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Gazprom stays away from DEPA privatisation bid for lack of guarantees

June 10, 2013, 19:42 UTC+3
The company /DEPA/ is already experiencing serious problems with non-payments by consumers, - Gazprom spokesperson Sergei Kupriyanov said
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Sergei Kupriyanov. Photo ITAR-TASS

Sergei Kupriyanov. Photo ITAR-TASS

MOSCOW, June 10 (Itar-Tass) - Russia’s Gazprom did not participate in the DEPA privatisation bidding for lack of sufficient guarantees that the Greek company’s financial position would not deteriorate by the time the deal is completed, Gazprom spokesperson Sergei Kupriyanov said on Monday, June 10.

“All procedures for getting approvals and formalising the acquisition of DEPA after the results of the tender are announced may take about a year. The company is already experiencing serious problems with non-payments by consumers, it is heading for restructuring to spin off DESFA, and the bidders were given no guarantees that public regulation of DEPA would not deteriorate. All this creates significant risks that affect the company’s value, while the price of the deal is to be fixed now without taking all these factors into account,” Kupriyanov said.

As a result, Gazprom decided against bidding.

The Greek Internet portal Capital.gr said Gazprom and another Russian company, Negusneft of Sintez Group, had refrained from bidding because of disagreements between the Russian gas monopoly and the Greek government over the price of natural gas supplied to Greece. Gazprom meets 67 percent of Greece’s gas needs, but the Greek government claims that the price of Russian gas is about 30 percent above the European average.

Other electronic media blamed the failure of the deal on the uncompromising position of the European Union, which does not want Russian energy companies to gain more weight in Europe and which is the ultimate authority that approves privatisation deals.

According to sources, only one of five bidders - the State Oil Company of Azerbaijan (SOCAR) - participated in the tender with a binding offer with regard to DESFA.

As for DEPA, none of the two bidders - Gazprom and the joint venture M&M Gas, created by the Greek energy companies Motor Oil and Mytilineos - made binding offers during the tender.

On February 29, 2012 the Greek government announced the start of the bidding procedure for privatisation of DEPA, the state-run gas company.

DEPA is focused on wholesale purchases, sales and supplies of natural gas to industrial consumers and households in Greece. It operates within the jurisdiction of the Ministry of Development. In 2005, in order to liberalise the natural gas market, DESFA SA was created as a fully owned subsidiary to transport natural gas within Greece. Since then, DEPA sells gas to large consumers and to the gas supply companies. Natural gas is imported by pipelines from Bulgaria and Turkey and by liquefied natural gas at the Revithoussa LNG Terminal.

DEPA Group is active in the wholesale, trading and supply of natural gas to large end-users. DEPA procures gas through long-term ToP contracts for piped gas and LNG with Gazprom, Botas and Sonatrach totalling 4.2 billion cubic metres per annum. In turn, DEPA sells gas under medium and long-term ToP contracts to power producers, large industrial customers and the three existing gas distribution and supply companies, the EPAs. In 2011, these customer groups accounted for 96 percent of gas sold by DEPA.

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