DEPA, Shell talks for Dutch firm’s local market exit still not over

Long-running negotiations between DEPA, the public gas corporation, and Shell concerning the former’s acquisition of the Dutch firm’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area, have yet to be finalized but could be successfully completed within the next few days, DEPA sources have informed.

DEPA holds a 51 percent stake in these ventures and is negotiating to buy out Shell for a reported sum of 150 million euros.

The two sides are believed to have agreed on most matters but are still working on fine details concerning Shell’s full market withdrawal. DEPA is pushing for an agreement that would rule out any possibility of Shell’s eventual reentry into this market.

Sources explained it would be pointless for DEPA to pay 150 million euros now only to see the Dutch firm reemerge at some point in the future as part of a rival team.

Tax and environmental issues, concerning the existing DEPA-Shell ventures, that could arise in the future are also being closely examined.

An agreement between the two sides is expected no later than June 6. DEPA’s bailout-required privatization plan, to offer investors a 65 percent stake, is expected to be shaped immediately following the utility’s agreement with Shell.

DEPA is expected to be split into two enterprises – one to handle the networks and the other commercial matters – to be sold separately, energy minister Giorgos Stathakis and the country’s lenders appear to have agreed. This model, still unclear, needs to be fine tuned.

The Greek State is expected to keep a majority stake in the firm controlling the networks and a minority stake for the commercial firm, according to Stathakis. He has not elaborated on specific stakes.

This plan was tabled by TAIPED, the state privatization fund, not the energy minister, who proposed a far more elaborate model entailing the establishment of a listed holding company comprised of three subsidiaries to respectively handle the networks, commercial matters and international projects, including gas pipeline projects such as the IGB and IGI Poseidon. Investors would have been offered a minority stake for the first and a majority stake for the second, while the third would have remained under the holding company’s control.

The country’s lenders expressed doubts over this proposal’s feasibility and opted for the two-firm solution.

 

 

DEPA, Eni to sign deal today, Shell selling its stake for €150m

Months-long negotiations between DEPA, the public gas corporation, and Italy’s Eni for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith, are expected to be completed today with the signing of a finalized agreement.

Until now, DEPA has held a 51 percent stake in this venture and Eni the other 49 percent. No changes are expected to be made to the EDA Thessaloniki-Thessaly gas distribution company. DEPA and Eni will retain their respective 51 and 49 percent stakes in this venture.

Not unintentionally, the timing of the deal’s anticipated completion coincides with a meeting in Athens today between energy minister Giorgos Stathakis and the country’s lender representatives. Greek officials are keen to send a signal to the troika that pending bailout issues at the energy ministry are being settled.

DEPA also appears to have been reached an agreement with Shell to acquire the latter’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution companies covering the wider Athens area. DEPA currently holds 51 percent shares in these ventures. The two sides held marathon talks yesterday. Pending issues appear to have been settled while, according to sources, the agreement is worth 150 million euros.

The government and lenders still need to agree on the resulting market structure following these rearrangements before a DEPA-Shell deal can be officially announced. DEPA would fully control EPA and EDA Attiki and hold a majority stake in EDA Thessaloniki-Thessaly.

The finalization of DEPA’s future roles in all the aforementioned ventures will enable officials to begin discussing and implementing the gas utility’s privatization model. This sale is planned to offer investors a 65 percent stake.

A meeting today to involve Stathakis, the energy minister, finance minister Euclid Tsakalotos and the lenders will indicate whether a Greek proposal for the DEPA privatization stands a chance of being accepted.

An alternative DEPA privatization plan prepared by the energy minister entails the establishment of a holding company to serve as an umbrella for three new subsidiaries respectively covering commercial, distribution and international projects divisions.

A number of local officials have questioned whether this plan can raise the privatization funds expected from DEPA as the proposal, restricting investors to a minority stake of DEPA’s networks, is seen as unattractive.

A second idea has also been tabled. It entails the establishment of two subsidiaries, one representing DEPA’s networks and the other the firm’s commercial division, without a holding company. Each subsidiary would be sold separately to represent a 65 percent privatization. This proposal recognizes that the gas networks and commerce are two different markets. Some investors may focus on the networks and others on the commercial side.

Apart from the privatization model that needs to be adopted for DEPA, ELPE (Hellenic Petroleum), which holds a 35 percent stake of this gas utility, also needs to make its position clear.

ELPE officials have told energypress that retaining a minority role in DEPA is pointless for the enterprise, while suggesting ELPE would withdraw from its DEPA interests if the price is right.

ELPE is interested in the natural gas market but only as a majority shareholder with managerial control, the officials explained.

 

 

 

Eni set to sign deal with DEPA for EPA Thessaloniki-Thessaly

DEPA, the public gas corporation, and Italy’s Eni have finalized an agreement for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith, energypress sources have informed.

Until now, DEPA was the majority shareholder of this venture with a 51 percent stake and Eni held the other 49 percent.

The same sources noted that the DEPA board intends to endorse the agreement at a meeting tomorrow ahead of its signing next week – either Tuesday or Wednesday.

Next week’s anticipated signing ceremony will coincide with a visit to Athens by troika officials for negotiations with the Greek government on pending bailout issues, including energy sector matters.

No changes will be made to the EDA Thessaloniki-Thessaly gas distribution company. DEPA and Eni will retain their respective 51 and 49 percent stakes in this venture.

DEPA is also negotiating with Shell to acquire the latter’s 49 percent share in their EPA Attiki gas supply company covering the wider Athens area. DEPA currently holds a 51 percent stake in this enterprise.

According to sources, certain details remain unresolved but an EPA Attiki agreement is expected to be inked by the two sides just days after the EPA Thessaloniki-Thessaly deal has been signed.

The shareholders of all companies involved will need to approve these agreements. The competition committee must also endorse them.

The completion of the EPA Thessaloniki-Thessaly and EPA Attiki agreements, satisfying natural gas market supply and distribution demands set by the country’s lenders, will enable the bailout-required DEPA privatization to proceed.

Energy minister Giorgos Stathakis has already announced that he will present, next week, to the lender representatives, a DEPA holding company plan to serve as an umbrella for three new subsidiaries respectively covering commercial, distribution and international projects divisions. The plan entails listing the holding company on the bourse while the possible involvement of a strategic investor in the subsidiary covering commercial matters will be examined.

It remains to be been how the troika will react to the energy minister’s proposal.

 

 

 

 

Finalized DEPA privatization plan needed, time pressuring

With time pressure growing and one alternative plan after another being worked and reworked by Greek authorities for the bailout-required privatization at DEPA, the public gas corporation, officials at TAIPED, the state privatization fund, the gas utility and energy ministry are likely to meet during the week to forge a finalized plan.

Greece’s obligation to sell a 65 percent stake will remain the basis of the plan, but  alternatives of equivalent worth will be sought. At least two alternatives have so far being proposed. The energy ministry and DEPA appear to favor establishing a holding company to be comprised of three subsidiaries and be eligible for a listing on the bourse.

According to this plan, one of the three subsidiaries will control the DEPA networks and a strategic investor could cquire a minority stake. The second subsidiary would take on commercial affairs but a majority stake could be sold to investors. The third subsidiary would remain a part of the holding company and control major projects.

According to DEPA sources, this option is the most preferred.

DEPA still needs to finalize negotiations concerning changes at its supply and distribution ventures with local partners Shell and Eni before the privatization procedure can proceed.

DEPA is expected to withdraw from the EPA supply company covering Greece’s north and remain a part of the distribution company, EDA Thess. DEPA holds 51 percent stakes in these ventures and Italy’s Eni the other 49 percent.

DEPA is also expected to acquire Shell’s 49 percent in EPA Attiki and EDA Attiki, two ventures serving the wider Athens area. DEPA also holds respective 51 percent stakes in these.

An announcement by DEPA and Shell is expected imminently, sources have informed. A price tag of nearly 150 million euros is expected to be attached to Shell’s withdrawal. Other details remain undisclosed.

 

 

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.

Motor Oil’s Coral planning natural gas market entry

Plans for an entry into Greece’s natural gas retail market by Motor Oil Hellas subsidiary Coral (Shell) are expected to be completed by October, a highly ranked company official informed yesterday, noting Coral plans to utilize its broad network of fuel stations, numbering over 730, 301 of these company-owned, as well as a large number of loyalty cards, which exceed 835,000.

The Motor Oil Hellas group has been granted three natural gas market licenses for its Motor Oil, Coral and Coral Gas companies.

In planning to penetrate the natural gas retail market, the corporate group intends to enter a rival market is that impacting its main business activity, fuel sales.

Apart from its entry into the natural gas retail market, the group is also considering entering the wholesale gas market.

Coral plans to offer a company bond to investors in late April. According to Motor Oil Hellas, this move is being made to further reinforce the company’s independence, not reduce its debt level. Since being acquired by Motor Oil Hellas in 2010, Coral’s market share has risen from 16 percent to 22.6 percent.

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”.

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.

 

 

DEPA, Shell seen picking common EPA Attiki evaluator

DEPA, the Public Gas Corporation, and Shell, partners in the retail natural gas supplier EPA Attiki covering the wider Athens area, appear headed towards selecting a common evaluator for the appraisal of the Dutch firm’s 49 percent stake.

DEPA holds a majority 51 percent share of this venture and is seeking to increase its stake. Shell has made clear it wants to withdraw from Greece’s retail natural gas market.

Rothschild and Lazard, the financial consultants representing DEPA and Shell, respectively, are meeting daily for negotiations believed to be constructive, energypress sources informed. At this stage, it appears that the two sides are nearing an agreement. There has been no news of a sale price for Shell’s 49 percent, but developments on this front can be expected once an evaluator has been commissioned.

Shell wants the cost of the premature end to EPA Attiki’s market monopoly, a bailout requirement, factored into the agreement. The Dutch firm had entered EPA Attiki on terms guaranteeing the venture exclusive supply rights for the wider Athens region until 2030. Shell has set a price of 150 million euros for this premature monopoly loss but DEPA has questioned the figure.

A tight schedule needs to be maintained and final decisions must be taken by March. Any delay would impede the planned DEPA privatization, another bailout reqirement, to offer a 65 percent stake of the Greek gas utility. According to the revised bailout, this privatization has been timed to begin in late March, presumably seen as a time when DEPA and Shell will have reached a deal.

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.

DEPA’s future role in EPA Attiki, as well as EPA Thessaly-Thessaloniki, a venture in which the utility also holds a 51 percent stake, will need to be cleared up before the DEPA privatization procedure can begin.

The Greek government supports DEPA’s intention to remain in EPA Attiki and withdraw from EPA Thessaly-Thessaloniki. The country’s lenders want DEPA’s dominant market role diminished.

 

 

 

 

DEPA, Shell reps for EPA Attiki seen meeting next week

DEPA, the public gas corporation, appears to be just days away from finalizing a deal with financial advising group Rothschild & Co, joined by Alpha Bank, to represent the Greek utility in its negotiations with Shell for the acquisition of the Dutch company’s 49 percent stake in gas supplier EPA Attiki, covering the wider Athens area. DEPA currently holds a 51 percent stake in this joint venture.

It is anticipated that the establishment of an agreement will be followed by an initial meeting next week, barring unexpected developments, between Rothschild-Alpha Bank and Lazard, representing Shell.

The price tag to be placed on the stake being sold by Shell is expected to stand as a key subject in these talks. Shell has made clear it wants a compensation amount for the premature loss of EPA Attiki’s regional monopoly, originally agreed to until 2030, factored into the price. Shell’s estimate of this compensation sum is 150 million euros.

A decision for Shell’s desired withdrawal from EPA Attiki needs to be reached by March as any delay would affect DEPA’s bailout-required privatization plan, to offer the Greek State’s 65 percent share of the gas utility. This privatization effort is scheduled to commence in March, according to the revised Greek bailout terms.

It remains unknown whether ELPE (Hellenic Petroleum), which holds DEPA’s remaining 35 percent, will be willing to offer its stake. ELPE has repeatedly declared it is interested in the natural gas market.

This privatization effort cannot begin unless DEPA’s role in EPA Attiki, as well as EPA Thessaloniki-Thessaly, a venture in which the utility also holds 51 percent, is cleared up. Italy’s ENI holds a 49 percent share of the EPA Thessaloniki-Thessaly gas supply firm.

The Greek government is seeking DEPA’s withdrawal from EPA Thessaloniki-Thessaly and a continued presence in EPA Attiki.

 

Major players, seeing Shell exit, consider EPA Attiki role

A number of natural gas market players, closely monitoring developments in negotiations expected to lead to the withdrawal of Shell from retail gas supplier EPA Attiki, covering the wider Athens area, are believed to be keen on filling the void. Shell holds a 49 percent stake in the venture led by DEPA, the public gas corporation, with a 51 percent majority.

Any agreement will need to be endorsed by the European Commission’s Directorate-General for Competition.

Greece’s energy ministry, backed by the government and DEPA’s administration, has submitted a specific plan to Brussels concerning the gas utility’s future role in the domestic retail natural gas market. This plan proposes a DEPA withdrawal or stake reduction in EPA Thessaloniki, a venture in which the utility also holds a 51 percent share with Italy’s Eni as a partner (49%), as well as maintenance of the utility’s role in EPA Attiki along with an active managerial role.

Possessing an established client base and potential for further market growth in the natural gas market while  likely to also enter the electricity market, EPA Attiki is a luring prospect for major players observing the developments, which are still unclear.

Given various problems being encountered by independent electricity suppliers in their efforts to penetrate the electricity market, an associaton with EPA Attiki could offer a crucial advantage.

 

 

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.

 

Competition Committee to decide on DEPA retail market role

The Competition Committee will decide whether DEPA, the public gas corporation, can maintain its presence in Greece’s retail natural gas market, according to additional terms included in the bailout agreement.

The terms specify that an assessment by RAE, the Regulatory Authority for Energy, and the Competition Committee, in association with the European Commission, to judge whether competition in the retail natural gas market remains restricted, will be made once the ownership make-ups of the existing EPA gas supply companies have been reshuffled. This assessment will need to be made prior to the bailout-required sale of a 65 percent sale of DEPA.

DEPA currently holds 51 percent stakes in EPA Attiki and EPA Thessaly-Thessaloniki, in respective partnerships with Shell and ENI.

If the Competition Committee decides that prospective line-up changes at the EPA companies continue to limit competition in the gas market, which needs to be fully liberalized by January 1, then the new corporate models will face reexamination.

At this stage, ENI appears interested in acquiring DEPA’s 51 percent in EPA Thessaly-Thessaloniki, while Shell seems interested in selling its 49 percent share of EPA Attiki to DEPA.

According to energypress sources, the country’s lenders are determined to prevent the formation of a state-controlled monopoly in Greece’s retail natural gas market. The lenders may allow DEPA to increase its stake in EPA Attiki, serving the wider Athens area, but they will not allow a full takeover, the sources informed.

Shell’s intended withdrawal from EPA Attiki is made complicated by the need for an evaluation of the premature loss of this venture’s monopoly, originally promised to last until 2030, but cut short by Greece’s bailout-required gas market reforms. The value of this lost monopoly will be factored into the sale price. For some time now, Shell has valued its monopoly loss at 150 million euros.

The negotiations, part of the road map established for the gas market, need to be completed by March, 2018, when, according to additional bailout terms, the tender for the sale of DEPA’s 65 percent needs to be announced. Any delays in the negotiations between DEPA, Shell and ENI promise to delay the planned DEPA sale.

 

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.

 

 

 

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.

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.

 

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.

 

Alarming crude oil price plunge keeping Shell in Greek market

Until last autumn, multinational Shell, which holds a 49 percent stake in the EPA gas supply company covering the wider Athens area, was seriously contemplating abandoning the Greek market. The company’s thoughts of leaving Greece were mostly linked to problems caused by the premature end of the EPA Athens gas supply company’s monopoly as a result of bailout-related gas market reforms intended to generate competition in the market. The country’s ongoing deep recession for a sixth successive year was less of a concern for Shell.

However, intensified woes generated by the further plunge in crude oil prices over the past couple of months, down to levels of less than 30 dollars per barrel, a development that has greatly reduced Shell’s international revenue potential, has forced the multinational to rethink and maintain all its money-making ventures worldwide, even in smaller marginal markets, such as Greece, offering moderate earnings for the corporate giant.

According to energypress sources, Shell has now decided to remain in Greece. The bailout deal’s gas reforms, which has divided distribution and trading activities to help open up the market is believed to be the key reason behind Shell’s decision to carry on here. Data has showed that EPA Athens earns 80 percent of its revenues from distribution activities and just 20 percent from trade. The distribution-related earnings are generated through the collection of distribution fees.

Shell anticipates it will continue collecting these distribution fees following the gas market’s break-up, while it could lose a fraction of its earnings generated by trading activity.

Pundits have pointed out that even an oil major the size of Shell will not turn its back to a steady supply of guaranteed earnings, even if small, amid such global uncertainty.

However, it is believed Shell would accept a good offer to sell its 49 percent share in EPA Athens, which is unlikely to occur for the time being. DEPA, the Public Gas Corporation, holds a majority 51 percent stake in the EPA Athens venture.