Less DESFA shares for SOCAR?

For a second time, the European Commission has extended the deadline for the decision on the acquisition of the Greek gas transmission system operator DESFA by the State Oil Company of Azerbaijan Republic (SOCAR), according to the statement on the EC official website.

The deadline extended to April 22nd from earlier announced date of March 23rd.

On November 5th, the European Commission said that it had opened an in-depth investigation as to whether the proposed acquisition is in line with the EU merger regulation. The EC has concern that SOCAR’s involvement in the production of natural gas as well as of its wholesale in Greece in the context of the created Southern Gas Corridor after acquisition major share in Greece gas distribution system may reduce competition here.

The merged entity could hinder SOCAR's competitors in accessing the Greek gas transmission network, the EC said, based on the preliminary investigation. DESFA owns and operates Greek's sole high-pressure gas transmission and Greece's only LNG terminal and mainly transports gas through its network.

SOCAR has acquired 66% stake in DESFA for €400 million after winning a tender in June, 2013. The European Commission has not yet approved the deal.

SOCAR has been negotiating the issue with EC competition authorities with the one of the option under consideration to cut of a 17% equity stake of the Azerbaijan state-owned company in order to reduce its participation in DESFA to 49%, said Greek Deputy Environment, Energy and Climate Change Minister Makis Papageorgiou at an energy conference in Athens as ANA-MPA reported.  The transfer of 17% will be made at a later stage, said the Minister.  

Greece’s Environment, Energy and Climate Change Minister Yiannis Maniatis had discussed the approval of the pending deal by the Commission at a meeting with European Commission Vice-President for Energy Union Maroš Šefčovič on the sidelines of the Council of Energy Ministers December 8-9. Maniatis said he had requested a speeding up of the process because of DESFA's role in strengthening energy security in Europe.

Commenting on the latest developments around the South Stream natural gas pipeline project and Russia’s decision to close the project, Minister Papageorgiou said this could speed up doubling the capacity of TAP pipeline to 20 billion cubic meters annually, from originally setting 10 bcm.

Related Reading: Privatization of DESFA Faces Possible Challenge