Sonatrach

Six Greek heavyweights among DEPA Commercial contenders

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Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

DEPA Trade offers due today, at least 7 players interested

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

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

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

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

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

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

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

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

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

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

 

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

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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.

DEPA’s ICC victory over Botas promises wider boost for gas utility

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Considerable time will be needed before a precise retroactive payment amount can be determined for gas utility DEPA following 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.

An initial estimate has put the retroactive amount to be received by DEPA at around 200 million euros.

DEPA claimed the Turkish company has overcharged for purchases – by the Greek utility – of Azerbaijani natural gas delivered through Turkish pipelines since 2011.

Importantly, DEPA stands to secure more competitive purchase prices for Azerbaijani gas until 2023, when the Greek utility’s transmission contract with Botas is due to expire.

DEPA covers approximately 40 percent of the total amount of natural gas it trades through this supply source, meaning the ruling’s favorable impact will be significant.

Meanwhile, DEPA is currently seeking more favorable terms from its two other suppliers, Russia’s Gazprom and Algeria’s Sonatrach.

Improved terms and supply prices promise to help DEPA rebound from consistently contracting market shares as a result of tougher competition over the past two to three years. Better conditions also promise a market boost for the Greek gas utility ahead of its upcoming privatization.

 

DEPA, pivotal for Greek energy plan, pushing ahead internationally

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Flurry of activity at Revythoussa LNG terminal over next two months

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A flurry of LNG import activity planned through the Revythoussa islet terminal, just off Athens, in September and October, highlights the strong interest maintained by Greek energy companies in this energy source.

The country’s total of five players have all made arrangements to import large and small LNG shipments via Revythoussa during this two-month period, gas grid operator DESFA has announced.

Mytilineos has placed the biggest order, an LNG shipment of approximately 0.5 bcm, expected in October.

The second-biggest LNG order was made by gas utility DEPA, a 0.282-bcm quantity resulting from the utility’s long-running association with Sonatrach for Algerian supply.

Elpedison and Heron have each programed LNG shipments of 148,000 cubic meters, their respective arrivals scheduled for September 12 and 24.

Prometheus Gas has ordered 45,000 cubic meters of LNG for  September 27.

ELPE sale ‘may be dropped’ if alternate revenue plan is found

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An ELPE (Hellenic Petroleum) privatization offering a 50.1 percent stake, whose initial tender failed to produce a result last week, could be scrapped if the government finds an alternative way of raising the sale’s anticipated 500 million euros for the country’s privatization fund, highly-ranked energy ministry sources have told energypress.

“The ELPE sale is not a structural measure or market revision but was included in the privatization fund TAIPED’s program for cash-collecting purposes as the sale price achieved would have contributed to reducing the national debt,” a source noted, indicating alternative ways of raising an equivalent amount could be sought instead of an ELPE sale relaunch.

If so, the government will need to convince the country’s lenders of an alternative fund-raising plan when they arrive in Athens next month for a third post-bailout review of the Greek economy.

The Greek State was offering 20 percent of its 35.48 percent share in ELPE and the Latsis group’s Paneuropean Oil 30.1 percent of its 45.47 stake.

Glencore, an early candidate, was eventually joined by US firm Carlyle, and Dutch trading firm Vitol, the sale’s other early contender, was joined by Algeria’s Sonatrach. Neither bidding team followed through with offers last week, when the deadline for binding bids expired.

 

ELPE privatization effort fails to deliver result, next step unclear

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A tender offering a 50.1 percent stake of ELPE (Hellenic Petroleum), whose complicated make-up involved two sellers and four possible buyers, has failed to produce a result.

The Greek State was offering 20 percent of its 35.48 percent share and the Latsis group’s Paneuropean Oil 30.1 percent of its 45.47 stake.

As officials had strongly suspected ahead of yesterday’s deadline for binding bids, the sale procedure did not convince participants for a variety of reasons.

In the lead-up, SPA and SHA term negotiations with the sale’s main candidates Glencore and Vitol, both trading firms, made clear that emphasis needed to be placed on protecting the association between ELPE’s main activity, refining, and the domestic market. The petroleum group currently covers approximately 70 percent of the Greek market’s needs.

Glencore, which was eventually joined by US firm Carlyle for this sale, had other ideas. During the SPA talks, it strove for the incorporation of a term that would have offered the trading company exclusive control of ELPE’s production.

Instead, clauses were introduced to the tender’s SPA to protect supply to the Greek market and maintain the country’s strategic reserves for security reasons.

This development prompted the sale’s officials to place their hopes for a result on the privatization’s other second-round qualifier, Dutch trading firm Vitol, which was latter joined by Algeria’s Sonatrach.

The Algerian state-run energy company proved to be the more interested partner of this pairing, but the political turmoil over recent weeks in Algeria, which led to the resignation earlier this week of President Abdelaziz Bouteflika, the country’s leader over the past 20 years, prevented Sonatrach from pursuing what would have been the biggest takeover in the company’s history.

It remains to be seen how the government and TAIPED, the privatization fund, will respond to the sale’s failure. TAIPED had anticipated a significant inflow of privatization revenues from the ELPE sale.

 

Binding bids for ELPE’s 50.1% due today amid uncertainty

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Binding bids for an ELPE (Hellenic Petroleum) sale offering a 50.1 percent stake are due today, bringing one of the country’s biggest energy-sector privatizations to a crucial stage.

The Greek State is offering 20 percent of its 35.48 percent share and the Latsis group’s Paneuropean Oil is selling 30.1 percent of its 45.47 stake.

Two bidding teams have reached the privatization’s final stage. Glencore, an early qualifier, has teamed up with US firm Carlyle, while Vitol, the procedure’s other early candidate, formed an alliance with Algeria’s Sonatrach for this sale.

Their level of acceptance of the sale’s SPA and SHA terms, as well as ELPE’s financial figures, assessed in due dilligence, will become apparent later in the day.

Despite today’s bidding deadline, it still remains uncertain if the two teams will submit offers. If made, they will be unveiled later this afternoon, at 5pm.  Dossiers carrying technical details will be opened for assessment over the next few days.

Improved bids could be called for if the privatization’s terms have been met by participants.

Should the current sale effort fail to produce a result, the government will need to engage in talks with the country’s lenders on the next move for the ELPE privatization.

ELPE sale expectations, risks high as deadline day nears

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A succession of record-breaking financial results at ELPE (Hellenic Petroleum) over the past few years has boosted the company’s expectations of an elevated sale price in a privatization offering a 50.1 percent stake.

Even so, whether the sale’s two bidding teams both end up submitting binding bids on Wednesday, the deadline day, remains a 50-50 situation, officials have noted, pointing out tough sale-term negotiations that have taken place between the sellers – the Greek State, offering 20 percent of its 35.48 percent share, and the Latsis group’s Paneuropean Oil, selling 30.1 percent of its 45.47 percent share – and the possible buyers.

The privatization’s two early qualifiers, Glencore and Vitol, have pressed hard for sale-term improvements. These demands then increased with the emergence of US firm Carlyle and Algeria’s Sonatrach as respective partners of the initial candidates.

Despite the privatization’s plan for the sale of a 50.1 percent majority, the Greek State has insisted on maintaining veto rights for crucial decisions of national significance.

TAIPED, the state privatization fund, was forced to delay the binding-bids deadline and most recently rescheduled the date for April 3 from March 29.

ELPE’s EBITDA figure averaged 763 million euros between 2015 and 2018, more than double the 350 million-euro average achieved between 2011 and 2014.

ELPE bids deadline extended to April 3, union announces strike

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The Greek privatization fund TAIPED has extended a binding-bids deadline for participants of a tender offering a 50.1 percent stake in ELPE (Hellenic Petroleum) to April 3 from March 29, a  development that takes the sale procedure into the home stretch.

Two bidding teams are participating in the ELPE tender. Glencore, an early qualifier, has been joined by US firm Carlyle, while Vitol, the other early contestant, has formed an alliance with Algeria’s Sonatrach.

The sale’s officials may call for a second round of improved binding bids if needed, sources informed.

Meanwhile, the ELPE workers union group PSEEP has reacted strongly against the planned privatization, describing it as a “major scandal” and “national crime”.  PSEEP has announced a three-day strike for March 28 to 30.

 

 

ELPE sale March 29 binding bids deadline set for mild extension

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A March 29 binding-bids deadline set for participants of a tender offering a 50.1 percent stake in ELPE (Hellenic Petroleum) will need to be extended by a few days as officials require more time to finalize details of the privatization’s sale and purchase (SPA) and shareholder (SHA) agreements, sources have informed.

The Greek privatization fund TAIPED, energy ministry and potential buyers are currently consulting on these details.

Energy minister Giorgos Stathakis has apparently raised certain objections and is awaiting responses from the privatization fund and investors, sources have informed.

Also, a US trip made last week by the energy minister to a major energy conference in Houston, Texas has contributed to the overall procedure’s delay, prompting the need for a binding-bids deadline extension.

Sources informed a few extra days beyond the March 29 date will be needed, while some believe the deadline could be stretched to around April 10.

Two bidding teams are participating in the ELPE tender. Glencore, an early qualifier, has been joined by US firm Carlyle, while Vitol, the other early contestant, has formed an alliance with Algeria’s Sonatrach.

 

ELPE bidding deadline in sale offering 50.1% set for March 29

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Two bidding teams participating in a tender offering a 50.1 percent stake in ELPE (Hellenic Petroleum) have been set a March 29 deadline for binding bids, the state privatization fund TAIPED, staging the sale, has decided. All candidates have been informed.

Glencore, an early qualifier, has been joined by US firm Carlyle, while Vitol, the other early contestant, has formed an alliance with Algeria’s Sonatrach for the ELPE tender.

Much work was needed to finalize this privatization’s sale and purchase (SPA) and shareholder (SHA) agreements.

Also, preceding ELPE sale deadlines needed to be stretched to allow the new entries, Carlyle and Sonatrach, to prepare, officials have noted.

ELPE’s bourse value at the end of yesterday’s trading session was 2.53 billion euros. The company’s share has gained 5.3 percent over the past month.

The European Commission, part of the troika, wants the ELPE privatization to be completed by the year’s half-way mark. In a recent report, Brussels expressed concern over the limited field of final-round qualifiers.

State veto rights for DEPA Trade despite minority stake

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Investors preparing for gas utility DEPA’s upcoming privatization will face ambiguous operating conditions as the Greek State, to begin by offering a majority 50.1 percent stake in DEPA Trade following an imminent company split ahead of the sale, is expected to maintain veto rights on a number of strategic matters despite its minority status in this trade venture.

Key issues to concern DEPA Trade will include the gas utility’s long-term agreements with major suppliers such as Russia’s Gazprom, Algeria’s Sonatrach and Turkey’s Botas.

DEPA’s contract with Gazprom, which runs until 2026 and is the biggest of all three, features a take-or-pay clause requiring the Greek gas utility to order no less than 1.5 billion cubic meters of natural gas per year or face fines.

DEPA’s supply agreements with Sonatrach and Botas both expire in 2021. The Botas agreement will not be extended as the soon-to-be-launched TAP project will provide direct supply to Greece from Azerbaijan. DEPA has already signed an agreement for one billion cubic meters of TAP-related natural gas per year.

Subsequently, the Greek State will maintain its influence over DEPA’s supply contracts with Sonatrach and Gazprom.

Investors considering the majority stake to be offered in DEPA Trade will not be entirely free.

A draft bill for DEPA’s split into DEPA Trade and DEPA Infrastructure ahead of the privatization is scheduled to be submitted to parliament tomorrow.

A minority stake of DEPA infrastructure will be offered to investors at a latter date. The Greek State will maintain no less than 51 percent of this corporate entity.

ELPE bidders given exemption right for ELPE Upstream costs

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Potential buyers participating in a sale offering a controlling 50.1 percent stake in ELPE (Hellenic Petroleum) will be given the option of being exempted from hydrocarbon exploration-related expenses concerning ELPE Upstream, a separate division holding ELPE’s hydrocarbon exploration and concession rights.

A 51 percent stake of ELPE Upstream will remain under the control of the state. Potential buyers will have the right to refuse to partake in ELPE Upstream’s investment activities, given the minority stake they will hold in this venture.

This cost exemption option appears to have satisfied potential buyers of ELPE’s 50.1 percent, preparing to submit binding bids, possibly within the first ten days of March. A deadline has yet to be set.

Head representatives, including Sonatrach boss Abdelmoumene Ould Kaddou, have spent time in Athens over the past couple of weeks for meetings with Greek state privatization fund TAIPED officials. No objections appear to have been raised.

Sonatrach recently entered the ELPE sale, joining Vitol as a partner. American firm Carlyle, the other new entry, has joined forces with Glencore for this sale.

All of ELPE’s current exploration and production licenses have been transferred to ELPE Upstream.

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

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Gas utility DEPA and US energy exporter Cheniere have reached an advanced stage in negotiations for a long-term LNG supply agreement that could result in a five-year deal, according to sources.

A 150,000-cubic meter spot-market purchase made by DEPA from the Texas-based company towards the end of last year kindled the current negotiations for a longer-term agreement between the two sides, energypress sources informed.

The US has made clear its interest to establish Greece as a gateway for American LNG into Balkan markets. The US Ambassador to Greece, Geoffrey R. Pyatt, has often made reference to the prospect.

A supply agreement between DEPA and Cheniere would further diversify the Greek gas utility’s sources, currently dominated by Russian natural gas and LNG from Algeria.

DEPA has reserved a one-billion cubic meter capacity through the TAP route as of 2020, when the new gas pipeline carrying natural gas from Azerbaijan is expected to begin operating. The prospect should enable DEPA to offer domestic-market customers more competitive prices and further penetrate Balkan markets, via the IGB Greek-Bulgarian pipeline, to connect with TAP.

The ongoing DEPA-Cheniere talks have not swept Algeria’s Sonatrach out of the picture, sources stressed. DEPA’s current supply agreement with Sonatrach expires in 2020 and the two sides are already discussing a renewal.

DEPA agreements with Cheniere and Sonatrach, combined with Azerbaijani gas supply through TAP, promise to place the Greek gas utility in a more favorable position opposite Russia’s Gazprom, its main supplier.

ELPE sale deadline headed for early-March extension

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The state privatization fund TAIPED appears likely to reset the binding bids deadline of a sale offering a 50.1 percent stake in ELPE (Hellenic Petroleum) for a date within the first week of March, more than one month beyond the current January 31 date, reliable sources have informed.

The need for additional time is being attributed to the recent entry into the sale of two new candidates, American firm Carlyle and Algeria’s Sonatrach. They have established respective partnerships with the procedure’s two existing candidates, Glencore and Vitol, and will need time to appraise ELPE before shaping bids with their partners.

TAIPED has yet to officially endorse the new bidding pairs but is expected to offer its approval very soon, possibly within the current week.

The ELPE sale procedure has needed to overcome various obstacles along the way. Late last year, Greece’s Capital Market Commission ruled that the preferred investor to emerge from the sale will not need to make a public offering to other company shareholders, ending an ambiguity that caused delays.

ELPE sale’s binding offers in late February, early March

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The binding bids deadline of a sale offering a controlling 50.1 percent stake in ELPE (Hellenic Petroleum) is expected to be set for late February or early March, sources closely monitoring the privatization’s developments have informed.

This one-and-a-half month period should provide enough time for the sale’s new entries, American firm Carlyle and Algeria’s Sonatrach – who have established respective partnerships with the procedure’s two existing candidates, Glencore and Vitol – to appraise ELPE.

No other pending issues remain other than a response from the prospective buyers on the privatization’s plan for ELPE Upstream. Holding Hellenic Petroleum’s hydrocarbon exploration and concession rights, ELPE Upstream will remain under the control of the state with a 51 percent stake.

The entire portfolio of ELPE’s current hydrocarbon exploration and concession rights has been incorporated into ELPE Upstream. Future concession rights are also planned to be added to this holding company.

The state will reserve the right to appoint ELPE Upstream’s managing director, while, according to sources, the holding company’s minority shareholder will have the right to decide on investment decisions and presumably exercise veto rights.

ELPE’s details were uploaded into a virtual data room last week for investors to study as they prepare to shape their offers.

Market analysts expect ELPE 50.1% sale to reach over €2bn

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Market analysts, including HSBC, in a new report, expect the ELPE group (Hellenic Petroleum) sale offering a 50.1 percent stake to exceed 2 billion euros.

Besides the privatization’s higher aspirations generated by ELPE’s strong profit figures, including a streak of records, international analysts are also pointing to excellent prospects for the petroleum group over the next two years, at least, as well as its limited exposure to mazut.

ELPE’s share ended trading last Friday at 7.57 euros but the petroleum group’s privatization may escalate its share price by 50 percent to 11.7 euros, according to the recent HSBC report, covering refineries in Europe, the Middle East and Africa (EMEA).

Given a share price of 11.7 euros, a 50.1 percent stake of ELPE would be worth 1.78 billion euros. Adding a 20 percent premium to this figure for the petroleum firm’s management rights also offered in the sale increases the value to 2.1 billion euros.

ELPE, it should also be noted, is one of the wider region’s few refineries which, with a minimal amount of facility adjustments, will be capable of producing new environmentally friendly shipping fuels by 2020. This prospect, promising even higher profit levels at ELPE in the near future, is seen adding to the petroleum group’s appeal among investors.

According to latest developments, buyers will be asked to submit binding offers within the first quarter of 2019.

Two new participants, US firm Carlyle and Algeria’s Sonatrach, are believed to be discussing respective partnerships with the privatization’s list of two existing candidates, Switzerland’s Glencore and Dutch company Vitol. No official announcements have been made on the rumored Glencore-Carlyle and Vitol-Sonatrach pairings.

TAIPED, the privatization fund, has yet to set a deadline for new partnerships.

Early elections not a threat for ELPE sale, officials assure

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Greek privatization procedures already at a mature stage and not requiring any legislative revisions or presidential decrees, such as the ongoing ELPE (Hellenic Petroleum) sale, would not be affected by early elections ahead of the completion of the government’s four-year mandate in October 2019, even if these were to be held as early as March, prospective buyers in the ELPE sale, offering a 50.1 percent stake, have been assured by the privatization fund TAIPED in response to questions on the matter.

Two new participants, US firm Carlyle and Algeria’s Sonatrach, are believed to have established respective partnerships with the privatization’s list of two existing candidates, Switzerland’s Glencore and Dutch company Vitol. However, to date, no official announcements have been made on the Glencore-Carlyle and Vitol-Sonatrach pairings.

If verified, the ELPE sale’s new entries can be expected to raise hopes for higher offers when binding bids are submitted at a still-unspecified date within January.

Glencore joined by Carlyle, Vitol by Sonatrach in ELPE sale

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Two new participants, US firm Carlyle and Algeria’s Sonatrach, have entered the ELPE (Hellenic Petroleum) sale offering a 50.1 percent stake by establishing respective partnerships with the privatization’s list of two existing candidates, Switzerland’s Glencore and Dutch company Vitol.

Though not yet officially announced, the Glencore-Carlyle and Vitol-Sonatrach pairings have apparently cemented, sources in contact with these players have told energypress.

The ELPE sale’s new arrivals can be expected to raise hopes for higher offers when binding bids are submitted at a still-unspecified date within January.

Carlyle’s entry into the sale had been rumored prior to the procedure’s first round of non-binding bids, along with a list of other major players, including Italian petroleum firm Eni.

In a related development, the Greek State appears to have finalized a decision to participate with a 51 percent stake in a new hydrocarbon holding company referred to as ELPE Upstream. This means the winning bidding team of the ELPE sale will also acquire a 49 percent stake of the holding company. This, however, will depend on the approval of ELPE’s existing shareholders and, most crucially, prospective buyers.

All of ELPE’s exploration and production licenses have been transferred to this holding company as separate ventures. Though the Greek State will hold the right to appoint the holding company’s chief executive, the minority shareholder will decide on investment decisions through a veto right.

DEPA placing extra LNG order for bigger Revythoussa terminal

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Gas utility DEPA is making arrangements with Algeria’s Sonatrach for a considerable additional LNG order to fill a new third storage tank at the upgraded LNG terminal on the islet Revythoussa, just off Athens, once the facility’s imminent commercial launch is staged.

This LNG shipment, entailing part of a 130,000-cubic meter order, comes as an addition to scheduled deliveries for the winter season’s heightened demand.

DEPA is now awaiting the LNG terminal’s launch, which has been delayed by a few weeks, to proceed with its extra Sonatrach order. The gas utility is keen to move ahead with the order as soon as possible to avoid any price fluctuations in the European energy market, currently volatile.

According to latest estimates, the upgraded Revythoussa terminal is expected to begin operating – commercially – in the second half of December, despite a preceding official launch ceremony, planned for November 22.

The terminal’s new storage tank will offer a 95,000-cubic meter capacity, boosting the facility’s overall capacity to 225,000 cubic meters. The upgrade promises to create new gas export potential to Balkan and southeast European markets.

According to a study conducted by Greek gas grid operator DESFA, the new Revythoussa terminal will be able to cover 30 percent of gas import needs in the Balkans, Slovenia and Hungary.

The US is currently seeking European gateways for shale gas exports. Besides catering to American gas trading interests, the upgraded Revythoussa terminal could, in the medium term, also facilitate gas quantities stemming from rich Cypriot and Israeli sources in the east Mediterranean.

 

DEPA, Sonatrach close to 2019 LNG deal for price, quantity

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LNG price, pricing formula and order quantity negotiations between Greek gas grid operator DEPA and Algeria’s Sonatrach, initiated last July by the Greek utility’s push for improved supply terms in 2019, are believed to be approaching finalization and could be completed within the next ten days.

On a visit to Algeria in the summer, DEPA chief executive Dimitris Tzortzis and his team countered Sonatrach pressure for higher prices by noting that Algerian LNG needs to remain competitively priced as international gas market conditions are changing. The DEPA team reminded of the planned 2020 launch of the TAP project as a new pipeline route to bring Azerbaijani gas into the Greek market.

Sonatrach currently supplies DEPA between 0.55 and one billion cubic meters of gas, annually, based on a contract that expires in 2021. Russia’s Gazprom supplies DEPA 2.2 billion cubic meters annually based on a contract expiring in 2026. A DEPA agreement with Turkey’s Botas for an annual gas amount of 0.75 billion cubic meters expires in 2021.

Greece’s energy sufficiency this coming winter will be ensured by an additional third tank at gas grid operator DESFA’s LNG terminal at Revythoussa, an islet just off Athens, DEPA officials have informed. The third tank, a 98 million-euro investment offering a 95,000 cubic meter capacity, has boosted the facility’s overall capacity to 225,000 cubic meters and also created new gas export potential into Balkan markets. Until now, Russia has fully covered the Balkan gas market.

 

 

DEPA infrastructure split likeliest development at utility ahead of sale

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A full or partial separation of gas utility DEPA’s infrastructure from the parent company appears to be the likeliest development in the corporation’s much-discussed split as part of its privatization plan.

The corporation’s resulting corporate stature would remain unchanged if a full or partial split of its infrastructure division is pursued. This would not be so if the trade division were split as a new tax file number and new company would need to be established.

In the latter case, DEPA’s suppliers – Gazprom, Sonatrach and Botas – would need to offer their consent as their existing supply contracts with the gas Greek utlity would need to be transferred to a new company. Their consent cannot be taken for granted. Even if the trio were to agree, privatization-related time, which is running out, could be needed to overcome various objections.

DEPA’s local takeover agreement with Shell still needs to be endorsed by a local Competition Committee. DEPA has agreed to acquire Shell’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area. DEPA already holds the majority 51 percent in these ventures.

The announcement of a tender concerning the privatization of DEPA Trade, originally intended for November, now appears set for a delay and will most likely be rescheduled for within 2019, a tricky period, as next year will be an election year.

DEPA seeking long-term supply agreement with US firm Cheniere

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A long-term LNG supply agreement of between 15 and 20 years has been the main focus of negotiations over the past few months between Greek gas utility DEPA and US energy company Cheniere, primarily active in LNG-related businesses.

DEPA’s recently appointed chief executive Dimitris Tzortzis is seeking a delivery arrangement that would enable the gas utility to not only import gas into Greece but also trade LNG in international markets, to the extent permitted by global market conditions.

Tzortzis mentioned DEPA’s ongoing talks with Cheniere at the Southeast Energy Forum in Thessaloniki last Friday without elaborating further.

The DEPA boss told the event that the two sides have already established a spot cargo LNG agreement for 2018.

DEPA intends to renegotiate existing agreements with gas suppliers Sonatrach, Botas and Gazprom and also assume a trading role in the natural gas market, DEPA officials have commented when asked if the Greek market has capacity for further gas amounts.

At present, DEPA is supplied an annual natural gas amount of 2.2 billion cubic meters by Gazprom. This deal expires in 2026. Sonatrach supplies between 0.55 and one billion cubic meters in a deal ending 2021, when an arrangement with Turkey’s Botas for 0.75 billion cubic meters, annually, also expires.

In 2020, the Trans Adriatic Pipeline (TAP) is expected to bring a further one billion cubic meters of Azeri natural gas into the Greek market.

DEPA planning pricing changes, new formula for all consumers

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DEPA, the public gas corporation, is preparing to revise tariff formulas applied by the company to determine purchase prices offered to all consumer categories, including large-scale consumers, energypress sources have informed.

Until now, electricity producers have been offered special natural gas supply terms compared to household consumption, especially for heating purposes.

The gas company is believed to have completed studies that have produced results indicating leeway exists for adjustments concerning flexibility and supply security offered to customers.

It has become clear at DEPA that tariffs need to be adjusted to the energy sector’s new, liberalized and competitive environment, as shaped by institutional and regulatory changes adopted.

DEPA will seek to adopt fairer pricing formulas for all consumers, regardless of category.

The gas company has already begun negotiations with all its suppliers and is aiming to make changes over two stages. The first stage concerns the period up to 2020 or 2021 when contracts entailing gas supply by Turkey’s Botas and Algeria’s Sonatrach expire. The second stage will factor in the activation of a supply agreement for Azerbaijani natural gas via the TAP gas pipeline and Greece’s geopolitical emergence as an energy hub and role of the country’s energy exchange.

Of course, DEPA’s negotiations will also include Russian giant Gazprom, whose current supply contract for the Greek gas utility ends in 2026, and, possibly, a diversification effort by DEPA that could incorporate American LNG and spot market deals into its portfolio.

Overall, these developments changes could require DEPA to alter its gas prices offered to electricity producers, which could spark reactions from the main power utility PPC as well as independent electricity producers.

If DEPA manages to offer fair and competitive natural gas packages, then it could lay the groundwork for a leading role amid the new liberalized market.

Competition in the wholesale natural gas market is intensifying. Besides DEPA, other importers are also supplying gas to the Greek market, the main players being the Copelouzos group and the Mytilineos group.

 

 

 

 

 

DEPA seeking improved terms for Gazprom, Sonatrach supply

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DEPA, the public gas corporation, is making an effort to renegotiate contracts with its two main suppliers, Russia’s Gazprom and Algeria’s Sonatrach, for improved terms, energypress sources have informed, as a result of market condition changes.

Besides supplying DEPA, Gazprom now also sells directly to other major customers in Greece, such as the Mytilineos group, a development reshaping the country’s natural gas market.

DEPA’s chief executive Dimitris Tzortzis and Gazprom Export deputy director Elena Burmistrova are believed to have discussed the subject at a meeting in St Petersburg last month. Officials of the two gas companies are expected to stage a new meeting in St Petersburg this week, sources informed.

DEPA officials will seek to improve the terms of the Greek gas utility’s existing Gazprom gas supply deal to help offset the Russian firm’s new dealings with other customers in Greece.

DEPA already appears to have ensured an exemption from a take-or-pay clause requiring payments for unconsumed amounts specified in supply contracts. DEPA is also pushing for a lower price but Gazprom officials do not appear willing to discuss such a prospect.

However, DEPA does appear to stand a chance of being granted a right to resell a proportion of gas amounts purchased from Gazprom in Balkan markets.

DEPA is also seeking to improve the terms of its supply deal with Algeria’s Sonatrach, the Greek gas utility’s second biggest source, supplying LNG.

Tzortzis, the DEPA boss, was in Algeria earlier this month for talks with Sonatrach officials on supply security concerning the Greek market in 2019, as well as supply price and pricing formula issues.

At these talks, Sonatrach officials pressured for price hikes as a result of higher international gas prices, but the DEPA boss insisted Algerian LNG needs to remain competitively priced as TAP-pipeline natural gas stemming from the Azerbaijani section of the Caspian Sea will begin entering the Greek market in 2020. A contract ensuring one billion cubic meters per year of Azerbaijani natural gas supply to the Greek market has already been signed.

As is the case with Gazprom, DEPA is also pursuing the right to resell a portion of its Sonatrach gas purchases to foreign markets.

DEPA intends to terminate a third gas supply contract held with Turkey’s Botas in 2020, a year ahead of its expiry date, as the terms of this agreement are regarded as being  unfavorable in view of the imminent supply of Azerbaijani gas to Greece via the TAP pipeline. Though talks between DEPA and Botas have not been held, an extension of their contract has already been ruled out.

Gazprom and DEPA currently hold a supply agreement for 2.6 billion cubic meters per year, until 2026. Sonatrach supplies the Greek gas utility between 0.55 and one billion cubic meters per year based on a contract expiring next year, when DEPA’s deal with Turkey’s Botas, supplying 0.75 billion cubic meters per year, also expires.

 

 

Motor Oil Hellas seeks further business activity in Algeria

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A team of highly ranked offiicials at LPC, a subsidiary firm of Motor Oil Hellas, have visited Algeria to explore the possibility of expanding the corporation’s business activities in the North African country.

The meeting took place after Naftal, a subsidiary firm of the Algerian government-owned energy company Sonatrach, a key supplier of LNG to the Greek market, forwarded a proposal for LPC to invest in the development of a lubricant processing system in Algeria. LPC had extended a related proposal in 2013.

The two sides also explored fuel and lubricant supply from Motor Oil Hellas, while problems encountered with a supply tender were also discussed.

Though not widely known, Motor Oil Hellas has enjoyed a strong market presence in the Algerian market over the past fifteen years as an exporter of lubricants, through its subsidiary firm LPC, to Naftal.

Knowledge of the cooperation between Greece and Algeria in the energy sector is generally limited to the ongoing trade between DEPA, the Public Gas Corporation, and Sonatrach, whose LNG supply to the Greek market over the festive season resolved the country’s energy supply crisis. It was caused by the temporary withdrawal of French nuclear power stations from the system.

 

 

 

Arrival of Sonatrach LNG load eases grid’s capacity pressure

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Capacity shortage pressure faced by Greece’s electricity grid has been successfully dealt with following yesterday’s arrival of a 130,000 cubic-meter Algerian LNG order at the country’s terminal facility on Revythoussa, the islet just off Athens.

The LNG carrier, which arrived at the facility operated by DESFA, the natural gas grid operator, yesterday morning, to deliver an order placed by the operator’s parent company DEPA, the Public Gas Corporation, to Algeria’s Sonatrach, was fully unloaded by late last night.

The country’s energy system was placed on Level 2 Alert last week, prompting a crisis management team at RAE, the Regulatory Authority for Energy.

Despite the refill at the Revythoussa facility, local authorities will remain vigilant as a result of a sharp drop in temperatures forecast for later this week.

The energy alert was prompted by the temporary closure of a large number of nuclear power stations in France, causing energy supply problems in the country. This led to wider impact as France needed to draw all spot-market loads in the Mediterranean. As a result, Greece and other countries were unable to secure LNG loads in the market to cover their energy needs. This prompted DEPA to place the emergency 130,000 cubic-meter order with Sonatrach. As a further measure, electricity producers were ordered to cut back on gas consumption.

Electricity contributions by various hydropower stations in Greece, as well as increased renewable energy production, helped overcome the crisis.