EWE Eyes Turkish Gas Divestments

German gas utility EWE has acknowledged that it is considering offers for its Turkish gas distribution businesses, while declining to comment on "market rumours" of an imminent sale.

Turkish newspaper Sozcu reported August 8 that EWE was close to offloading its 80% stakes in the gas distribution businesses in the cities of Bursa and Kayseri, plus its Turkish telecom operator Millenicom, adding that Azeri state Socar and rival Turkish conglomerate Kolin were likeliest to snap up the assets; it cited market sources who said the EWE Turkish assets were worth $200mn-$250mn.

EWE's recently published 2017 annual report said it expected the number of customers and gas sales of both Bursagaz and Kayserigas to grow. But EWE CFO Wolfgang Mucher acknowledged in the report that given that Turkish retail gas prices there are set by the government in local currency, whereas import prices are oil-indexed in dollars, it was "a business that is hard to control from here in Germany."

Socar is already a gas wholesaler in Turkey and expects to increase sales there through the integrated Shah Deniz 2 and Southern Gas Corridor projects. The Azeri state firm also owns the large Star oil refinery at Izmir on Turkey's western coast.  Likewise, Kolin too has energy assets and an interest in expanding; it is a part-owner of Turkey's most recently opened LNG import terminal.

An EWE spokesperson declined to comment on the specifics of the Soczu report but told NGW: "In the past ten years, EWE has built up valuable companies in Turkey which are able to manage investments entirely on their own. Nevertheless, EWE regularly reviews whether all current measures ensure sustainable growth for the group in the defined future areas. Therefore, we conducted a market investigation for our Turkey business. We noted that there are some interested parties for this business. If a prospective customer wants to continue this business and offers us an acceptable price, EWE will exit this business." 

Oldenburg-based EWE itself is mainly owned by groups of German municipalities, but a leading German power group EnBW owns a 6% interest.

It would not be the first western firm to mull an exit from Turkey: OMV said late May it will sell its Turkish gas-fired plant at Samsun to local firm Bilgin although, since the deal was announced, Turkish state-owned Botas has hiked the price at which it sells gas to such power plants significantly. 

EWE's main gas distribution areas in Turkey (Graphic credit: EWE)