization fund, will need to reexamine the utility’s privatization or postpone it.

The lenders are pressuring by excluding the possibility of any futher extensions.

TAIPED announced a tender yesterday for a legal consultant to work on the DEPA privatization. Interested parties face a February 26 deadline.

It remains unclear whether ELPE (Hellenic Petroleum) will offer its 35 percent stake of DEPA along with the Greek State’s 65 percent. ELPE has repeatedly expressed an interest in the natural gas market.

 

 

Major battle seen for liberalized gas market in 2018

The natural gas retail market’s liberalization, a new reality in Greece that has arrived along with the New Year as a follow-up to the wholesale gas market’s opening, promises to lead to major changes.

Combined electricity-and-gas packages are already being offered by retailers in a local energy market whose natural gas sales have grown from 2.9 billion cubic metres in 2015 to 5 billion cubic meters in 2017.

The natural gas market is expected to gain further impetus as a result of the electricity market’s liberalization. Numerous gas market retailers, besides EPA Attiki, covering wider Athens, and Zenith, covering Thessaloniki and Thessaly, are examining the prospect of offering combined electricity-and-gas packages.

The main power utility PPC has hired a consultant to help prepare its entry into the natural gas market, while major independent electricity suppliers have already launched campaigns for gas supply. Also, DEPA, the public gas corporation, is considering entering the electricity market, either alone or along with a partner.

As of 2018, independent gas suppliers will seek to further bolster their presence in a market traditionally dominated by DEPA.

The degree of DEPA’s future retail presence in the EPA supply companies serving wider Athens, Thessaloniki and Thessaly, to be determined by ongoing negotiations between the shareholders involved in these ventures, remains to be seen.

The government appears to favor DEPA’s withdrawal from EPA Thessaly-Thessaloniki and continued presence in EPA Attiki. DEPA currently holds 51 percent stakes in these ventures. Shell holds a 49 percent stake in EPA Attiki and ENI a 49 percent stake in EPA Thessaly-Thessaloniki. Shell appears to want to withdraw.

EPA Attiki and Zenith, covering Thessaloniki and Thessaly, have both expressed an interest to broaden their geographic reach.

According to data released for 2015, the retail natural gas market in wider Athens, Thessaly and Thessaloniki exceeded 293 million euros. EPA Thessaly-Thessaloniki posted a pretax profit of 45 million euros and EPA Attiki a pretax profit of 30.1 million euros, according to this data.

As for Greece’s wholesale natural gas market, DEPA, until recently, has stood as the undisputed dominant player owing to its overwhelming control of imports. In 2016, DEPA’s natural gas imports reached 42.7 million MWh, from 44.5 million MWh in total, a 96 percent share.

However, this picture began changing in 2017, beginning with Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export, whose imports for the year reached one billion cubic meters, or 20 percent of the 5 billion cubic meter total. These amounts were imported from the gas pipeline at Sidirokastro, via Bulgaria.

According to sources, Prometheus Gas has already signed contracts for a greater amount in 2018. Clients include PPC, which has placed orders for its natural gas-fueled power plants.

M&M, a joint venture involving Motor Oil Hellas and the Mytilineos Group, has also made imports.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, noted that the corporate group ranks as the country’s biggest natural gas consumer with a level of 1.5 billion cubic meters, adding that M&M Gas could soon start trading annual amounts of natural gas measuring around one billion cubic meters.

Despite the emergence of new players in Greece’s wholesale gas market, DEPA managed to increase its volume-based sales increase of 9 percent for 2017’s nine-month period, while its operating profit (EBITDA) rose by 32 percent to 223 million euros.

 

Gas market’s future shape not finalized, despite third review agreement

The future look of Greece’s natural gas market, including the role to be played by DEPA, the public gas corporation, remains murky despite an energy-sector agreement just reached between government officials and the country’s lenders as part of the bailout’s third review.

The deal, announced last Friday, goes no further than to state that gas market details will be based on arrangements to be agreed upon between DEPA and its EPA supply company partners, Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures.

The country’s lenders, especially the European Commission, have been pushing for dominant DEPA to loosen its control of both the wholesale and retail natural gas markets.

Though the details still remain unclear, certain facts do offer an outline as to how things will stand.

DEPA can be expected to withdraw from EPA Thessaly-Thessaloniki and retain interests in EPA Attiki, serving the wider Athens area. The lenders appear to have agreed to a Greek proposal calling for DEPA’s increased stake in EPA Attiki. Energy minister Giorgos Stathakis has already made clear DEPA stands to gain greater control of the EPA Attiki board.

It is also known that Shell is negotiating its way out of EPA Attiki.

In addition, an internationally recognized consultant will be hired to conduct an evaluation of the EPA ventures as a negotiating base for the expected changes. The consultant will also be tasked with evaluating the value of premature monopoly losses imposed on EPA Attiki and EPA Thessaly-Thessaloniki. These monopolies will cease to exist in the retail natural gas market as of January 1 as a result of market reforms being applied.

DEPA still needs to negotiate a price for its EPA Thessaly-Thessaloniki withdrawal and, once having done so, will need to use the amount to be received to compensate Shell for its expected departure from EPA Attiki. DEPA will also be expected to use part of its 320 million-euro amount in cash reserves.

DEPA, Shell and ENI have been engaged in negotiations since last summer. The hardline approach of DEPA’s recently ousted leadership had not helped the negotiators find common ground. In fact, gaps widened during the process.

According to sources, ENI has shown willingness to compromise but was not backed by Shell.

Despite the difficulties, agreements between all three companies appear to be on the final stretch.

 

Lenders, ministry remain divided on DEPA’s future role

With just one day remaining for a solution to be found as part of the bailout’s third review, the energy ministry and country’s lenders remain at odds over the future role of DEPA, the Public Gas Corporation, in Greece’s natural gas market, currently dominant and covering both the wholesale amd retail markets.

The lenders insist on a diminished role for DEPA that would restrict the corporation’s participation to less than 34 percent in the EPA Attiki and EPA Thessaly-Thessaloniki supply companies. This would end the gas utility’s retail market and managerial control in the two ventures.

On Tuesday, energy minister Giorgos Stathakis tabled a proposal entailing DEPA’s full withdrawal from EPA Thessaly-Thessaloniki through the sale of its current 51 percent stake to Italy’s ENI, the current holder of a 49 percent in this retail venture, as well as a full takeover of EPA Attiki through the acquisition of Shell’s 49 percent in this retail gas firm supplying the wider Athens area.

The lenders have rejected the proposal that would provide DEPA with full control of EPA Attiki, regarded as a form of nationalization that runs contrary to European Commission principles.

In practical terms, DEPA would remain omnipresent as a vertically integrated corporation with interests at both wholesale and retail levels. This contravenes the demands lenders have insisted upon for quite some tine now.

A preceding Greek proposal that would give DEPA a minority role in EPA Thessaly-Thessaloniki and an increased stake in EPA Attiki, plus managerial control, was also rejected by the lenders.

At this stage, two outcomes appear possible, the first being a Greek retreat that would leave DEPA with minority roles in both EPA supply companies. The other possible arrangement would allow DEPA to gain a stronger role in EPA Attiki, but not the venture’s full 100 percent.

The country’s lenders have already reached a general agreement with the government for a diminished DEPA role in Greece’s natural gas market in anticipation of its full liberalization as of January 1.

Shell to leave EPA Attiki, proposal for DEPA exit in north

Energy minister Giorgos Stathakis is expected to present the country’s lender representatives a gas-sector proposal entailing the full withdrawal by DEPA, the Public Gas Corporation, from EPA Thessaly-Thessaloniki through the sale of its current 51 percent stake to ENI, the current holder of a 49 percent in this retail venture, as well as a full takeover of EPA Attiki through the acquisition of Shell’s 49 percent in this retail gas firm supplying the wider Athens area, energypress sources have informed.

Both ENI and Shell both appear to agree to these EPA changes. According to sources, Shell has decided to withdraw from Greece’s natural gas market. The company hired a consultant to steer it through this process, it recently became known.

The energy minister is scheduled to meet with the lender representatives today and on Thursday to finalize energy sector measures needed for the bailout’s third review.

An agreement has already been reached with the European Commission, one of the country’s lender institutions, on main power utility PPC’s bailout-required lignite unit sale package, but the prospective changes in the natural gas sector remain unclear. The lenders are generally pushing for a diminished role by DEPA, currently dominant at both wholesale and retail levels.

DEPA appears willing to fully withdraw from EPA Thessaly-Thessaloniki. Last week’s leadership changes at the gas company are expected to facilitate this withdrawal.

The lenders had rejected a previous Greek offer entailing DEPA’s reduced presence in EPA Thessaly-Thessaloniki with a stake of at least 20 percent, as well as a management takeover at EPA Attiki and, possibly, the acquisition of Shell’s current 49 percent stake in this venture. Shell also failed to react positively to this proposal.

A counterproposal by the lenders called for DEPA’s reduced presence in both EPA ventures as a minor partner devoid of management rights.

It remains to be seen whether Greece’s latest proposal will be embraced by the lenders this week as part of the effort to conclude the bailout’s third review.

 

DEPA in robust financial condition amid Shell, ENI talks

Various alternatives are being examined for the future look of Greece’s natural gas market, especially the role to be played by DEPA, the Public Gas Corporation. Decisions on the direction to be taken are expected by the end of this month, officials have informed.

The gas utility, which has maintained a dominant, vertically integrated presence in the market, is currently engaged in negotiations with local retail gas business partners Shell and ENI – holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures – while the government is representing the utility in the ongoing third bailout review talks with the country’s lenders.

DEPA, a financially robust enterprise whose cash reserves are expected to have reached approximately 300 million euros by the end of the year, is strongly positioned in these talks. The gas utility has the ability to finance any decisions taken for its future market position, sources have noted.

The government is pursuing a plan that would maintain DEPA’s majority role in EPA Attiki, supplying the wider Athens area, in exchange for a minority role in EPA Thessaly-Thessaloniki.

According to sources, DEPA is close to striking a deal with ENI for their EPA Thessaly-Thessaloniki venture. A drastically reduced stake for DEPA, to a level well under 49 pecent, is regarded as a possible outcome.

As for EPA Attiki, the current arrangement, through which DEPA holds 51 percent of the venture and Shell 49 percent, could be left untouched.

A gas market reforms road map needs to be delivered by the end of the year, according to a term included in the revised bailout following a request by the lenders, its aim being to remove factors not promoting competition. Though this condition’s description has remained vague, it can be interpreted as representing pressure from the lenders for an end to DEPA’s omnipresence.

Major DEPA retail role, through EPA Attiki, supported locally

The leadership at the environment and energy ministry is insisting on a dominant role for DEPA, the Public Gas Corporation, in the retail gas firm EPA Attiki, serving the wider Athens area, and would settle for the gas utility taking on a minority role in EPA Thessaly-Thessaloniki, according to sources.

This position was apparently stressed during a meeting at the energy ministry yesterday. Officials representing DEPA, TAIPED, the state privatization fund, and ELPE, Hellenic Petroleum, which holds 35 percent stakes in DEPA and DESFA, the natural gas grid operator, all took part in the session.

Greece needs to deliver a gas market reforms road map by the end of the year, according to a term included in the revised bailout, following a request by the lenders, its aim being to remove factors not promoting competition. The future role of DEPA, currently omnipresent, is a key part of the road map.

The lenders have called for DEPA’s full withdrawal from Greece’s retail gas market but, as was indicated at yesterday’s meeting, the government is determined to maintain a commanding role for the gas utility through one of the two EPA companies. DEPA currently holds 51 percent shares in EPA Attiki and EPA Thessaly-Thessaloniki, while Shell and ENI are partners with respective stakes of 49 percent.

DEPA needs to reach agreements with its two EPA partners. According to sources, the gas utility is close to reaching a deal with ENI that would provide the Italian company with part of DEPA’s 51 percent in EPA Thessaly-Thessaloniki. The sources added that DEPA appears prepared to accept being a minor shareholder in EPA Thessaly-Thessaloniki with a stake well under 49 percent.

As for EPA Attiki, the ownership could remain as is, with DEPA maintaining 51 percent and Shell 49 percent, the same sources informed.

Given these indications, the government, in its negotiations with the lenders, appears to be sticking to the positions adopted at a DEPA shareholders’ meeting in the summer and by the board. Ultimately, the views of the lenders will be crucial.

It has become somewhat of a common secret that the lenders have persisted for DEPA to adopt a more passive role in the retail gas market with EPA stakes of no more than 49 percent. Shell and ENI have both expressed a clear interest to acquire majority stakes in these respective ventures.

A clearer picture on the gas market’s new look should emerge within the next fortnight. Time is running out for the road map’s delivery by the end of the year, as was highlighted at yesterday’s meeting.

Besides DEPA’s role in the gas market, Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030.

Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture. It is unclear to what extent Shell’s evaluation has been discussed by Greek officials.

DEPA, Shell, Eni talks crucial to gas market’s future look

The outcome of ongoing intensive talks between DEPA, the Public Gas Corporation, and local retail gas business partners Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures, over the future role of the Greek gas utility in the local gas market promises to be pivotal to its future look.

The partners are negotiating for a solution that will determine DEPA’s role in the existing EPA companies, or, even, whether the gas utility will have any role to play at all in these two retail gas firms.

Energy minister Giorgos Stathakis – speaking at a signing ceremony held yesterday for a license offering a consortium comprised of ELPE (Hellenic Petroleum), Total and Edison hydrocarbon exploration and exploitation rights to offshore Block 2, west of the Ionian island Corfu – stressed that time is running out for DEPA, Shell and ENI.

The minister noted that the partners will need to find a solution by the end of November, which, in turn, could be used as a platform for decisions to help conclude the bailout agreement’s third review.

Technical officials representing the country’s lender institutions have rejected a Greek road map proposal concerning gas market reforms. This has brought the future of DEPA’s role in Greece’s wholesale, distributions and – especially – retail gas markets to the fore.

A gas market reforms road map needs to be delivered by the end of the year, according to a term included in the revised bailout following a request by the lenders, its aim being to remove factors not promoting competition.

Though this condition’s description is vaguely expressed, it can be interpreted as pressure from the lenders for an end to DEPA’s omnipresence. Likewise, Shell and ENI have also called for a restriction of the gas utility’s widespread role in the local gas market.

Besides DEPA’s role in the gas market, Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030.

Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture.

 

 

 

Crete offshore blocks tender set for EU gazette publication

An international tender offering exploration and exploitation rights to offshore blocks southwest and west of Crete, as well as the Ionian, is expected to be published in the Official Journal of the European Union (OJ) within the next ten days, sources have informed.

The tender, announced on August 17, also needs to be published in the OJ, the EU’s official gazette of record, before the countdown for binding offers begins. Once published, interested parties will have 90 days to submit their offers to EDEY, the Greek Hydrocarbon Management Company.

Certain pundits have linked the anticipated speed-up of the tender’s publication to ExxonMobil’s Cretan interest and Greek Prime Minister Alexis Tsipras’s current official visit to the US for a meeting with President Donald Trump.

The interest expressed by ExxonMobil, joined by France’s Total and ELPE (Hellenic Petroleum) as consortium partners, prompted Greece’s energy ministry to proceed with the tender.

If no other investors emerge with offers, then the Greek State will move ahead and begin negotiations with this three-member consortium.

Italy’s ENI, which discovered Zor, the gigantic Egyptian gas field, is rumored to be interested in two Crete offshore blocks, one southwest, the other west of the island. The Italian firm has already established operations in Cyprus and is eyeing the wider southeast Mediterranean region.

DEPA, Shell, ENI in intensive talks for retail market solution

DEPA, the public gas corporation, and local retail gas business partners Shell and ENI, holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures, are currently in the midst of intensive talks over the future of their collaborations, sources have informed.

Consensus needs to be reached within the first 15 days of October but common ground has yet to be found. Numerous proposals have so far been discussed, including stock swaps, DEPA’s withdrawal from certain posts and a stronger hold of others, as well as a division of the EPA companies based on the current shares held by the partners.

The country’s lenders have already rejected a road map on needed Greek gas market reforms, including the future role of DEPA, currenly omnipresent. Authorities are now focusing on the  changes required in DEPA’s partnerships with Shell and Eni.

DEPA’s role and level of participation in Greece’s wholesale, distribution and, primarily, retail gas markets, is a core issue.

Energy minister Giorgos Stathakis, who discussed the issue yesterday with European Commissioner for Financial Affairs Pierre Moscovici, recommended a certain degree of leniency in the talks with lenders for the achievement of the best possible solution.

The lenders have called for the delivery of a road map by the end of this year detailing gas market reforms aiming to end current conditions that are stifling competition. This road map demand has been included in the revised bailout agreement. Though the demands are currently vague, the lenders are essentially applying pressure for DEPA to reduce its widespread market presence.

Greek officials, striving to protect DEPA’s market value and ensure compensation for any retreats, also want the corporation to remain a retail market player, even if in a revised form.

Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030. Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture.

 

 

 

Creditors discontent with Greek gas market reforms plan

A team of creditor representatives appears to have already rejected the country’s proposal regarding the role and participation of DEPA, the Public Gas Corporation, in the natural gas market’s wholesale, retail and distribution domains.

The latest round of discussions on Greece’s bailout-required energy sector reforms commenced in Athens last week, focused on the gas sector. Talks on main power utility PPC’s sale package of lignite units have yet to begin but officials are expected to begin dealing with this front in Brussels today.

A demand by the creditors for the delivery of a completed road map concerning natural gas market reforms by the end of this year has been added to the latest revised bailout agreement. One of the intentions is to eliminate conditions that do not incite competition.

Though the gas market demands made by the creditors have remained vague, the underlying motive is to break DEPA’s omnipresence. At present, DEPA is active at wholesale and retail levels and holds stakes in the EPA and EDA supply and distribution companies.

Shell and ENI, strategic partners in the EPA and EDA companies for wider Athens and Thessaly-Thessaloniki, respectively, are also pushing to restrict DEPA’s widespread market presence, as expressed in letters to energy minister Giorgos Stathakis.

The Greek recommendation, which, for the time being, appears to have been deemed inappropriate by the creditors, proposes maintaining DEPA’s presence in the EPA Attiki and EDA Attiki companies with the existing 51 percent stake.

Greek officials also recommend DEPA’s full withdrawal from EPA Thessaly-Thessaloniki or a drastic reduction of the corporation’s stake in this venture in exchange for an equivalent increase in its share of EDA Thessaly-Thessaloniki.

Greek officials have also proposed abandoning the idea of DEPA’s entry into the retail gas market as an independent corporate unit. DEPA has already revised its corporate charter to cover retail gas and electricity market activities.

Besides the needed gas market reforms, also unsettled are compensation claims made by Shell and ENI for the premature losses of their regional monopolies. Shell, which, as a 49 percent parner in EPA Attiki, had signed an exclusive supply agreement for wider Athens until 2030, has valued the financial cost of the premature end of this agreement at approximately 100 million euros. The amount would be shared with DEPA, holding a 51 percent stake in the venture.

Aerio Thessalonikis-Thessalias planning power market entry

Aerio Thessalonikis-Thessalias, the Thessaloniki-Thessaly gas supply company currently covering the heating and hot water needs of over 340,000 households and 8,000 businesses, making it the country’s second-biggest energy supplier following PPC, the main power utility, is preparing to enter Greece’s electricity market within the current year.

Officials at the company are currently working on setting a pricing policy and commercial strategy for its entry into the electricty market.

Established last January, Aerio Thessalonikis-Thessalias was recently issued a 20-year operating licence by RAE, the Regulatory Authority for Energy, to supply 350 MW per year.

The company appears determined to make an impact in the local energy market as a supplier of complete energy packages offering combined electricity and natural gas supply services.

Aerio Thessalonikis-Thessalias is looking to capitalize on its existing natural gas clientele.

The knowhow possessed by Italy’s ENI, which holds a 49 percent managerial stake in Aerio Thessalonikis-Thessalias, in the neighboring Italian market is expected to prove pivotal in its attempt to further penetrate the local energy market.

 

Major natural gas market changes lie ahead

An energy ministry plan involving the split of DEPA, the Public Gas Corporation, from the regional EPA natural gas supply companies covering the wider Athens area, Thessaloniki and Thessaly regions promises to bring about major changes to the country’s retail gas market.

The plan appears to have already been discussed, at an unofficial level, between Greek energy ministry and European Commission officials. Both sides are confident the revisions being considered are capable of establishing a more competitive Greek gas market, in line with EU directives.

As specified in Greece’s revised bailout agreement, the country’s lenders have requested a natural gas market road map by the end of this year to offer guidance for the removal of factors currently subduing market competition.

The role of DEPA in the future will be addressed at an upcoming general shareholders’ meeting on July 31.

A highly ranked energy ministry official contacted by energypress noted that two scenarios are possible. One entails DEPA’s step back from the retail market by becoming a minority shareholder in the EPA supply companies. The corporation currently holds 51 percent stakes in the country’s EPA supply companies, while Shell and Eni hold 49 percent stakes. The ministry does not appear keen to adopt this plan. The other scenario, believed to be prefered by the ministry, entails DEPA’s complete withdrawal from the Thessaly and Thessaloniki EPA supply companies combined with the corporation’s continued presence in EPA Attiki, covering the wider Athens area, without any changes to the 51 percent stake currently held in this venture.

The ministry’s overall aim is to establish a situation through which DEPA may operate in a competitive wholesale market while also maintaining its presence in a competitive retail environment, according to the ministry source contacted by energypress.

“A final decision on DEPA’s withdrawal from the EPA supply companies has yet to be reached,” the source noted, adding that Greek officials had more time ahead, until Christmas, to deliver a road map detailing the future of Greece’s natural gas market.

 

Crucial times for Cyprus’s hydrocarbon aspirations

Cyprus’s hydrocarbon aspirations face a crucial test this week as, firstly, ongoing research will determine whether needed additional deposits exist and, secondly, activities planned for the next few days should indicate how far Turkey is prepared to take its reactions.

The West Capella drilling ship hired by a consortium comprised of Total and Eni is scheduled to reach Block 11 in Cyprus’s Exclusive Economic Zone (EEZ) at 3am on Wednesday morning and prepare to start work within 24 hours.

This initiative represents part of a new and ambitious exploration drive that is expected to take about one year to complete.

The findings will be of pivotal importance as they will determine the possible existence and size of hydrocarbon deposits at Block 11, which would emerge as an addition to the deposit already discovered at Block 12. Estimates and forecasts only have real value if confirmed by drilling efforts. All is possible. The result could be an utter disappointment or a major future-altering discovery for the island is also possible.

The endeavor will also test Turkey’s true capacity for reaction, beyond its regular cast of verbal threats, against major international petroleum powerhouses that have acquired rights to Cypriot blocks and are gradually making progress to begin work.

Four drilling endeavors have taken place within Cyprus’s EEZ over the past seven years. Two of these were carried out by US firm Noble Energy, at Block 12, and two by Italy’s Eni, at Block 9.

The deposit discovered within Block 12, dubbed Aphrodite, may have provided momentum to Cyprus’s overall hydrocarbon drive, but its quantity, alone, is not sufficient to make the development of gas storage and transmission projects sustainable. The discovery of a new deposit is crucial as it could provide the additional hydrocarbon quantity that is needed to make such investments worth pursuing.

The discovery of Zohr, a gigantic deposit in Egypt’s maritime zone, has turned the attention of major petroleum firms to Cyprus. France’s Total has joined forces with Italy’s Eni to explore Blocks 11 and 6, while Eni has acquired exclusive rights for Block 8.

Also, the world’s largest oil and gas company ExxonMobil, until recently led by US Secretary of State Rex Tillerson, has been joined by another industry giant, Qatar Petroleum, for the rights to explore Cyprus’s Block 10.

The upcoming hydrocarbon exploration endeavors planned for Cyprus have been made more complicated by the breakdown, just days ago, of latest UN-backed Cyprus talks in search of a reunification deal.

Reacting to previous exploration endeavors around Cyprus, Turkey has responded in a standard way, sending a seismic vessel into Cypriot EEZ waters, accompanied by at least one frigate monitoring from a distance. Turkish reaction will certainly not be missing this time either, and could well be stronger following the recent collapse of the Cyprus reunification talks. Just how far Turkey is prepared to go remains to be seen.

 

 

 

 

 

Shell requests compensation for gas monopoly termination

Shell, a 49 percent shareholder of gas supplier EPA Attiki, covering the wider Athens area, has, in a letter forwarded to energy minister Giorgos Stathakis last week, officially demanded compensation from the Greek State for the premature loss of its monopoly, energypress sources have informed.

In the letter, Shell has requested a meeting with the energy minister to discuss the issue, while the multinational has evaluated the loss of its regional monopoly, originally agreed to last until 2030, at approximately 100 million euros. Shell would be entitled to roughly half this amount as state-controlled DEPA, the public gas corporation, holds a 51 percent share of EPA Attiki.

Shell, in the letter, also enquires about a conflict of interest concerning DEPA, which, as a result of the natural gas market’s new framework, is, concurrently, the majority shareholder of EPA Attiki, its supplier, and competitor. State-controlled DEPA revised its charter to enter the retail gas and electricity markets.

Shell has asked the energy minister for DEPA’s immediate withdrawal from the retail gas market in the wider Athens area.

Eni, the holder of 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies, has forwarded a similar demand to the ministry for these regional markets.

In comments to energypress, DEPA officials contended that no laws, at a European level, support such a claim.

Even so, on a recent trip to Rome, Stathakis, the Greek energy minister, is believed to have requested the Italian government’s support for a delayed withdrawal of DEPA from the EPA Thessaly and Thessaloniki ventures, sources have informed.

For quite some time now, both Shell and Eni have been presenting their case to DEPA, the Greek government, as well as the country’s lender institutions, contending that their venture partner cannot also be a competitor in the same market or a supplier for the EPA companies.

Ministry officials have questioned figures provided by Shell, noting that the effort to determine whether the multinational is entitled to compensation is complex and, if so, what this value gap could be worth.

Ministry officials contend that a value gap may not necessarily emerge if Greek public spending, in the past, on the development of gas networks and other infrastructure outlays is taken into account. Also, the EPA Attiki aand EPA Thessaly- Thessaloniki companies have received capital returns in the past, ministry officials have noted.

 

Shell, Eni likely to push for monopoly loss compensation

Shell and Eni, 49 percent shareholders in the country’s three EPA gas supply companies covering the wider Athens area, Thessaloniki and Thessaly, are likely to push for a meeting with energy minister Giorgos Stathakis over the premature ends of their respective regional monopolies. If so, the likelihood of the two companies demanding compensation payments is highly probable.

Both Shell and Eni have kept their intentions on the issue under wraps. However, they are expected to start opening up after assessing this year’s supply surcharges, forwarded just days ago by RAE, the Regulatory Authority for Energy.

The proceedings of a prospective meeting with the energy minister will determine whether Shell and Eni will freeze any thoughts for demands or pursue legal action. In the past, Shell had estimated the cost of the premature end to its regional monopoly at almost 100 million euros.

At this stage, further pressure by Shell and Eni for compensation payments seems likeliest. The recently replaced energy minister Panos Skourletis had ruled out the possibility of any payments to the two companies.

In 2001, Shell and ENI secured distribution and trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

Shell holds a 49 percent stake in the EPA supply company serving the wider Athens region and ENI holds 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies. DEPA, the Public Power Corporation, holds 51 percent stakes in all three EPA companies.

As of next week, gas consumers will begin receiving bills featuring new tariffs comprised of three fees, one concerning trading costs and the other two transmission and distribution costs. The new tally, including taxes, amounts to 5.3 cents per KWh, down from 5.5 cents per KWh in December.

Compared to the current heating fuel price – 8.9 cents per KWh or one euro per liter – the cost of natural gas is roughly 40 percent lower.

 

 

 

RAE decision on natural gas tariffs expected this week

RAE, the Regulatory Authority for Energy, is expected to announce its decision on new gas supply tariffs for 2017 within the current week. This news is crucial as it will determine whether ENI and Shell, holders of 49 percent stakes in three EPA gas supply companies covering the wider Athens area, Thesaloniki and Thessaly, will take legal action against the Greek State in response to premature ends of their regional monopolies.

If ENI and Shell deem the new gas supply tariffs as satisfactory then they will forget about the legal action they have contemplated taking. If not, then legal action by both can be expected. The two companies may also make one final attempt to gain compensation money.

RAE has already endorsed distribution tariffs and now needs to approve trading tariffs, which will enable Shell and ENI to assess the financial damage caused by the premature ends of their regional monopolies.

In 2001, Shell and ENI secured trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

The recently replaced energy minister Panos Skourletis has made clear that the Greek State will not offer any compensation payments to Shell and ENI. His successor Giorgos Stathakis has obviously yet to examine the matter.

DEPA, the Public Gas Corporation, holds 51 percent stakes in all three EPA gas supply companies.

ENI, Shell on standby for crucial RAE tariff level decisions

ENI and Shell, holders of 49 percent stakes in three EPA gas supply companies covering the wider Athens area, Thesaloniki and Thessaly, are on standby for a RAE (Regulatory Authority for Energy) decision concerning 2017 tariffs submitted for approval about a month ago.

Crucially, Shell, which holds a 49 percent stake in the company serving the wider Athens region, and ENI, holding 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies, are expected to freeze compensation demands from the Greek State, for premature ends to their respective regional monopolies, if RAE approves tariff levels that are deemed satisfactory by Shell and ENI officials.

If the tariff levels approved are not considered satisfactory by Shell and ENI then legal action by the two firms cannot be ruled out.

RAE has already endorsed distribution tariffs and now needs to approve trading tariffs, which will enable Shell and ENI to assess the financial damage caused by the premature ends of ther regional monopolies.

In 2001, Shell and ENI secured trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

The recently appointed energy minister Giorgos Stathakis has made clear that the Greek State will not offer any ompensation amounts.

The financial damage suffered by Shell haas been estimated at around 100 million euros, sources said. The company has yet to demand compensation from the Greek State, the same sources informed.

DEPA, the Public Gas Corporation, holds 51 percent stakes in all three EPA gas supply companies.

Gas market’s liberalization increasingly complex

The natural gas market’s liberalization process, directly linked to the privatization of DEPA, the Public Gas Corporation, is beginning to seem like an equation made increasingly complex by the addition of various factors whose impact remains unknown.

Most recently, the country’s lenders called for DEPA’s withdrawal from Greece’s retail natural gas market, a move intended to swiften the liberalization process, only to prompt the re-emergence of issues from the past that further complicate matters.

Shell, which holds a 49 percent stake in the DEPA subsidiary EPA Attica, a gas distribution company serving the wider Athens area, and Eni, the Italian multinational with 49% stakes in the equivalent EPA ventures covering Thessaloniki and Thessalia, may both seek compensation for the premature end to their regional monopolies. DEPA holds 51 percent stakes in all three EPA subsidiaries.

In 2001, Shell and Eni both signed contracts securing 30-year exclusive retail gas distribution rights to the aforementioned markets. These monopolies were abolished by the Greek bailout’s framework.

The recently replaced energy minister Panos Skourletis had ruled out the possibility of compensation amounts for Shell and Eni, while his successor, Giorgos Stathakis, who took control of the country’s energy portfolio just over a week ago, has yet to engage himself with the issue.

Brussels sources value the cost of the premature end of Shell’s retail monopoly for the wider Athens area at approximately 100 million euros. The same sources noted that Shell has yet to submit a compensation claim to the Greek government as it is waiting for a late-November announcement from RAE, Greece’s Regulatory Authority for Energy, on new tariffs. The level to be set will determine Shell’s future action. The same goes for Eni.

Should these two companies consider the upcoming new tariff levels as insufficient to cover the losses caused by the retail market’s liberalization, then the Greek State will face compensation claims. Theoretically, DEPA could act likewise as it, too, is being affected by the premature ends to the regional monopolies held by the EPA supply companies.

Given the tight condition of the Greek State coffers, compensation in the form of cash payments is most unlikely, meaning that some type of offsetting solution will need to be found.

DEPA risks facing double trouble as, unlike its EPA partners, the corporation may not be compensated for the premature ends to the retail monopolies and, in addition, would need to provide the compensation payments for Shell and Eni.

Also, the country’s lenders seem to be applying pressure for DEPA to be privatized in 2017. However, this process will be held up for as long as the possible EPA compensation issue and DEPA’s withdrawal from the retail market remain unresolved.

 

Lenders pressuring DEPA to leave retail natural gas market

DEPA, the Public Gas Corporation, an energy-sector issue in the bailout’s current second review, is being pressured by the lenders to withdraw from Greece’s retail natural gas market, a development that would destabilize the corporation’s future and the prospect of widened natural gas use around Greece.

Thought this latest request is not a bailout prior action, government officials fear the lenders will apply relentless pressure.

Already forced to increase its gas release, the proportion of low-priced natural gas offered by DEPA through its annual auctions as a means of generating market competition, the corporation is under pressure to abandon its 51 percent stakes in Greece’s three existing regional EPA gas supply companies covering the wider Athens area, Thessaloniki and Thessalia, without compensation. This would effectively leave DEPA out of the retail market.

The lenders, especially the European Commisson, represented by its Senior Economist for Greece, Carlo Viviani, want DEPA to abandon its retail role as of January 1, 2017, when distribution and retail activities of gas companies in the country’s natural gas market need to be split. Sources said the lenders are pushing for this move to further liberalize the gas market.

Shell holds a 49% stake in the EPA supply company serving the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessaloniki and Thessalia ventures.

This demand will surely prompt major legal issues as the public utility is being asked to abandon assets without any form of compensation. The prospect of expanding Greece’s natural gas network to parts of the country without access is also expected to be set back. The country’s role in prospective international gas transmission projects, through DEPA, would also be affected if the gas company’s role is diminished.

Regardless of this latest request by the lenders, DEPA needs to split its retail and distribution divisions at an administrative level.

 

Italian minister’s refugee crisis visit to include energy matters

Italian foreign minister Paolo Gentiloni’s emergency visit to Athens today, prompted by the refugee crisis, will also include energy matters on its agenda.

A series of meetings scheduled during Gentiloni’s whirlwind visit to the Greek capital include one with energy minister Panos Skourletis. The Italian minister will be accompanied by four Italian energy company executives who intend to remind Skourletis of their interest in doing business in Greece.

According to sources, an official representing Terna will point out that the company remains interested in buying a stake of IPTO, the power grid operator, regardless of whether this is a 20 percent stake the government plans to offer to a strategic investor or a 66 percent share if the Greek government’s proposal is not approved by the country’s lenders. Many officials believe rejection of the government’s IPTO plan cannot be ruled out.

An Edison official is expected to remind of the company’s interest for stakes in units owned by PPC, the main power utility. The company favorably views PPC chief executive Manolis Panagiotakis’s intention to establish partnerships with other European companies for PPC-related projects. However, the Edison official is expected to underline that hydropower plants will need to be included in the overall package.

An Eni representative will raise a compensation issue concerning the premature end of the company’s regional natural gas market monopolies in Thessaloniki and Thessalia, prompted by bailout-related gas market reforms. Eni holds 49% stakes in the Thessalia and Thessaloniki EPA gas supply companies. DEPA, the Public Gas Corporation, holds majority 51 percent stakes in both.

An Enel official is expected to point out the company’s interest to increase its presence in Greece’s wind energy market.

Though no officials representing Snam have joined the Italian delegation, Gentiloni, Italy’s foreign minister, will highlight to Skourletis the Italian company’s interest in acquiring a 17 percent equity share of DESFA, the gas grid operator. Azeri energy company Socar, the winning bidder of an international tender offering 66 percent of DESFA, needs to surrender 17 percent following European Commision intervention.

Shell, Eni await fees before acting on loss of monopolies

The level of network distribution fees to be set by RAE, the Regulatory Authority for Energy, within the next six months will determine the action to be taken by Shell and Eni, respective shareholders in the EPA gas supply companies for wider Athens and Thessaloniki-Thessalia, with regards to their demands from the Greek state.

The EPA companies have prematurely lost their exclusive regional supply originally agreed to as a result of gas market reforms intended to generate competition in the market.

If the network distribution fee levels, to benefit the EPA companies, are deemed appropriate, then the EPA shareholders will not launch compensation procedures against the Greek state for the loss of their respective monopolies, part of the bailout agreement. If the distribution fee levels are deemed as being to low, the companies are sure to take action.

A highly-ranked official at Shell, which holds a 49 percent stake in the EPA company serving the wider Athens area, raised the issue just weeks ago to energy minister Panos Skourletis. The minister made clear that the state does not intend to discuss compensation packages.

As a result, shareholders of the three exisiting EPA gas supply companies will wait for the distribution fee levels to be set before deciding on any future action.

As has been reported, as of 2017, gas consumers will be charged separate fees for distribution and trade, as part of the overall plan to generate competition in the sector. RAE must set the new network distribution fees by June, 2016.

DEPA, the Public Gas Corporation, holds majority 51 percent stakes in all three EPA gas supply companies. Shell holds a 49% stake in the company serving the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessalia and Thessaloniki operations.