TAP’s commercial launch now on the final stretch

The Trans Adriatic Pipeline (TAP) project, to enable the delivery of Caspian gas to destinations throughout southeastern, central and western Europe, is almost ready for its commercial launch, four years after construction began and 17 years after its first feasibility study was conducted.

The project, running from the Shah Deniz gas field in Azerbaijan, will represent the EU’s main alternative route for natural gas, greatly contributing to the end of the continent’s dependence on Russian gas, supply security and intensified competition.

The TAP project will begin operating at a capacity of 10 billion cubic meters, annually.

Greece was the first of the project’s host countries to complete its segment of construction work, a 550-km stretch across northern Greece, from Evros’ Kipoi area in the northeast to Ieropigi in the Kastoria province, at the Greek-Albanian border.

Just days ago, Greece’s energy ministry approved the operation of the project’s Greek segment, running from Evros to Rodopi, Xanthi, Kavala, Drama, Serres, Thessaloniki, Kilkis, Pella, Imathia, Florina, Kozani and Kastroria.

Authorities of the project’s two other host nations, Albania and Italy, will soon grant their respective operating permits, sources informed.

The project’s commercial launch is expected to take place close to the final quarter this year, the energy ministry has announced.

The Greek and Italian gas grid operators, DESFA and Snam, respectively, will need to prepare their national grids so that natural gas quantities can reach consumers via TAP, sources added.

 

Two, possibly three, bidders for South Kavala UGS license

An upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north is expected to attract the interest of two, or possibly three, bidding teams.

Interested parties have been given an extension to express non-binding first-round interest. Prospective participants are busy preparing.

The participation of Storengy – a three-member consortium formed by France’s Engie, Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna – is considered a certainty as this consortium was established in anticipation of this tender.

Greek gas grid operator DESFA, increasingly active, since its privatization, in various projects, including some beyond its more customary operator-related bounds, is seen as another certain bidder for the South Kavala UGS license.

Senfluga, the consortium of companies that acquired a 66 percent stake of DESFA, appears very interested in the South Kavala UGS tender. This consortium’s current line-up is comprised of: Snam (54%), Enagas (18%), Fluxys (18%) and Copelouzos group member Damco (10%).

Though Senfluga’s three foreign partners – Snam, Enagas and Fluxys – are examining the prospect of joining DESFA to express joint interest, separate bids from the two sides are considered likeliest. The main reason for this has to do with certain tender rules that restrict the ability of consortiums participating in the first round to then reshuffle, if needed.

Pricing policy regulations expected from RAE, the Regulatory Authority for Energy, ahead of binding offers, will be crucial to how the tender plays out as these rules will determine the project’s earnings potential and level of bids.

Gas firms look to hydrogen for maintenance of EU funding

Natural gas distribution and trading companies around Europe, including Greece, are turning to eco-friendly hydrogen in an effort to overcome European Commission financing prohibitions, following 2021, for fossil fuel-linked pipelines and other infrastructure.

Greece’s gas grid operator DESFA and gas utility DEPA are currently seeking ways to secure financial support for projects through EU funding and the European Investment Bank.

Converting these investment plans into eco-friendly projects by turning to hydrogen, a RES-generated fuel, is one alternative.

DESFA, counting on the experience of its main shareholders, Snam, Fluxys and Enagas – the trio’s Senfluga consortium controls the operator with a 66 percent stake – is examining the prospect of transmitting hydrogen through the national gas grid, the Greek gas grid operator’s chief executive Nicola Battilana told the four-day Delphi Economic Forum, ending tomorrow.

This DESFA investment plan could be revealed as part of the operator’s next ten-year business plan, now being put together.

DEPA chief executive Kostas Xifaras also spoke of the opportunities offered by hydrogen. The Greek gas utility and its Italian partner Edison are believed to be open to the prospect of establishing partnerships with third parties for hydrogen transmission through the prospective East Med pipeline.

Hydrogen has the potential to play a key role in energy transition and climate-change objectives, noted Aristotelis Chantavas, head of Enel Green Power Hellas.

Representatives of eight EU member states, Greece, Bulgaria, the Czech Republic, Hungary, Lithuania, Poland, Romania and Slovakia, among them Greek deputy energy minister Gerassimos Thomas, recently stressed the significance of maintaining EU funding support for natural gas projects.

 

DESFA trio may return to DEPA Infrastructure sale, Italgas link-up seen

Italgas, one of six bidders through to the second round of a tender offering DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization, intends to join forces with Snam, Fluxys and Enagas, the three members of the Senfluga consortium that acquired a 66 percent of Greek gas grid operator DESFA late in 2018.

The trio of companies controlling DESFA had expressed first-round interest in the DEPA Infrastructure sale but failed to show up for the procedure’s second round.

Snam, head of the Senfluga consortium with a 60 percent stake, is associated with Italgas as it has held a 13.5 percent stake since 2016.

Italgas is widely tipped to emerge victorious in the DEPA Infrastructure sale.

Besides Italgas, the five other qualifiers through to the second round of the DEPA Infrastructure sale are: EP Investment Advisors; First State Investments (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); Macquarie (MEIF 6 DI Holdings); and the Sino-Cee Fund & Shanghai Dazhong Public Utilities consortium.

Once they have signed confidentiality agreements, the six qualifiers will receive second-round texts and access to a virtual data room hosting DEPA Infrastructure data and information.

Senfluga allocates €500,000 to Greek health and non-profit sectors

Senfluga, the company owned by Italy’s Snam (54%), Spain’s Enagas (18%), Belgium’s Fluxys (18%) and Coupelouzos Group’s DAMCO ENERGY SA (10%), has allocated 500,000 euros for the Greek health system and non-profit sector, the company announced in a statement.

These Senfluga funds enabled the purchase of 90,000 isolation suits from a Chinese supplier. The medical material will be shipped to Greece in the next few days.

The donation is also aimed at supporting social initiatives advanced by foundations. Funds have already been primarily allocated to the national health system as well as NGOs such as ActionAid Hellas, Doctors of the World Greece and IASIS, which, together, have activated a helpline and are contributing to efforts made by the Greek State for relief and support measures.

Senfluga is the main shareholder of Greek gas grid operator DESFA with a 66 percent stake.

Italy’s Snam, Italgas face off in DEPA Infrastructure sale

Snam, Italy’s gas grid operator, and Italgas, the neighboring country’s biggest natural gas distribution company, have emerged as rivals, despite sharing common interests, in a Greek privatization offering a full stake in DEPA Infrastructure, a new entity formed by Greece’s gas utility DEPA.

The Snam group holds a 13.5 percent stake in Italgas. Also, the two companies have a common key shareholder, CDP Reti, holding a 28.98 percent stake in Snam and a 26.05 percent share of Italgas.

The showdown between Snam and Italgas could end up leaving both bidders out of the DEPA Infrastructure privatization, whose deadline for first-round expressions of interest expires today following a slight extension.

The participation of both players in the DEPA Infrastructure privatization would represent a violation of the sale’s terms, privatization fund TAIPED has already pointed out following a related query.

Fully aware of the situation, Snam has sought a solution. The Italian firm could form another consortium as it had done for the sale of Greek gas grid operator DESFA. Snam led a consortium, Senfluga, joined by Fluxys and Enagas, for the acquisition of a 66 percent stake of DESFA.

Two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to submit expressions of interest today. Two other funds, both undisclosed, one from China, the other from the Middle East, could also participate. Additional entries have not been ruled out.

Strong turnout seen for DEPA Infrastructure sale tomorrow

A solid build-up to tomorrow’s first-round deadline for a tender offering a full stake in DEPA Infrastructure, a new entity formed by gas utility DEPA, has indicated at least ten European operators as well as funds from beyond the continent will submit expressions of interest.

Snam, Fluxys, Enagas, Italgas, two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to turn up.

Two undisclosed funds, one from China, the other from the Middle East, are also believed to be among the prospective bidders.

Candidates see DEPA Infrastructure’s investment plan as an opportunity for prospective synergies. Budgeted at 400 million euros, it envisions the development of a series of pipeline projects and other infrastructure in the wider southeast European region over the next five years.

Snam, Fluxys and Enagas, who formed a consortium named Senfluga to acquire a 66 percent of Greek gas grid operator DESFA in 2018, are expected to move independently for the DEPA Infrastructure tender’s first round, fearing antitrust regulations, before regrouping later on.

DESFA wants key role in country’s infrastructure projects

Gas grid operator DESFA, controlled by Senfluga, a consortium formed by Snam, Enagas and Fluxys for their acquisition of a 66 percent stake of the operator in 2018, is determined to play a leading role in all the country’s infrastructure projects as well as Greece’s wider natural gas-related developments.

“We see our role as being that of the leader in Greece’s gas sector and the wider region. We are interested in every gas project and want to be able to claim it. We also have the know-how and strong shareholders to play such a role,” a DESFA official told energypress.

According to sources, DESFA’s emergence as a prospective buyer of DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization procedure, prompted officials to slightly extend the sale deadline.

More specifically, Snam, the Senfluga consortium’s chief member with a 54 percent stake, requested a deadline extension for the DEPA Infrastructure as it has yet to decide on its partners for this bidding quest. Enagas and Fluxys each hold 18 percent stakes in Senfluga. The Copelouzos group’s Damco recently joined this consortium, buying a 10 percent stake.

DESFA’s influence is also believed to have persuaded officials to delay a decision on whether to classify the development of a natural gas storage facility at a depleted offshore gas field in the south Kavala region as a national or independent grid project.

Snam, Enagas and Fluxys are part of the six-member Trans Adriatic Pipeline (TAP) consortium.

DESFA, which has signed a Memorandum of Understanding for the Alexandroupoli FSRU, is now seriously considering to acquire a 20 percent stake in this venture, headed by Gastrade.

Other projects being considered by DESFA include a 175 million-euro Cretan LNG terminal that promises to resolve the island’s energy sufficiency concerns, as well as a 57.3-km gas pipeline connection linking the Thessaloniki area with North Macedonia, already included in the operator’s ten-year strategic plan.

 

Gov’t to hasten hydrogen market development amid investment interest

Procedures leading to the establishment of Greek hydrogen market appear set to progress faster than expected, the government’s strategic decision for greater renewable energy penetration of the energy market, investment interest and Germany’s upcoming EU presidency being catalysts. The government will aim to implement related regulatory framework by July.

Hydrogen tariffs, sector support, technical prerequisites for the infusion of hydrogen into the natural gas network, as well as the determination of maximum mix levels for the two fuels are among the issues included in the new framework, to be accompanied by a sustainability study on related facilities.

Feasibility studies examining the level of competitiveness of such infrastructure as well as costs do not exist at present. They need to be conducted so as to enable authorities to determine the number of units that can enter the Greek market.

Hellenic Petroleum (ELPE) has publically expressed interest to develop the country’s first hydrogen refueling station for vehicles. Greek utility DEPA and Italy’s Snam have also expressed interest. Snam reiterated its interest at a New Year company event staged yesterday by Greek gas grid operator DESFA. Snam is a main shareholder, along with Enagas and Fluxys.

A recent McKinsey study commissioned by Snam for the Italian market showed that hydrogen can cover 23 percent of domestic energy demand in 2050 amid a 95 percent decarbonized market.

Greece looks to build on Italian East Med interest at Cairo event

Energy minister Costis Hatzidakis will be looking to build on yesterday’s interest expressed by Greek gas grid operator DESFA’s main shareholders – Snam, Enagas and Fluxys – in the planned East Med gas pipeline project, especially Italy’s Snam, when he meets with regional counterparts at the Eastern Mediterranean Gas Forum in Cairo, an event encouraging collaboration on gas trade in the region.

The energy ministers of Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority are scheduled to participate at the Cairo event.

Snam chief executive Marco Alvera expressed particular interest in the East Med gas pipeline at a meeting yesterday involving Greek Prime Minister Kyriakos Mitsotakis and the chiefs of the Italian company’s DESFA partners, Enagas and Fluxys.

Snam’s interest in the prospective East Med gas pipeline, to carry natural gas from Cypriot and Israeli fields to the EU via Italy, follows that of Energean and represents further investor confidence in the sustainability of the pipeline as it possesses commercial appeal for gas producers in the east Mediterranean as well as gas sales.

Participants at the Eastern Mediterranean Gas Forum are hoping the event is upgraded into a transboundary organization for gas cooperation. If an agreement on a forum charter is achieved, a signing ceremony will take place in Cairo tomorrow.

Besides participating at the forum, Hatzidakis, Greece’s energy minister, has also lined up meetings with his Cypriot, Israeli and Egyptian counterparts, Giorgos Lakkotrypis, Yuval Steinitz and Tarek el-Molla, respectively, for talks on the next steps needed to develop the East Med pipeline.

In addition, Hatzidakis will discuss prospective electricity grid interconnections between Greece and Egypt and also meet with Italy’s economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, who recently forwarded a letter of support for the East Med project to his Greek counterpart.

Operator DESFA seeks role in Greek infrastructure projects

Greek gas grid operator DESFA, driven by the three-member consortium of Snam, Enagas and Fluxys now controlling the company with a 66 percent stake, appears determined to stretch beyond its operator role and become one of the biggest and most pivotal players in the domestic energy market, judging by its interest in major Greek-related natural gas projects now in progress.

According to energypress sources, DESFA’s administration is looking to acquire stakes in three key energy infrastructure projects: the prospective floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece; the planned underground gas storage facility at a depleted natural gas field in the offshore south Kavala region; and DEPA Infrastructure, one of gas utility DEPA’s two new corporate entities heading for privatization.

The chief executives of Snam, Enagas and Fluxys, major European operators also holding respective stakes in the TAP project, met yesterday with Greek Prime Minister Kyriakos Mitsotakis.

The officials requested first-hand information on the government’s energy market decisions following the delivery of a new and more ambitious National Energy and Climate Plan and the signing of a trilateral agreement between Greece, Cyprus and Israel for the East Med gas pipeline.

The Greek operator’s controlling consortium also presented investment plans supporting the country’s decarbonization strategy and aspirations to become a regional energy hub.

DESFA labor agreement near, payroll for sub-contracted workers

Snam-Fluxys-Enagas, the three-member consortium that acquired control of Greek gas grid operator DESFA approximately one year ago, is close to finalizing a collective labor agreement with the operator’s union group.

The operator’s administration intends to soon start an appraisal process for sub-contracted workers who have offered their services to DESFA for years but have been kept off the company payroll.

The administration will seek to establish direct labor ties with all staff members organically linked to the operator. An estimated 350 workers belong to this category.

 

 

 

 

Italian energy firms eyeing array of local investments, PM in Italy

Italian investors are displaying widespread interest for energy investments in the Greek market, including possible stakes in distribution network operator DEDDIE/HEDNO, power grid operator IPTO, gas utility DEPA’s two new entities DEPA Trade and DEPA Infrastructure, as well as joint ventures in wind energy stations, electric vehicle projects and smart grids.

Deputy energy minister Gerassimos Thomas, joining Prime Minister Kyriakos Mitsotakis on an official visit to Rome today, is expected to be informed of this Italian investment interest. Thomas is scheduled to meet with Italian economic development minister Stefano Patuanelli.

The Greek Prime Minister, to meet with his Italian counterpart Giuseppe Conte, can also expect to hear of this Italian investment interest during talks which, besides the refugee crisis, will also address cross-border energy projects such as TAP and East Med.

Snam maintains the most emblematic of Italian investments in the Greek market at present with a 66 percent stake in gas grid operator DESFA, including control of the country’s natural gas transmission and storage infrastructure.

Italian firms are regarded as pioneers in a number of green-energy domains, including smart grids, electric vehicle recharging station installations along highways, even wave power projects.

Just days ago, a consortium comprising Eni, Fincantieri and Terna announced it would commercially develop its pilot project Inertial Sea Wave Energy Converter (ISWEC) for wave energy generation, initially at small Italian islands, followed by projects abroad.

The Greek Prime Minister and his energy deputy will also meet with Italian entrepreneurs, including Eni gas e luce chief executive Alberto Chiarini.

Italy’s Terna, one of Europe’s biggest transmission system operators, is believed to be interested in acquiring a stake of IPTO and its Ariadne subsidiary, project promoter of the submarine Crete-Athens grid interconnection.

Enel is considering moves into networks, renewable energy investments and the electric vehicles sector.

Italgas, Italy’s biggest gas distributor and the continent’s third biggest, appears interested in DEPA Infrastructure. Italgas is believed to have reached a preliminary agreement to acquire fellow Italian company Eni gas e luce’s 49 percent stake and management rights in EDA Thess, covering the Thessaloniki and Thessaly areas.

Eni, increasing its involvement in pioneering projects, including wave energy, is believed to be looking to increase its Greek market presence, possibly through acquisitions.

 

 

Initial TAP market test justifies capacity boost to 20 bcm

The results of a non-binding, first-round market test concerning a possible capacity boost of the TAP pipeline, to bring Azeri natural gas to Europe via a northern Greece crossing, justify an increase from 10 bcm to 20 bcm.

The TAP consortium, along with Greek gas grid operator DESFA and Italy’s Snam, issued the market test’s results yesterday, as was scheduled.

Procedures for a second-round market test, whose result will determine whether a pipeline capacity increase will be carried out, and if so, its extent, are already underway. A final decision is expected within the first half of 2020.

The TAP consortium, SRG (Snam Rate Gas) and DESFA are launching a Coordinated Design Phase today as part of the second-round procedure.

During this phase, expected to last 12 weeks and be completed by January 13, 2020, TSOs (operators) will prepare further technical studies related to the capacity boost so that the project’s budget and construction schedule can be revised.

Interested parties will then be invited to declare capacity reservations.

The TAP project, approaching completion, promises to directly meet transportation needs for Azeri natural gas towards southern Europe and also offer reverse-flow capabilities from Europe.

 

Copelouzos’ DESFA 6.6% buy inspection ready by September

RAE, the Regulatory Authority for Energy, expects to complete its inspection of the Copelouzos group’s entry into gas grid operator DESFA early in September, enabling the agreement’s completion.

Earlier this month, the Copelouzos group’s Damco agreed to buy a 10 percent stake of Senfluga, a consortium formed by Snam, Enagas and Fluxys for the acquisition of a 66 percent stake of DESFA last year. This promises to offer Damco a 6.6 percent share of DESFA.

RAE’s endorsement could be delayed beyond early September if the authority requests further details on the agreement, some sources warned.

Damco’s decision to acquire a 6.6 percent stake of DESFA, officially announced on August 5, signals the Copelouzos group’s interest for a wider association with Snam, Enagas and Fluxys in international infrastructure projects.

The Senfluga consortium was established with Snam as its main shareholder, holding a 60 percent stake, joined by Enagas and Fluxys, each with 20 percent stakes.

The Copelouzos group, in association with Gaslog, an international LNG carrier run by Panagiotis Livanos, has launched an effort for the development of an FSRU in Alexandroupoli, northeastern Greece. Greek gas utility DEPA, its Bulgarian peer Bulgartransgaz, and private investors are also expected to become involved in this project.

Highlighting the domestic natural gas market’s growing potential, DESFA is also eyeing an imminent tender for the development of an underground gas storage facility at a depleted natural gas field in the offshore South Kavala region.

 

Copelouzos acquires 10% of DESFA consortium Senfluga

The Copelouzos group’s Damco has agreed to buy a minority 10 percent share of Senfluga, a consortium formed by Snam, Enagas and Fluxys for the acquisition of a 66 percent stake of Greek gas grid operator DESFA last year, all sides involved have confirmed in a joint statement. The agreement was reached for a price of 56 million euros, sources informed.

Until now, Snam held a 60 percent stake in Senfluga, while Enagas and Flyxys have each held 20 percent shares. This consortium bought a 66% share of DESFA for an amount of €535 million last year.

“The Damco investment is the result of long and constructive dialogue between the two sides and has been built in accordance with the same terms and conditions applied for Senfluga’s acquisition of [the 66 percent] DESFA [stake] and in compliance with the existing regulatory framework,” the statement noted.

The agreement reflects a wider collaboration established between the Copelouzos group and the three European companies for international natural gas infrastructure projects.

Just months ago, Damco submitted a joint bid with Snam, Enagas, as well as Gaslog, to a tender for construction of LNG import infrastructure in Cyprus.

WACC, revenue and expense figures for DESFA this month

RAE, the Regulatory Authority for Energy, appears set to adopt a middle-of-the-road solution for gas grid operator DESFA’s weighted average cost of capital (WACC) for the current regulatory period (2019-2022) as well as the operator’s revenue and expense recognition.

The energy authority has decided on an 8.22 percent WACC figure for 2019, which will drop to 7.4 percent in 2022, according to energypress sources. This represents a drop in the gas grid operator’s WACC figure for the previous period,  which stood at 9.25 percent.

As for the operator’s expenses, RAE is seeking to keep their recognition level low in order to subdue tariffs. Even so, many expenses have been recognized, sources informed.

As for the recognized revenues, RAE and the operator’s new owners, the Snam-Fluxys-Enagas consortium, have been miles apart over protracted talks. RAE has insisted that tariffs paid by consumers for various regulatory services need to also include revenues stemming from miscellaneous operator activities.

Final decisions for the operator’s WACC and recognized revenues and expenses are expected this month.

RAE, DESFA owners at odds over tariff, cost, revenue figures

RAE, the Regulatory Authority for Energy, and the new DESFA board appointed by the Snam-Enagás-Fluxys team that acquired a 66 percent stake in Greece’s gas grid operator last year have yet to find common ground on tariff revisions for a four year-period that already commenced on January 1.

The Greek energy authority has yet to endorse Revenue Requirement (RR) and Weighted Average Cost of Capital (WACC) figures for this four-year period, which is generating uncertainty for the new owners.

RAE insists costs associated with additional amenities that have been provided to full-time staff over the years  should not be factored into the calculations, according to sources.

RAE is obviously seeking to restrict the operator’s officially recognized costs in order to keep tariffs low now that the gas grid operator’s privatization has led to an annual total of 14 monthly paychecks for staff on the payroll, as is the case for all private sector enterprises,  from the previous 12 applying to public sector firms.

DESFA’s new administration is pushing for the opposite. The operator’s new ownership does not want to cease offering DESFA employees their customary amenities but wants to recover these through tariffs.

As for revenue matters, the current gap between the two sides appears to be wider. For example, DESFA’s new administration regards a recent gas pipeline maintenance contract signed by the operator and TAP as a supplementary entrepreneurial activity whose resulting revenues should not be factored into the tariff calculations.

 

DESFA external workers to be hired ahead of ownership transfer

A payroll inclusion demand by unions for external associates employed by gas grid operator DESFA and currently paid through sub-contract and freelance arrangements appears set to be accepted by authorities ahead of the operator’s transfer to its new owners, a consortium comprising Snam, Fluxys and Enagas.

DESFA has forwarded a request on the matter to RAE, the Regulatory Authority for Energy. Employees covering operator needs on a continual basis are expected to be added to the DESFA payroll.

It is believed RAE will approve the inclusion, on the DESFA payroll, of half the number of 350 external associates, in compliance with the new owners, while the payment terms of all these staff members will be reviewed.

A DESFA union and the Panhellenic Energy Organization (POE) have been applying pressure over the issue. POE staged a 24-hour strike yesterday.

Besides increasing DESFA’s operating costs, the transfer of external associates onto the company payroll will also require its owners to pay all newly added employees 14 monthly salaries per year, instead of 12, as is the case for all public sector firms following bailout revisions. DESFA’s transfer to its new owners will subject the operator to private-sector labor terms.

TAIPED privatization fund officials are rushing to complete the DESFA sale’s ownership transfer by the end of the year, which would inject 251.3 million euro’s into the Greek State’s coffers. Co-owner ELPE (Hellenic Petroleum) stands to receive 283.7 million euros. Snam, Fluxys and Enagas acquired a 66 percent stake of DESFA for 535 million euros.

Authorities have already endorsed the operator’s certification under its new owners, WACC figures, as well as a 10-year development plan.

The setting of DESFA’s new overall revenue requirement and approval of new board members remain pending but are expected to be settled within the next few days. The three-member consortium has forwarded the names of its board proposals.

Also, it is believed managers at the operator are currently being interviewed as part of DESFA’s personnel restructuring procedure.

 

Energy authority’s DESFA certification paves way for sale’s completion

RAE, the Regulatory Authority for Energy, has delivered its pending certification needed for the completion of a gas grid operator DESFA sale, giving Snam, Fluxys and Enagas, the winning bidding team, a 66 percent stake, sources have informed.

This move sets the stage for the transfer of DESFA’s 66 percent to the buying trio. RAE also approved the gas grid operator’s WACC figures at a board meeting yesterday.

Snam, Fluxys and Enagas, as well as their respective Italian, Belgian and Spanish embassies in Greece, had raised concerns over delays holding back the sale procedure’s final stage.

State privatization fund TAIPED is eager to complete the transaction, which will inject 251.3 million euros of the sale’s total amount of 535 million euros into its coffers. Hellenic Petroleum (ELPE), DESFA’s other shareholder, stands to receive 283.7 million euros.

TAIPED’s leadership regards the DESFA privatization as a success. A preceding sale effort, staged four years earlier, was cancelled to make way for a new attempt that ended up generating a higher sale price.

RAE has yet to endorse DESFA’s 10-year national gas grid development plan, submitted approximately a year and a half ago.

The privatization fund is now awaiting the energy ministry’s submission to parliament of a draft bill needed for gas utility DEPA’s split into two companies, DEPA Trade and DEPA Infrastructure, ahead of its privatization. The energy ministry plans to submit this bill in January.

DESFA, Snam also considering Greek-Italian pipeline crossing

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

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

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

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

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

 

Snam officials in Athens pushing for DESFA deal completion

A team of officials representing Snam, the Italian energy firm heading an all-European gas operator consortium named the preferred investor for the acquisition of a 66 percent stake of DESFA, Greece’s natural gas grid operator, is in Athens to apply pressure for the completion, as soon as possible, of pending issues leading to the deal’s finalization.

Spain’s Enagás Internacional and Belgium’s Fluxys are the consortium’s two other members.

One of four pending issues, a stalled agreement between DESFA and Fyrom (Former Yugoslav Republic of Macedonia) state-run energy company MER Skopje for the development of a pipeline interconnection intended to link the gas grids of the neighboring countries, appears to have regained momentum. Snam has pushed for the DESFA-MER agreement to be sealed.

DESFA and MER Skopje signed a Memorandum of Cooperation for the project in 2016 but Greek licensing procedure delays and an initiative taken last year by Russian entrepreneur Leonid Lebedev’s Windows International Hellas for a license to construct a rival natural gas pipeline from Thessaloniki to Fyrom, slowed down the process. RAE, Greece’s Regulatory Authority for Energy, still needs to make a final decision.

Another pending issue, DESFA’s corporate split from gas utility DEPA, is the most challenging of all. DESFA will also need new certification, as a national gas grid operator, under its new ownership.

Tariff revisions represent the fourth pending issue. DESFA has proposed a WACC figure of 9.27 percent but RAE does not appear keen to offer its endorsement. The authority has made note of the WACC figure at IPTO, the power grid operator, ranging between 7 and 7.5 percent.

 

 

Upgraded LNG terminal set for launch amid US interest

A third storage tank added to an LNG terminal at Revythoussa, an islet close to Athens, is set for its commercial launch between late October and early November, slightly behind schedule.

The new tank, which promises to increase the facility’s overall capacity to 225,000 cubic meters, almost double its previous size, is currently undergoing test runs.

The facility’s capacity upgrade represents a pivotal development for the LNG terminal, a key asset belonging to DESFA, the natural gas grid operator, whose 66 percent is being privatized. A consortium comprised of Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys has emerged as the winning bidder with a 535 million-euro offer.

DESFA is already engaged in talks with Greek and foreign firms interested in utilizing the upgraded facility and reserving capacities. They include two US firms, Cheniere and Tellurian, amid initiatives being taken for American gas imports into Greece. Cheniere and Tellurian have enquired about usage fees, capacities, technical details and port capabilities.

All firms interested in utilizing the upgraded LNG terminal at Revythoussa have made clear they are eyeing both the Greek market and the wider region to the north.

 

DESFA buyers agreement soon, RAE certification the sale’s final step

An endorsement by the European Commission’s Directorate-General for Energy of the winning bidding scheme’s offer in an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator, paves the way for the signing of a shareholders agreement, which, according to sources, could take place by the end of this week at the state privatization fund TAIPED’s Athens headquarters.

An all-European investment team comprising Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys emerged as the tender’s winning bidder last summer with a 535 million-euro offer.

Once the shareholders agreement has been signed, RAE, Greece’s Regulatory Authority for Energy, will need to offer its certification for the new owners. This step, the last in the overall sale procedure, is expected soon.

This privatization effort, which has so far lasted over five years, was launched in 2013 with an unfinished initial tender won by Azerbaijan’s Socar.

The Greek State, offering 31 percent of DESFA’s 66 percent being sold, stands to receive 251.3 million euros of the 535 million-euro total. ELPE (Hellenic Petroleum), selling the other 35 percent, will receive 283.7 million euros.

The Snam-Enagás-Fluxys team will be entitled to appoint six of the new DESFA board’s eleven members, the Greek State, to hold a 34 percent stake of the gas grid operator, will be given three board seats, while a further two board members will be appointed based on agreements between the Greek State and the investors.

The Greek State, which will reserve the right to appoint the board’s president, will also hold veto rights for matters such as capital increases and international projects.

The incoming investment team will not be permitted to operate other rival ventures in Greece, will be expected to carry out a 330 million-euro investment program, and will not be able to transfer shares to third parties during the first two-year period and until the investment program has been completed.

 

RAE starts DESFA sale inspection process with auditor still at work

A dossier submitted by the winning bidding team of an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator, to the Court of Auditors may still be undergoing inspection but RAE, the Regulatory Authority for Energy, has already begun preliminary work concerning its own certification for the new owners.

RAE will examine the winning team’s portfolio for any complications, but the certification process should be swift as the investment team is comprised entirely of EU firms – Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys. Authorities are already confident all three meet the sale’s requirements.

The certification process was more complicated in the recent sale of a 24 percent of IPTO, the power grid operator, to China’s SGCC, as the incoming strategic investor was a non-EU firm.

As soon as the Court of Auditors has completed its work, the investment trio’s dossier will be transferred to RAE for inspection. It will also be forwarded to the European Commission’s Directorate General for Competition for a concurrent approval procedure, the aim being to complete the sale’s overall inspection process as swiftly as possible.

Snam officials were in Athens last week for a first-hand update on the progress being made. Officials of the Italian enterprise met with  TAIPED (state privatization fund) and other authorities involved in the sale’s ownership transfer process.

An important first step was made last month when shareholders at ELPE (Hellenic Petroleum) approved the petroleum firm’s 35 percent sale of the overall 66 percent DESFA stake offered to investors through the international tender. The privatization fund contributed the other 31 percent of DESFA on behalf of the Greek State.

The signing of a share purchase agreement (SPA) will represent the next step once the Court of Auditors, RAE and the Directorate General for Competition in Brussels have completed their inspections.

TAIPED and the winning investment team are then expected to sign a finalized sale agreement for the transfer of DESFA’s 66 percent to the buying trio for a price of 535 million euros.

The deal’s finalization is expected by the end of December. Until then, the current DESFA board is not permitted to maintain any contact with the new buyers for provision of any information concerning the Greek natural gas grid operator.

 

 

 

.

 

 

 

 

DESFA buyers in Athens for RAE, TAIPED meetings

Officials representing Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys, the three members of the winning consortium in an international tender offering a 66 percent stake of DESFA, the natural gas grid operator, are expected in Athens this week for meetings with TAIPED, the state privatization fund, and RAE, the Regulatory Authority for Energy, concerning the procedure leading to the agreement’s finalization.

The meeting between the consortium officials and RAE will focus on the authority’s certification of DESFA, based on the operator’s new ownership. RAE will inspect the winning bidder’s portfolio for any complications, which should be a swift procedure as the investment team is comprised entirely of EU firms.

The certification process was more complicated in the recent sale of a 24 percent of IPTO, the power grid operator, to China’s SGCC, as the incoming strategic investor was a non-EU firm.

Dossiers of the DESFA sale will then need to be submitted to the European Commission’s Directorate General for Competition and Directorate General for Energy for approval. The former will need to endorse the sale and the latter must provide certification.

Besides the RAE meeting, the winning consortium’s representatives will, during their visit this week, also submit a DESFA acquisition dossier to Greece’s Court of Auditors. This is expected by tomorrow, following translations, into Greek, of all the related documents. The Court of Auditors is expected to offer its approval in June or July.

These steps represent part of the road map leading to DESFA’s share purchase agreement (SPA), expected by the end of December.

If the current steps are successfully completed, then TAIPED and the investors will sign an agreement for a transfer of DESFA’s 66 percent to the Snam-Enagás-Fluxys consortium for a sum of 535 million euros.

Of this amount, the privatization fund, selling 31 percent of DESFA on behalf of the Greek State will receive 251.3 million euros while ELPE (Hellenic Petroleum), holding a 35 percent stake of DESFA, stands to receive 283.7 million euros.

 

Six steps to DESFA sale completion, expected towards end of year

The sale agreement for DESFA, the natural gas grid operator, is expected to be completed towards the end of the year, pundits believe, enabling the international tender’s winning bidder – a consortium comprised of Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys – to take control of a 66 percent stake acquired for 535 million euros.

Until then, six steps are needed. The first of these was taken yesterday at an ELPE (Hellenic Petroleum) meeting, during which company shareholders approved the firm’s 35 percent stake of DESFA contributed to the sale. TAIPED, the state privatization fund, offered the other 31 percent on behalf of the Greek State.

The second step will entail the submission of the sale’s dossier to Greece’s Court of Auditors with all documents translated into Greek. This step is expected to be taken within May, sources informed. The Court of Auditors should offer its approval in June or July, which would enable the deal to be finalized by the end of December.

Then, for the third step, a share purchase agreement (SPA) needs to be signed by the buying consortium and TAIPED. This will be immediately followed by RAE (Regulatory Authority for Energy) certification of DESFA with the new owners on board. The certification process will essentially provide RAE with the opportunity to inspect the incoming consortium’s members for any irregularities.

This part of the overall process should be completed swiftly. It proved more complicated in the recent sale of a 24 percent of IPTO, the power grid operator, to China’s SGCC, as the incoming strategic investor was a non-EU firm.

The fifth step, once the new-look DESFA has been certified by RAE, will involve submitting the sale’s dossier to the European Commission’s Directorate General for Competition and Directorate General for Energy. The former will need to endorse the sale and the latter must provide certification.

Once these five steps have been taken, TAIPED and the three-member consortium will be able to sign a finalized agreement for the transfer of a 66 percent stake of DESFA to the strategic investors and a concurrent payment of 535 million euros to TAIPED.

As all three consortium members are European firms, the overall process is expected to proceed swiftly, pundits anticipate.

The DESFA board will not be permitted to contact the buyers and inform on any company activities until the sale has been completed.

 

 

 

 

DESFA sale finally appears to have been achieved, six years on

A total of roughly six years, two international tenders, political upheavals and European Commission intervention were needed to conclude the apparent 66 percent sale of DESFA, the natural gas grid operator.

TAIPED, the state privatizaton fund, yesterday named a consortium led by Italy’s Snam and including Spain’s Enagás Internacional and Belgium’s Fluxys as the preferred bidder, following its 535 million-euro second-round offer.

DESFA’s two sellers, TAIPED, selling 31 percent on behalf of the Greek State, and ELPE (Hellenic Petroleum), selling 35 percent, have accepted the offer.

It also needs to be endorsed by the Court of Audit as well as the competition authorities in Athens and Brussels. Pundits do not anticipate any surprise developments, as was the case with the preceding DESFA tender, whose preferred bidder, Azerbaijan’s Socar, faced issues.

Socar had offered 330 million euros for a 66 percent stake of DESFA, five years ago, when Greece’s country risk factor was higher. Also, the operator’s current cash deposits, estimated at around 200 million euros, are considerably greater than they were during the previous sale effort.

ELPE stands to receive 283.7 million euros, while TAIPED will receive 251.2 million euros from the Snam-led consortium’s 535 million-euro offer.

Snam, Fluxys and Enagás hold 20 percent, 19 percent and 16 percent stakes, respectively, in the TAP consortium that is developing the Trans Adratic Pipeline, to supply natural gas from Azerbaijan to central Europe, via Turkey, Greece, Albania and Italy. Its launch is expected in 2020. The consortium’s trio sees DESFA as a platform for wider regional interests.

 

 

 

 

TAIPED names Snam-led team as preferred DESFA investor

A consortium comprised of Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys has been nominated as the preferred investor for the acquisition of a 66 percent stake of DESFA, Greece’s natural gas grid operator, TAIPED, the state privatization fund announced today.

The fund’s board has unanimously accepted an improved financial offer made by the consortium worth 535 million euros for DESFA’s 66 percent – 31 percent from the privatization fund and 35 percent from ELPE, Hellenic Petroluem, it announced.

The board of directors of ELPE has also accepted the aforementioned offer, expected to be endorsed in due at an extraordinary general shareholders’ meeting.

The file of the tender process will be submitted to the Court of Audit for a pre-contractual audit and the relevant transaction documents will be prepared after a court approval. The completion of the transaction is conditional to the competent authorities’ approvals.

Alantra Greece Corporate Advisors S.A. and Alpha Bank S.A. acted as financial advisors for TAIPED and Koutalidis Law Firm, Clifford Chance LLP and Holman Fenwick Willan LLP as legal advisors.

 

 

 

 

SNAM’s wider ambitions raise consortium bid for DESFA to €535m

A consortium led by Italy’s Snam and including Spain’s Enagás Internacional and Belgium’s Fluxys, which, it has been revealed submitted a 535 million-euro second-round offer to an international tender offering 66 percent of DESFA, the natural gas grid operator, plans to invest in projects worth billions, if it is declared the sale’s prefered bidder.

These projects include links between DESFA’s natural gas network and that of Albania, whose development has already been awarded to Snam; the TAP pipeline running horizontally through Greece, Albania and across the Adriatic Sea to Italy, a project in which the Italian firm holds a 20 percent stake; as well as a prospective vertical axis to link the Bulgarian, Romanian, Serbian and Hungarian grids before reaching Austria’s Baumgarten gas hub.

The prospects offered by these projects spurred the Snam-led consortium to exceed by 30 to 35 million euros the value of DESFA’s 66 percent, estimated at roughly 500 million euros by two independent valuators commissioned by TAIPED, the state privatization fund, according to energypress sources.

As a result, the consortium comprised of Snam, Enagás and Fluxys appears likeliest to emerge victorious from the DESFA tender. A call by TAIPED for a further improvement to the second-round offers made cannot yet be ruled out.

Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

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

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

Last August, Snam and Albania’s Albgaz signed an MoU to begin developing Albania’s infrastructure. This agreement is directly related to the development of Albania’s natural gas market and the TAP pipeline crossing the country.

TAP represents part of the Southern Corridor, stretching from Azerbaijan’s Shah Deniz 2 gas field and running through Georgia, Turkey, Greece and Albania before ending in Italy via the Adriatic Sea.

“The Italian firm is determined to gain DESFA control. Besides being a TAP shareholder and having taken on development of Albania’s natural gas network, Snam is also aiming to develop the vertical corridor linking Bulgaria, Romania, Serbia and Hungary,” an official who is closely following developments told energypress.

Though still at the planning stage, the vertical corridor has been classified a Project of Common Interest (PCI) by the EU.