DEPA, rebounding in wholesale market, looks to capture 40%

Gas utility DEPA appears set to regain lost ground in the wholesale market as a result of reduced gas prices negotiated over the past few months with international suppliers.

Talks for new deals between the company’s administration and customers, primarily electricity producers and retail gas firms, have indicated DEPA’s market share will increase this year.

DEPA expects a market share rise to a level of approximately 40 percent, up from 33 percent at the end of 2019.

The Greek gas utility recently renegotiated improved supply deals with Russia’s Gazprom and Algeria’s Sonatrach, while a favorable verdict by the ICC (International Court of Arbitration) in an overcharging case against Botas, Turkey’s state-run crude oil and gas company, came as an added boost. DEPA should receive a retroactive amount of around 200 million euros, according to an initial estimate.

DEPA’s revised Gazprom supply deal limits oil-indexed gas pricing to 60 percent of the total order. The other 40 percent will be priced in accordance with the Dutch gas trading platform TTF, one of Europe’s biggest hubs, where prices are significantly lower.

In mid-January, TTF price levels for LNG shipments in February were 14 euros per MW/h, including Greek gas grid entry costs, compared to over 20.5 euros per MW/h for pipeline gas, a 45 percent difference.

DEPA is currently also renegotiating the terms of its take-or-pay clause with Gazprom, requiring the Greek utility to absorb at least 80 percent of its annual contracted amount of 2 billion cubic meters, or 1.6 bcm.

As for Sonatrach, supplying LNG to DEPA, the Greek utility is believed to have reduced amounts and also achieved a discount.

DEPA’s contract with Gazprom, the utility’s biggest in terms of volume, runs until the end of 2026 with an option for a 10-year extension. ICC

The Greek gas utility’s second-biggest contract is with Azerbaijan’s Socar, running until 2040 for one bcm per year and a minimum level of 0.9 bcm. The Turkish Botas contact is DEPA’s third biggest, securing 0.75 bcm, annually, until 2021.

PPC asked to explore Crete energy sufficiency solutions until 2022

The main power utility PPC, in ongoing exchange with RAE, the Regulatory Authority for Energy, has reiterated its concerns of a potential energy sufficiency threat on Crete until 2022, when the anticipated launch of grid interconnections is expected to have resolved the problem.

A study conducted by RAE in conjunction with DEDDIE, the Hellenic Electricity Distribution Network Operator, has forecast a capacity deficit for the island in the lead-up to the island’s grid interconnections.

Responding to a RAE request calling on PPC to explore possible solutions, the power utility has asked for further clarification. The power utility wants specific figures concerning Crete’s capacity shortage threat.

The energy authority apparently wants PPC to work on proposals covering three scenarios for additional electricity generation of 50, 100 and 150 MW.

Solutions contemplated so far include a PPC tender for the installation of additional wind energy facilities as well as proposals by Gek Terna and Socar for the development of small-scale LNG-fueled power stations as back-up solutions.

However, at this stage, it remains unclear if future market conditions can secure the sustainability of such back-up LNG units once Crete’s grid interconnection projects are launched.

 

 

Tesla presents microgrid plan for non-interconnected islands

US energy company Tesla has presented a plan for the development of a microgrid on Greece’s non-interconnected islands at a meeting yesterday with Greek energy minister Giorgos Stathakis.

The Tesla proposal, a system dubbed Powerpack and based on solar panels and large-capacity batteries, has already been developed on American Samoa, unincorporated US territory including five main islands in the South Pacific Ocean, as a replacement for inefficient diesel-fueled generators consuming 1,400 liters of diesel per day.

Tesla’s system for American Samoa entailed installing solar panels with a 1.4-MW capacity and 60 Tesla Powerpacks for a battery energy storage capacity of 6 MWh.

Regarded as one of the world’s most advanced electricity microgrid solutions, this system ensures electricity supply for as many as three days without sunshine, while its batteries may be fully recharged in seven hours.

According to Tesla, the Powerpack system’s resulting energy cost ranges between 170 and 135 euros per MWh, which is 15 to 30 percent less than the cost of diesel-generator electricity, reaching 200 euros per MWh.

Tesla’s power-network proposal for Greece’s non-interconnected islands, growing into a major attraction for energy sector investors, is the latest following presentations by companies such as Enagas, Socar and EdF.

Qatar team in Crete to survey units for sufficiency proposal

A team of Qatar state-run energy company officials has arrived in Crete to survey the main power utility PPC’s diesel-fueled power station in the Atherinolakos region as part of the firm’s interest to offer a solution for Crete’s looming energy sufficiency threat as of 2020, when PPC will need to have withdrawn its diesel-fired power stations operating on the island.

The survey to be conducted by Qatari energy company technical officials will also include the Atherinolakos port facilities, intended to be utilized as a key part of the plan. The firm’s proposal entails the usage of a floating power station and electricity supply unit to be anchored at the Atherinolakos port for additional electricity generation on Crete. The vessel will include an LNG storage facility as well as a gasification unit, according to the Qatar firm’s plan.

At this crucial stage, given the little time remaining before the withdrawal of PPC’s old diesel-fired power stations on Crete, it still remains unclear how the government and RAE, the Regulatory Authority for Energy, will go about resolving the island’s energy sufficiency threat from 2020 onward.

As his most preferred choice, energy minister Giorgos Stathakis hopes the European Commission will offer a further operating extension for Crete’s existing power stations. If Brussels does not, then the old units will need to stop operating by December 31, 2019.

GEK Terna, Socar and Spain’s Enagas have also made proposals along the lines of the plan proposed by Qatar’s energy firm.

PPC currently operates three diesel-fueled power stations on Crete with a total capacity of 728 MW. Total electricity demand on the island is estimated at 630 MW.

A planned submarine cable link from Crete to the Peloponnese will provide a further 150 to 180 MW to the island, while a major-scale grid interconnection, to link Crete with Athens, will offer around 700 MW.

These interconnection projects have been delayed as a result of an ongoing dispute between Greek power grid operator IPTO and Euroasia Interconnector – a consortium of Cypriot interests heading a wider Greek-Cypriot-Israeli PCI-status interconnection project – for control of the Crete-Athens segment.

 

 

 

Socar, Qatari firm proposals for Crete energy sufficiency issue

LNG usage and the establishment of a floating regasification terminal for gas-fueled electricity generation at power stations are the common factors of at least two proposals to be presented this week to RAE, the Regulatory Authority for Energy, as possible solutions for the Crete’s looming energy shortage problem as of 2020.

An exemption to EU law concerning power station emission limits for local high-polluting units, such as those operating on Crete, is set to expire in December, 2019.

An Athens-Crete interconnection plan that would resolve resulting power insufficiency issues on the island has fallen behind schedule and prompted the need for solutions until the project’s launch.

Azerbaijan’s state-run energy firm Socar – possibly in partnership with Heron, which has been given permission to relocate a natural gas-fueled power station from provincial Thebes, slightly northwest of Athens, to Crete – is expected to present RAE a model implemented by the firm on Malta in 2016. The island country faced a similar energy situation to Crete. A gas storage facility (FSU) and floating regasification terminal and combinations of gas-based electricity production now provide 50 percent of electricity demand on Malta.

A representative of a state-run Qatar energy firm has also approached RAE for a solution entailing gas supply and electricity production via a floating terminal to be anchored off Crete.

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.

 

Major traders, Socar tipped to submit first-round ELPE bids

Two of the world’s biggest commodity traders, Dutch firm Vitol and Switzerland’s Glencore, will probably feature among the participants to officially express interest in ELPE’s (Hellenic Petroleum) international tender offering a 50.1 percent stake of the enterprise, according to latest information provided by sources.

The deadline for non-binding offers expires today following an extension of a previous May 18 deadline.

Besides the aforementioned commodity traders, Azerbaijan’s state-run energy firm Socar, joined by a European firm, possibly Spanish, is also tipped to declare non-binding interest in the bailout-required ELPE sale, sources have informed. This would represent a surprise development.

Socar had taken part in a previous DESFA (natural gas grid operator) sale and was declared the winning bidder before its long-running acquisition attempt was blocked by European Commission competition concerns.

News on the possible participation of major European energy players is not good. European petroleum groups such as Italy’s Eni, Hungary’s MOL, France’s Total, and, possibly, Spain’s Repsol, have reached decisions to not submit initial expressions of interest for the ELPE sale, according to energy market pundits.

A clearer picture on the sale’s preliminary turnout is expected later in the day when TAIPED, the state privatization fund, is expected to announce the list of first-round bidders.

 

 

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.

 

 

 

 

Bidders want greater clarity on DESFA future operating terms

Prospective investors looking to take part in Greece’s renewed tender offering a 66 percent stake of DESFA, the natural gas grid operator, have requested additional guarantees, presumably driven to do so by the eventual collapse of the previous tender for which Azerbaijan’s Socar had been declared the winning bidder before revenue-limiting measures imposed on the operator by the country’s then-energy minister played a key part in the sale procedure’s derailment.

Interested investors have requested additional guarantees so as to avoid any unpleasant legal framework surprises down the road such as those experienced by Socar when Panos Skourletis, the energy minister at the time, introduced measures limiting DESFA’s earning potential.

Guarantees demanded by the prospective bidders include an assurance that DESFA’s tariff levels and weighted average cost of capital (WACC) will remain unchanged until 2022. This demand clearly indicates the impact of the first DESFA tender’s developments on the follow-up sale attempt.

The investors also want further specification of terms concerning a recoverable amount of 350 million euros to be demanded from DESFA through tariff charges over a 20-year period. This demand is also linked to Socar’s bad experience.

Overall, potential investors are demanding absolute clarity on DESFA’s future operating conditions before any offers are made.

The new DESFA sale attempt has developed into a challenge of political dimensions for the Syriza-led coalition, whose moves proved instrumental in killing the initial sale attempt, launched by the country’s previous administration. The new tender will need to fetch more than the 400 million euros offered by Socar for DESFA’s 66 percent if it is to be branded a success.

The level of offers to be made by prospective investors will be determined by the level of clarity provided by Greek authorities on DESFA’s future operating terms.

Just days ago, a first-round deadline for non-binding offers was slightly extended to August 7 following the late emergence of an unidentified Greek-American investor who has expressed an interest in DESFA.

Belgium’s Fluxys and Dutch network operator Gasunie are expected to team up for a joint offer, while Italy’s Snam, possibly backed by a fund, is also regarded as a certainty. Spain’s Enagas also appears to be gearing up to join the list of interested parties.

 

Socar officials ‘know nothing’ about apparent DESFA interest

A recent claim by Greece’s Ambassador to Azerbaijan supporting that the country’s state-controlled energy company Socar is interested in taking part in an upcoming yet still-unannounced tender to offer a stake of DESFA, Greece’s natural gas grid operator, has been rejected by well-informed energypress sources and the Azerbaijani company itself.

The Greek ambassador in Baku, Dimitris Tsoungas, is said to have surprised officials at Socar, who apparently were informed of the energy company’s alleged interest in the forthcoming DESFA tender through an interview in which the Greek diplomat stated this claim.

DESFA was the winning bidder of a previous long-running DESFA tender offering 66 percent. That sale attempt collapsed in December.

One energypress source explained that the Greek ambassador’s claim may have come as part of an effort to generate a favorable climate ahead of energy minister Giorgos Stathakis’s visit to Baku for today’s 3rd Southern Gas Corridor Advisory Council, where the minister is expected to hold a series of talks with highly ranked European Commission officials, fellow ministers as well as financial institution officials.

Since the collapse of the initial DESFA privatization effort last December, Socar officials have contended that Azerbaijan’s bilateral ties with Greece remain unharmed.

However, the truth of the matter is that the current Greek government’s handling of the procedure, which included the implementation of revenue-limiting measures on DESFA prior to the tender’s eventual collapse, did not go down well in Baku.

Also, leading Greek officials, including Prime Minister Alexis Tsipras and President Prokopis Pavlopoulos, have turned down invitations for official visits to Baku over the past couple of years, citing various reasons.

Today’s visit to Baku by the energy minister is the first to be made by a leading Greek government official in quite a while.

 

 

Energy ministry to stage new DESFA tender offering 66%

The energy ministry has decided to stage a new tender for the sale of DESFA, the natural gas grid operator, offering a 66 percent stake, as was also the case with the initial long-running procedure that eventually collapsed late last year.

Prior to this latest decision, the ministry spent a couple of months examining inapplicable solutions such as the continuation of the preceding tender, in a bid to save time, or staging a tender that would retain 51 percent stake of DESFA for the Greek State.

Energy minister Giorgos Stathakis has now come to realize that there is no other option than to stage a new tender, energypress sources have informed.

This procedure will require between 16 and 18 months to complete, leaving a gap in this year’s planned privatization revenues, inevitable following the government’s failure to finalize a deal with Azerbaijani energy firm Socar, which emerged as winning – and only – bidder for a 66 percent stake of DESFA in 2013 at a price of 400 million euros.

Subject to ensuing revisions, including revenue-limiting measures, the Azerbaijani energy firm officially withdrew its interest on November 30 after refusing to extend a letter of guarantee for a third successive month.

If it were legally possible to continue the initial tender, the ministry anticipated it would have saved at least five months from the overall process. This time period will now be needed for preliminary work such as appointing an adviser and announcing the new tender.

Over the past few months, it had become somewhat of a common secret among energy sector insiders that DESFA’s administration acted as a key proponent in pushing the energy ministry towards seeking a continuation of the initial tender, the aim being to make the most of advanced talks with Belgium’s Fluxys.

Dutch operator Gasunie and Fluxys are among the candidates expected to express an interest in the follow-up DESFA tender. Offers for the operator’s 66 percent will most probably fall short of the 400 million euros offered by Socar in the initial procedure.

 

 

 

 

 

 

 

TAIPED to launch new DESFA tender, details not released

The energy ministry is keeping under wraps the details of its plan concerning the relaunch of an international tender to offer a stake of DESFA, the natural gas grid operator, including whether the 66 percent stake offered though the previous sale attempt will be reduced.

TAIPED, the state privatization fund, is waiting for final decisions to be made at the energy ministry before it proceeds with the tender’s declaration. Meanwhile, a letter of guarantee worth 40 million euros that had been provided by the Azerbaijani energy firm Socar, the winning bidder of the first and ultimately unsuccessful DESFA tender, has yet to be returned.

At this stage, it appears certain that a new tender will be launched immediately following the festive season.

Legal experts have informed that no obtacles should prevent the first tender from being nullified as it was completed in 2013, when Socar was declared the winning bidder. A final agreement, however, was never reached and the process recently collapsed after Socar decided not to further extend its letter of guarantee.

After winning the first tender, Socar was eventually joined by Italy’s Snam as a partner in the deal in response to European Commission intervention ordering the Azerbaijani firm to surrender at least 17 percent of the 66 percent stake of DESFA it had agreed to acquire. The sale effort was further complicated by Greek energy ministry measures imposed last summer that severely restricted the operator’s revenue potential.

According to sources, Socar and TAIPED have already agreed to terminate the first tender signed three years ago without any penalties. As the next step, the Greek privatization fund will need to return the letter of guarantee to Socar after having cleared the failed sale attempt of any prospective legal complications.

The equity stake of DESFA to be offered by ELPE (Hellenic Petroleum), which holds a 35 percent stake of the gas grid operator, is another isssue that needs to be resolved before the follow-up sale attempt proceeds.

Given the rapid developments in Greece’s energy market, a number of ELPE officials believe that the petroleum company needs to maintain its interests in the country’s gas infrastructure, including the LNG terminal on the islet Revythoussa, just off Athens. This perception could restrict the DESFA stake ELPE would be willing to offer for the tender’s relaunch. Certain ELPE officials admit they would be more prepared to sell ELPE’s stake in DEPA, the Public Gas Corporation, rather than DESFA.

Greek government officials are now expected to inform parties interested in the upcoming new DESFA tender of the new sale procedure. These include Belgium’s Fluxys and Romania’s Transgas.

If all goes according to plan, the new DESFA tender is not expected to be completed before September, 2017.

Government preparing to launch new DESFA tender

The Greek government and TAIPED, the state privatization fund, are preparing to launch a new international tender for the sale of a stake in DESFA, Greece’s natural gas grid operator, following the recent collapse of a long-running sale procedure through which the Azerbaijani energy firm Socar, joined later on by Italy’s Snam, were the candidate buyers for a 66 percent stake.

At this stage, it remains unclear how big a stake of DESFA will be offered through the new sale attempt.

Thoughts of keeping the original tender valid once negotiations broke down were expressed by the country’s international creditors, in a bid to save time, but this would not be legally feasible.

Officials at TAIPED informed energypress that, at best, the new tender will not be completed before the third quarter of 2017.

Though the original tender theoretically remains alive, it is now believed to be just a matter of days before TAIPED nullifies the procedure.

Over the past few days, energy minister Giorgos Stathakis, since his return from an official visit to New York City, has held talks with officials at TAIPED and ELPE (Hellenic Petroleum), which holds a 35 percent stake of the operator’s parent company DEPA, the Public Gas Corporation, also on the privatizations agenda.

Given the country’s rapid gas sector developments amid the sector’s ongoing market liberalization, a number of ELPE officials believe it is crucial for the oil company to maintain its presence in this domain’s infrastructure.

Greek government officials are now expected to inform parties that have expressed an interest in DESFA of the upcoming new tender. These include Belgium’s Fluxys and Romania’s Transgas.

Brussels pressures gov’t to seek DESFA tender extension

Pressured by the European Commission, Greek government officials are searching for ways to prolong the just-expired tender offering 66 percent of DEFSA, the natural gas grid operator, rather than relaunch a new procedure from scratch, in an effort to avoid wasting more time, which would delay other imminent privatizations, such as that of DEPA, the Public Gas Corporation.

Over the past few days, local legal experts have been working on the prospect of launching a new tender as a result of last week’s demise of the long-running DESFA sale attempt. However, the latest pressure applied by the lenders on Greek officials, as part of the bailout’s second review, has brought about a change of direction.

A continuation of the same tender would end the government’s hopes of retaining majority control of DESFA for the Greek State and selling a minority stake.

The country’s lenders are believed to have applied relentless pressure on the Greek government over the DESFA sale, demanding immediate action, as last week’s sale collapse creates a hole in Greece’s privatization revenues while also blocking prospective – and interlinked – sales, those of DEPA (65%) and ELPE (35%).

DESFA is a wholly owned DEPA subsidiary and ELPE holds a 35 percent stake in DEPA.

The DESFA matter needs to be cleared up before a privatization tender for DEPA can be launched, pundits have highlighted, as an accurate evaluation of DEPA is not possible the way things stand.

The DESFA sale saga may still not have stuck major-crisis level considering the mild climate following a meeting between Greece’s recently appointed energy minister Giorgos Stathakis and Maros Sefcovic, the European Commission vice president responsible for Energy Union. However, a vicious cycle of further delays will need to be avoided.

The Greek government failed to sell DESFA’s 66 percent to Azerbaijani energy firm Socar, the winning bidder of an international tender in 2013, which was eventually joined by and Italy’s Snam as a partner in the deal.

 

Gov’t expected to announce DESFA plans next week

The Greek government is expected to announce, next week, the details of its future plan for DESFA, the natural gas grid operator, following this week’s collapse of a long-running privatization attempt.

Athens will also need to start work on anticipated legal issues as a result of the failed sale to Azerbaijani energy firm Socar, the winning bidder of an international tender in 2013, offering a 66 percent stake, and Italy’s Snam, an eventual partner in the deal.

According to sources, government officials have already begun exploring the prospect of whether the tender could be kept alive as a means of avoiding the launch of a new procedure from scratch.

Legal experts contacted by energypress informed that a new tender is legally inevitable as a result of Socar’s refusal, on November 30, to extend its letter of guarantee following two successive one-month extensions.

If permitted by the country’s lenders, the Greek government is expected to try and retain 51 percent of DESFA for the Greek State and offer a smaller stake to investors. A plan through which the government is expected to offer between 25 and 30 percent of DESFA to a strategic investor, as well as shares through the bourse, all of which will not exceed 49 percent, is seen as the government’s prefered route. This approach would be based on the model being carried out for IPTO, the power grid operator.

Insiders informed that Socar had wanted to abandon the DESFA deal long ago, from the time the European Commission intervened, in 2015, demanding that the Azerbaijani firm surrender at least 17 percent to a certified European operator, which limited Socar’s share to no more than 49 percent.

 

 

Gov’t to try and retain 51% of DESFA for state in new tender

The coalition and energy ministry will battle to retain a 51 percent stake of DESFA, the natural gas grid operator, for the Greek State in the new tender to be launched as a result of yesterday’s collapse of a long-running sale attempt offering 66 percent of the operator, sources have informed energypress.

“We did all that we could to finalize the sale and are now carrying on based on new conditions,” a ministry official commented.

For the time being, the coalition’s economic policy team will focus on reaching a decision next week on the percentage of DESFA to be offered in the follow-up sale attempt, which is considered certain as the operator’s sale is a bailout requirement.

Yesterday’s agreement collapse signaled the end of a marathon effort to sell DESFA’s 66 percent. The Azerbaijani energy firm Socar had emerged as the winning bidder for 66 percent of the operator in 2013. The European Commission eventually intervened over competiton concerns and demanded that the candidate buyer surrender at least 17 percent to a certified European partner, which brought Italy’s Snam into the picture as a partner in the deal.

The failed sale attempt creates a hole in the budget at TAIPED, the state privatization fund. The next set-up for the DESFA sale will need to be decided in conjunction with the country’s lenders. The details remain to be seen.

DESFA sale collapse raises a series of crucial questions

Yesterday’s collapse of the long-running attempt to sell a 66 percent stake of DESFA, Greece’s natural gas grid operator, may have offered some leeway to the Greek government, which never felt completely comfortable about this specific sale, but it also raises a number of questions.

These issues range from how Greek officials will handle a letter of guarantee provided by Azerbaiiajni energy firm Socar, the initial buyer which was later joined by Italy’s Snam as a partner for the deal; the shape of the new tender; as well as bigger matters such as the country’s image as an investment market and the impact on Greece’s geopolitical standing.

Energy ministry officials, who hold the prospective buyer accountable for the collapse, contend that Socar’s letter of guarantee, worth 40 million euros, or 10 percent of the 400 million-euro sale price, should be nullified, which would deprive the Azerbaijani company of a refund. On the contrary, local legal experts believe that such an intention is groundless as the buyer did not deviate from the tender procedure’s regulations. It remains to be seen whether this separation will be a smooth process or not.

The failure to finalize the DESFA tender deprives TAIPED, the state privatization fund, of an anticipated 188 million euros in 2017. This amount represents DESFA’s 31 percent of the 66 percent share that was put up for sale. The country’s lenders will most likely demand that this monetary gap be covered by another sale. It remains to be seen which Greek asset will be chosen to make up for the shortage.

Also, ELPE (Hellenic Petroleum), which provided its 35 percent of DESFA stake to the sale, was expecting 212 million euros, based on a decision at a shareholders meeting back in 2013, when Socar emerged as the international tender’s winning bidder. ELPE had written off the possibility of a 212 million-euro cash injection this year, but it was anticipating that the amount would arrive at some point in 2017.

A new tender will need to be launched as the DESFA sale is a bailout requirement. The government is expected to seek retaining 51 percent of DESFA for the Greek State and offer the other 49 percent to a strategic investor as well as through the bourse, based on the IPTO (power grid operator) sale model now being carried out.

The new international tender will take at least a year to complete from the moment it is announced. Sector experts believe the price to be offered by bidders, regardless of the stake offered, will be proportionately less than Socar’s offer of 400 million euros for a 66 percent share in 2013. This offer had factored in a revoverable amount of 829 million euros for previous investments at DESFA. Following recent revisions, this figure has been reduced to 326 million euros, which reduces the incentive for investors. Officials maintaining an opposing view claim that the recent upgrade to the LNG terminal in Revythoussa, an islet off Athens, increases the operator’s market value. A new evaluation of DESFA is definitely needed before the the next tender is launched.

Greece’s privatizations program has lost momentum for quite some time now. Yesterday’s collapse of a sale that had been agreed to back in 2013 is not good news for the international investment community. Leading government officials are scheduled to attend a Capital Link conference in New York City on December 12. They will seek to promote foreign investments in Greece. The timing, just days after the DESFA sale collapse, is not good.

It is no secret that the US was extremely keen on seeing Socar’s bid for DESFA finalized. The prospect was viewed as a positive step for US interests in southeast Europe, the objective being to break Russia’s dominance. As a DESFA stake holder, Socar, which holds a 20 percent stake in the TAP (Trans Adriatic Pipeline) project to cross northern Greece, would have had every reason to pursue new transboundary interconnection projects in the wider Balkan region. It should be noted that the US applied relentless pressure on Socar to complete the DESFA agreement.

 

Long-running DESFA sale attempt sinks without result

Greece’s long-running attempt to sell a 66 stake of DESFA, the natural gas grid operator, to Azerbaijani energy company Socar and Snam, its eventual Italian partner in the deal, has officially ended without a result, the energy ministry announced tonight.

“In recent months, the government has been engaged in continuous discussions with representatives of Socar and Snam for the sale of 66 percent of DESFA. The climate of these discussions was constructive. However, the proposal tabled by the candidate buyers for a price reduction was legally impossible and would have nullified the tender,” the energy ministry noted.

The energy ministry also noted that various alternatives proposed by the candidate buyers, their intention being to improve the operator’s commercial potential, were examined but could not be implemented to the sale’s existing framework.

“The ministry’s proposals sought to improve the operator’s financial position by offering an increase to the recoverable amounts [for past investments],” the ministry announced. “These proposals were not accepted, and, as a result, the negotiations concluded.”

Socar was named the winning bidder of an international tender offering a 66 percent stake of DESFA in 2013,  under a preceding conservative New Democracy-led coalition for which Yiannis Maniatis of the socialist PASOK party, the government’s junior partner, was in charge of the energy portfolio. At the time, the energy minister signed an agreement with Socar president Rovnag Abdullayev for the transfer of DESFA’s 66 percent – 31 percent from TAIPED, the State Privatiation Fund, and 35 percent from ELPE (Hellenic Petroleum) – to Socar.

The European Commission eventually intervened over competition concerns and forced Socar to surrender at least 17 percent to a certified European operator, prompting Snam’s entry into the ordeal.

Negotiations concerning the deal’s details further delayed the sale and then, last summer, the recently replaced energy minister Panos Skourletis struck a devastating blow by implementing measures that severely limited DESFA’s revenue potential. This development was negatively received by the candidate buyers, who sought a price reduction, and ultimately drove the long-running sale attempt to tonight’s demise.

In the lead-up, Socar kept the process alive by offering two successive one-month extensions to the agreement’s deadline, which was originally due to expire on September 30 – all to no avail.

Gov’t exploring options as it waits for DESFA buyer reply

The Greek government is anxiously awaiting a response from Azerbaijani energy firm Socar to its slightly improved offer concerning the 66 percent privatization of DESFA, Greece’s natural gas grid operator, while also exploring alternative options should the procedure sink, a prospect the government does not wish but which is highly likely.

The deadline, determined by a letter of guarantee provided by Socar, expires later today.

According to energy ministry sources, Greece’s new proposal forwarded to Socar and Snam, the Italian firm which has joined Socar as a partner for the deal, improves the market value of DESFA and places emphasis on recoverable amounts concerning investments made between 2006 and 2015. It remains unclear whether the improvement has satisfied the prospective buyers and to what extent.

An answer is expected within the next few hours. Rumors which floated about late last night gave the DESFA sale attempt little hope, which is why the government is already preparing alternatives.

The long-running DESFA sale attempt’s failure would affect the government’s second-review bailout negotiations with the lenders. The DESFA sale is a pending issue from the bailout’s first review. Failure to privatize now would also harm the country’s credibility in the eyes of investors. The tender’s failure would also negatively impact Greece’s wider relations with Azerbaijan and a number of energy project prospects such as the TAP natural gas pipeline, now under construction. Both Socar and Snam hold stakes in the TAP consortium. In addition, the country’s privatizations revenue coffer would be deprived of 180 million euros, which is the Greek State’s share of the 400 million sale price. The other 220 million would end up at ELPE (Hellenic Petroleum).

To minimize the fallout of a failed sale attempt, the government will need to relaunch a new DESFA tender as soon as possible. Government officials are already exploring plans to once again offer a 66 percent stake of DESFA or, alternatively, retain 51 percent for the Greek State and offer a total of 49 percent to a strategic investor and investors via the bourse. This latter option is based on the sale plan currently being carried out for IPTO, the power grid operator.

According to sources, other prospective investors seem ready to surface should the tender be relaunched from scratch.

Belgian natural gas grid operator Fluxys, also a TAP project shareholder, is likely to emerge as a potential buyer in association with Romania’s Transgas. Last week, representatives of these two firms, accompanied by their respective ambassadors to Greece, appear to have held talks with officials at ELPE, selling its 35 percent stake of DESFA as part of the 66 percent on offer. Fluxys and Transgas are believed to be interested in acquiring a 30 percent share of DESFA if Greece fails to reach an agreement with Socar and Snam.

The recently appointed energy minister Giorgos Stathakis appears to favor keeping grid management under the Greek State’s control. He is expected to promote the option based on the aforementioned IPTO plan and seek to sell 49 percent of DESFA.

Prime Minister Alexis Tsipras will need to decide on the next step should the current DESFA sale attempt sink.

All possible with DESFA sale deadline just two days away

The level of urgency surrounding the DESFA sale attempt has intensified now that it has become known that the country’s lenders have elevated the matter by noting the sale needs to be kept alive if the Greek bailout’s second review is to be completed.

Just two days remain before the November 30 deadline, determined by a letter of guarantee provided by Socar, the Azerbaijani energy company which has been joined by Italy’s Snam for a 66 percent stake of DESFA. All is possible at this stage.

Certain officials closely associated with the negotiations have expressed strong doubts about the chances of an agreement following the rejections, by both sides, of various proposals made.

Socar has kept the sale process alive by offering two successive one-month extensions to its letter of guarantee.

Troubled by the lack of progress, the Greek side appears to have asked for a further deadline extension, which indicates that convergence is still a long way off.

Should the prospective buyers reject an extension request, the current international tender, from which Socar emerged as the winning bidder in 2013 with a 400 million-euro offer for 66 percent of DESFA, will be terminated, creating the need for a new tender to be launched. This would create problems for the Greek bailout’s second review.

The Greek side appears to be discussing a further concession by increasing the operator’s long-term revenue potential. This would be created by adding interest to recoverable amounts concerning investments made between 2006 and 2015, which, in turn would increase tariffs and revenues for the operator’s shareholders.

 

Gov’t makes final offer to buyers in DESFA sale attempt

The Greek government appears to have played its last card in the long-running attempt to privatize a 66 percent stake of DESFA, the natural gas grid operator, hoping the potential buyers, Socar and Snam, will accept it and save the procedure from a demise as the November 30 deadline, determined by a letter of gurantee provided by potential buyer Socar, approaches.

The government has proposed a slight tariff increase for DESFA, which would raise the operator’s revenue potential, through a small interest rate to be added to every year of unrecovered amounts concerning investments made between 2006 and 2015.

The operator’s current framework, revised last summer by the recently replaced energy minister Panos Skourletis, does not offer any interest for these past recoverable amounts.

Until now, a series of proposals made by the negotiating sides have been rejected, making this latest offer, coming just days ahead of the deadline, seem like the last chance for a successful completion of the DESFA sale.

Offers made by the potential buyers have included a rejection and overhaul of the Skourletis measures, which severely limited DESFA’s revenue potential; a sale price reduction; and payment through installments, plus interest.

The buyers have stressed they want the Greek government to provide a guarantee ensuring that any increases agreed to now will not be altered in the future.

TAIPED, the State Privatization Fund, has yet to publish its next Asset Development Plan (ADP), now overdue, as it is awaiting the outcome of the DESFA sale attempt. If the current effort sinks, DESFA will need to be added to the fund’s next ADP list.

Stream of proposals discussed in expiring DESFA sale talks

All is possible in the ongoing negotiations for a solution to the long-running privatization attempt of a 66 percent stake of DESFA, the natural gas grid operator, as the November 30 deadline, determined by a letter of gurantee provided by potential buyer Socar, approaches.

The disputes separating the negotiating sides could be resolved, the overall effort could sink and force the Greek government to launch a new international tender, or a new deadline extension, which would be the third, could be offered.

One proposal after another is apparently being discussed by the two sides in the attempt to seal a deal. Amid the flow of activity, one certainty is that Socar, the winning bidder in 2013 of an international tender for DESFA’s 66 percent at a price of 400 million euros, and Italy’s Snam, the Azerbaijani energy firm’s partner in this deal as a result of European Commission intervention requiring Socar to surrender at least 17 percent to a certified European operator, have offered 300 million euros up front and 100 million euros in the long term, once recent improvements to the previous energy minister Panos Skourletis’s measures severely restricting the operator’s revenue capacity begin producing results.

The Greek side may be considering this future 100 million-euro payment as long as interest is added to the amount. However, conflicting reports continue to emerge on this detail.

Certain energy ministry officials have rejected the prospect of a payment in two stages. The potential buyers note that a double-payment solution is better than the sale procedure’s ultimate demise. The buyers contend that the Greek side has not rejected payment through installments.

According to information provided by other sources, the prospective buyers have proposed an increase of the operator’s recoverable amount for investments made between 2006 and 2015 to a level of slightly over the 326 million euro amount set by RAE, the Regulatory Authority for Energy. This proposal is being discussed, sources said.

The former energy minister’s measures had reduced this recoverable amount from 829 million euros to 285 million euros before RAE stepped in to raise it to 326 million euros.

 

 

 

 

DESFA buyers make new undisclosed offer as deadline approaches

Azerbaijani energy firm Socar and Italy’s Snam, the prospective buyers of DESFA, Greece’s natural gas grid operator, have submitted an alternative proposal to TAIPED, the State Privatization Fund, in a bid to resolve differences and finalize the long-running attempt to sell a 66 share of the operator ahead of an imminent deadline on November 30.

Socar and Snam, which united for this privatization attempt after the European Commission forced the Azerbaijani firm to surrender at least 17 percent of a 66 percent share of DESFA acquired by Socar through an international tender in 2013, have submitted a series of proposals intended to limit the negative impact of recent revenue-restricting measures imposed on the operator by Greece’s just-replaced energy minister Panos Skourletis.

No details of this compromise attempt have been disclosed. Buyer representatives, emerging from a meeting yesterday with the new energy minister Giorgos Stathakis, said that leeway exists to find a solution.

The troubled sale attempt has remained alive as a result of Socar’s two one-month extensions to its letter of guarantee.

Socar was named the DESFA tender’s winning bidder after offering 400 million euros for a 66 percent stake. However, the Azerbaijani firm and fellow prospective buyer Snam insist that the operator’s market value is now worth considerably less as a result of the former minister’s revenue-limiting measures.

Azerbaijani media reports published yesterday put the Greek operator’s value at levels of around 260 million euros, roughly 40 percent less than the initial price, highlighting the gap between the negotiating sides.

Just days ago Socar proposed paying 300 million euros up front and a further 100 million euros in the long term once a series of Greek government measures implemented to soften Skourletis’s DESFA cuts begin offering benefits.

 

 

Ball now in new Greek energy minister’s court for DESFA sale

The recently appointed energy minister Giorgos Stathakis is expected to meet with Socar and Snam officials over the next few days in a bid to find a solution with the prospective buyers of a 66 percent stake in DESFA, the natural gas grid operator, as a November 30 deadline approaches following two one-month deadline extensions.

Preliminary talks ahead of this next attempt seem to have taken place last week.

At this stage, revisions by the new minister to revenue-limiting measures imposed on DESFA by his predecessor Panos Skourletis appear to be the only way out of the impasse.

The buyers believe that DESFA’s 66 percent stake is now worth less than the 400 million euro amount originally agreed to prior to the former Greek energy minister’s measures.

Socar, which had emerged as the winning bidder of the operator’s 66 percent stake, and Italy’s Snam, which joined the Azerbaijani energy firm for this deal after the European Commission intervened and forced Socar to surrender at least 17 percent to a certified European operator, have proposed to offer 300 million euros up front and the other 100 million euros in the future, when the operator begins to benefit from recent RAE (Regulatory Authority for Energy) revisions concerning DESFA’s revenue capacity. The Greek side has made clear it cannot accept partial payments.

The former energy minister’s measures limited DESFA’s recoverable amounts for investments concerning 2006 to 2015 to 285 million euros from 829 million euros. RAE then revised this figure upwards to 326 million euros and halved the recovery time period to 20 years from 40 years. The operator’s tariff increase limit was also raised from 23 percent to 33.5 percent.

Socar offer to pay €300m up front for DESFA rejected

Azerbaijani energy firm Socar, having consulted Italy’s Snam on their bid to acquire a 66 percent stake of DESFA, Greece’s gas grid operator, is prepared to offer 300 million euros now and a further 100 million later on, at an unspecified time, once the operator begins benefiting from revisions made just months ago by RAE, the Regulatory Authority for Energy, to improve the operator’s capacity for recoverable amounts, energypress sources have informed.

However, the Greek side has already rejected the offer by noting that it cannot accept a split of the total amount as this would violate the sale’s terms, set in an international tender. The same argument was used when Socar sought a price reduction.

Socar, which, in 2013, emerged as the winning bidder of an international tender for 66 percent of DESFA at a price of 400 million euros, was later forced to surrender at least 17 percent to a certified European operator following European Commission intervention. Snam then stepped in as a partner.

Time is running out for this marathon sale attempt. Socar’s latest extension to its letter of guarantee provided for the deal will expire on November 30.

The negotiating sides have been at odds over the sale price of 400 million euros. Socar officials contend that revenue-limiting measures imposed last summer by Greece’s recently replaced energy minister Panos Skourletis have severely affected the operator’s market value, arguing that a price of 300 million euros is now more appropriate. The Greek side has refused to budge from the 400 million-euro price tag.

Socar insists that the recent RAE revisions only partially cover the damage caused by the minister’s measures, which limited DESFA’s asset base and, as a result, drastically reduced the operator’s recoverable amounts for investments made between 2006 and 2015 from 829 million euros to 285 million euros. RAE then intervened to increase this amount to 326 million euros and reduce the recovery period to 20 years from 40 years, as had been engineered by the former energy minister. The authority also offered a provision that increases DESFA’s tariffs by 33.5 percent instead of 23 percent, as set by Skourletis. This slight rise is still quite a long way off the 68 percent figure prior to the minister’s measures, the prospective buyers have protested.

Prospect of nearing Eurogroup meeting to apply pressure on DESFA sale

A Eurogroup meeting of EU finance ministers scheduled for December 5, just days after the latest one-month deadline extension for the DESFA (natural gas grid operator) sale, now reset for November 30, is expected to apply pressure on the Greek government to reach a final agreement with the operator’s prospective buyers.

The government wants to have completed the bailout’s ongoing second review before the December 5 meeting in order to immediately follow up with debt reduction talks.

Completion of the DESFA sale prior to this December date will lend some support to the government’s debt-reduction case. The DESFA sale is a pending issue that spilled over from the bailout’s first review.

It remains unclear whether the Azerbaijani energy firm Socar, the winning bidder of an international tender for a 66 percent share of DESFA, had the Eurogroup meeting’s timing and impact on negotiations in mind when it decided yesterday to extend, yet again, its letter of guarantee by an additional month.

Socar must surrender at least 17 percent to a certified European operator as a result of European Commission intervention. Italy’s Snam has moved in to take on a surrendered amount.

The Greek government would be taking a big risk should it send finance minister Euclid Tsakalotos to next month’s Eurogroup meeting without good news on the DESFA sale. Brussels and the US, both looking to diversify natural gas supply in Europe to lessen Russia’s dominance, are pushing for a deal.

DESFA’s negotiating sides remain at odds over the operator’s sale price. Socar, the winner of a tender in 2013 on the strength of a 400-million euro offer for a 66 percent stake of DESFA, and Snam, its partner in this venture, both believe the operator is worth far less as a result of revenue-restricting measures imposed last July by Greek energy minister Panos Skourletis. The buyers believe a price tag of 300 million euros is more appropriate, considering the DESFA revisions. Despite the gap, Socar and Snam officials believe a solution is possible.

A change to the original price agreed to through the international tender is not possible as this would cancel the procedure, the government insists. Intervention by RAE, the Regulatory Authority for Energy, or an amendment to the Skourletis bill will be needed if a final agreement is to be reached. An increased dividend yield could also be considered.

Whatever the case, officials at Socar, which has hung on to the long-running DESFA sale attempt for years, remain cautiously optimistic.

 

Gov’t seeking new DESFA sale extension amid dim prospects

The Greek government hopes the Azerbaijani energy company Socar will respond favorably today to its proposal for a further one-month extension of a letter of guarantee concerning the beleaguered and long-running effort to sell 66 percent stake of DESFA, Greece’s natural gas grid operator. The current letter of guarantee, an extension of a previous letter, expires today.

The overall prospects are not good as Socar and Italy’s Snam – it entered the negotiating process to take on a DESFA share that must be surrendered by the Azerbaijani company following European Commission intervention – both believe the Greek operator’s 66 percent stake is worth considerably less than the initial price of 400 million euros initially agreed to as a result of revenue-limiting measures imposed on the operator last summer by the Greek energy minister Panos Skourletis.

The Greek government has not budged on the price issue, meaning that even if the sale attempt is kept alive today the prospects of a final agreement appear dim.

Representatives of all three sides will meet today. Energypress sources have informed that Socar is pressing for extreme gains as well as written guarantees from the Greek government in order to extend the sale process. Socar officials appear to have lost faith in the Greek government’s handling of the DESFA sale following the most recent round’s failure to produce finalized results.

Socar had emerged as the winning bidder of an international tender in 2013 for 66 percent of DESFA at a price of 400 million euros. More recently, Brussels ruled the Azerbaijani firm must surrender at least 17 percent.

 

Socar, Snam demanding lower DESFA price as deadline nears

Despite significant progress achieved over the past few weeks – as a result of a number of compromise moves – in Greece’s long-running attempt to sell a majority stake of DEFSA, the natural gas grid operator, the procedure has stumbled again as the prospective buyers, Azerbaijan’s Socar and Italy’s Snam, are demanding a price reduction well below the original 400 million-euro price tag for the 66 percent share being sold.

Socar and Snam insist the operator’s price for this stake should be reset to around 300 milllion euros, possibly less.

Time is running out. The negotiating sides have just a few more days, until October 31, to reach a deal when a letter of guarantee provided by Socar, the winning bidder of an international tender in 2013, expires. Socar was later forced to surrender at least 17 percent to a certified European operator as a result of European Commission intervention, prompting Snam to move in for a share of the sale.

According to energypress sources, legal representatives of all three companies have been engaged in a series of increasingly urgent negotiations in Athens over the past few days in search of an agreement, to no avail so far.

Socar officials insist that revenue-restricting measures imposed on DESFA last summer by energy minister Panos Skourletis have significantly lowered the operator’s market value. Snam officials are believed to be pushing hardest for a price reduction, while the people at Socar are maintaining a milder, more diplomatic stance.

However, as has been repeatedly noted in previous reports, a revision to the original price is technically not possible as this would violate the tender’s conditions. TAIPED, the State Privatization Fund, had made this clear to all negotiating sides quite a while ago.

This crucial detail has been reiterated to Socar’s deputy vice president Vitaly Baylarbayov, who has been in Athens over the past few days, and Anar Mammadov, the former director of the Azerbaijani company’s Greek subsidiary, Socar Energy Greece.

The fate of this unfinished deal will be made clear during the day or tomorrow, the latest.

 

Crucial week for DESFA sale as October 31 deadline nears

This week will be crucial in Greece’s long-running effort to privatize 66 percent of DESFA, the natural gas grid operator, a process facing an October 31 deadline, when a letter of guarantee provided by prospective buyer Socar, the Azerbaijani energy company, expires following a recent one-month extension.

Leading officials representing Socar, the winning bidder of a DESFA tender, which must now surrender at least 17 percent following European Commission intervention, and Snam, the Italian operator expected to take on the surrendered stake, will be in Athens for final talks with Greek government officials. Dimitris Liakos, the Prime Minister’s adviser, is representing the Greek government for the DESFA sale. A series of secret meetings have apparently been staged in Athens over the past few weeks.

A number of compromise moves have been made in an effort to satisfy the negotiating sides. DESFA’s network usage tariff is expected to be increased by 33.5 percent, an improvement on a previous percentage figure set by the energy ministry. A recoverable amount has been set at 326 million euros and concerns 2006-2016. A shorter collection time of 20 years rather than 40 years, as has been originally planned by Greek officials for this amount, is being offered. Also, a dividend yield of 9.23 percent has been set.

The Greek government has remained firm on the sale’s original price tag of 400 millon euros for DESFA’s 66 percent stake. Prior to the aforementioned revisions, Socar officials contended that DESFA’s market value had fallen as a result of revenue-restricting measures.

If all goes well, Socar will sign a final agreement with TAIPED, the State Privatization Fund, for a 66 percent stake of DESFA. A total of 400 million euros will be paid, of which 180 million euros will be channeled to the privatization fund, selling a 31 percent of DESFA, and 220 million euros to ELPE (Hellenic Petroleum), selling 35 percent of the operator. Then Socar will sign an agreement with Snam. According to sources, the Italian firm will acquire at least 30 percent of DESFA.

Snam, Socar officials arranging final details for their DESFA roles

Officials at Azerbaijani energy company Socar and Italy’s Snam are currently negotiating a shareholders agreement for DESFA, the natural gas grid operator, in anticipation of the Greek government’s imminent final proposal for the sale of a 66 percent stake of the operator.

Issues being worked on by the two prospective buyers include the percentage to be sold to Snam by Socar, the winner of an international tender for DEFSA’s 66 percent back in 2013; the price of this transfer; as well as the managerial and board roles of the two shareholders.

After winning the DESFA tender, Socar was asked to surrender at least 17 percent by the European Commission, seeking to keep the Azerbaijani firm’s stake in the Greek operator to no more than 49 percent.

The Greek government needs to forward its finalized proposal carrying all the issues agreed to in recent weeks by the Prime Minister’s adviser Dimitris Liakos with Socar and Snam officials.

These issues include a network usage fee increase of 35 percent for DESFA, well below a previous Greek plan, a recoverable amount of 326 million euros concerning 2006-2016, a shorter collection time of 20 years rather than 40 years as had been originally planned by Greek officials for this amount, as well as a dividend yield of 9.22 percent.

The prospective buyers are most likely to receive the Greek government’s final proposal next week as less than a fortnight now remains before a letter of guarantee submitted by Socar expires on October 31, following a one-month extension.

If all goes well, Socar will sign a final agreement with TAIPED, the State Privatization Fund, for a 66 percent stake of DESFA. A total of 400 million euros will be paid, of which 180 million euros will be channeled to the privatization fund, selling a 31 percent of DESFA, and 220 million euros to ELPE (Hellenic Petroleum), selling 35 percent of the operator.

Then Socar will sign an agreement with Snam. According to sources, the Italian firm will acquire 30 percent of DESFA, which would reduce Socar’s stake to 36 percent from the 66 percent share originally agreed to through the international tender. The Greek State will hold the other 34 percent.

According to sources, Greek officials recently asked Snam officials to buy as much as 36 percent of DESFA. This would make the Italian firm the operator’s main shareholder. However, Snam officials reportedly responded by informing that the Italian firm intends to honor an agreement already signed with Socar on this issue.