Greece's DEPA Privatization and the Southern Corridor
The developments in the Southern Corridor since the beginning of 2012 have been significant and have revealed the main two consortium contesters for the transfer of gas from the second phase of Azerbaijan's Shah Deniz gas field, namely TAP and Nabucco West. Another development with a significant value related directly to the aforementioned is the privatization of DEPA, which is gradually anchoring itself with TAP, in a move that clearly illustrates not just business orientation but a geo-economical one as well.
DEPA was established back in 1987 as the company that would manage the long-term gas import contracts of Greece by Gazprom. Gradually, it developed an LNG facility as well and made separate deals with the Algeria's Sonatrach, whilst in the past five years it imports Azeri gas through Turkey. Through its subsidiary DESFA it also manages the entire domestic pipeline network and caters the needs of a middle-sized European market with a growing appetite for natural gas.
Despite the dismal state of affairs in Greek public finances, DEPA manages each year to have high earnings, drawing the interest of fourteen international companies in buying the 65% share the state currently controls. DEPA is not listed in any stock exchange and its total value is estimated by local pundits from 2 to 4 billion Euros, with the highest bid taking into account the tacit value of its geo-economic importance as a preferred hub for the transfer of Caucasian-Central Asian and even East Mediterranean gas to Southeastern Europe and the EU via Italy.
Over the past decade DEPA tried to place itself into becoming this hub mostly through the ITGI project which faltered by the selection of TAP earlier this year, although Asimakis Papageorgiou, the alternate Minister for energy in Greece - and a former DEPA head- has quickly grasped the opportunity of allying Greece to TAP and currently all available information point out that a percentage from 10-20% is being negotiated for the inclusion of the Greek company into the TAP consortium.
Since 2007 DEPA imports Azeri gas via the Turkish BOTAS and it’s the only EU country in that respect, thus the Southern Corridor was actually opened by Greece. In parallel since 2009 DEPA and the Bulgarian BEH have agreed for the IGB pipeline that would interconnect their pipeline systems, thus offering a significant advantage for the further flow of Azeri gas into the Balkan market, by taking into account that Bulgarian and Romania systems are also in the process of interconnection.
DEPA has also managed to hold some extra cards by having previous agreements with Gazprom and ENI in the South Stream project, which can be considered as an antagonistic one with that of the Southern Corridor. Thus by playing aside with the differences of big suppliers, DEPA officials often mentioned to the Greek media that they are confident they are going to be in the side of one major supplier in any case.
Moreover although ITGI is off the table, the Poseidon part of it, which is the underwater connection between Greece & Italy is still being considered to be used to transfer Algerian gas that would arrive to Greece in greater quantities from Italy. From there it would find its place in the regional market. Already DEPA have relayed that plan that aims to act as a counterweight in case it feels excluded from the Southern Corridor plans. In a more spectacular move of wider geopolitical importance DEPA is consistently transmitting to various stakeholders since May 2012, that it also proceeds with a feasibility study in order to be able by 2020 to transfer the East Mediterranean natural gas reserves, off the coast of Cyprus and Israel into the EU and Southeastern Europe. That move is coupled with Tel Aviv's and Nicosia’s anxiety of getting closer to Europe in the midst of the tectonic changes in the Middle East.
As it can be understood the different plans by DEPA are often of conflicting nature, nevertheless they can be used as a tool not only for business expansion but also for the gain of great geo economic advantages in a region stretching from the Adriatic Sea to the Levantine and up to the Caucasus producers. According to a high-ranking manager from ENI "DEPA's geo-economic agenda is one of the main motives for a foreign investor in its impeding privatization."
The main contesters so far for acquiring DEPA are SOCAR which strives to secure firmly Baku's role into supplying the EU through its Shah Deniz II field, Gazprom Finance which will certainly push forward the South Stream plan, Sonatrach which eyes the emerging Southeastern European market, ENI which needs a hub in Greece to connect itself both with Caucasus and the CIS suppliers for a steady flow of energy, and Israel Corp. which views DEPA as an ideal hub for the connection of Israel to the EU.
As it can be understood the long-term prospects of the Southern Corridor will be affected by DEPA's privatization since each of the main contesters offers distinct geo-economic perspectives and change the balance of suppliers in the total mix for the export of gas to the EU and the Balkans. Therefore it can be safely estimated that more developments should be expected regarding the crystallization of alliances, as far as, the Southern Corridor route is related.