Socar hopes for progress in Desfa Privatisation with Snam Onboard
Azerbaijan’s energy company Socar hopes to make progress with its purchase of Greece gas grid operator Desfa soon, while sources hint at Italy’s Snam as the state firm’s partner for gas transmission operations in Greece.
“We will continue our discussion on the matter with the energy ministry during a visit to Greece,” Soсar’s president, Rovnag Abdullaev, told journalists in Baku May 17. “Currently the proportion of the stake that will be ceded to European companies has not been determined.”
Azerbaijan energy minister and Socar officials left for Greece to join to the ground-breaking ceremony for the Trans Adriatic pipeline (TAP) in Thessaloniki.
Speculation surrounds Socar's readiness to cede 17%-25% of the company to other buyers, following its acquisition of a 66% interest in Desfa in an international tender in 2013.
Socar signed an agreement with the Greek government for €400mn, which would have been a useful sum for the government. But it could not finalise a deal following the European Commission's intervention over EU competition and energy security concerns. Socar remains a bundled production, transport and supply company with a monopoly on gas exports – like Russia's Gazprom. which has also encountered regulatory obstacles in the way of its plans to ship gas to Europe.
The European Commission stepped in to demand that the Azeri company surrender 17% to a certified European operator, which will reduce its control to 49%.
“The talks continue with ongoing selection process for another partner. Snam and Enagas are among them”, Abdullaev said last month.
Meanwhile, the head of Greece privatisation agency HRADF, Stergios Pitsiorlas, expressed hope that the deal will be closed soon with the Italian company – reportedly Snam – getting 17% interest in Desfa out of Socar’s 66%, Businessenergy reports.
Azerbaijan's ambassador for Greece, Rahman Mustafaev, also named Snam as Socar’s future partner for Desfa.
A tariff level issue is another obstacle holding back the completion of Desfa privatization. The Greece’s government is aiming for a revised tariff formula that will avoid excessive costs for consumers, especially for industrial sector, where changes influence production costs, and households, which rely on natural gas for basic energy needs.
Desfa has forwarded a proposal for new regulations as part of public consultation procedures staged by the regulatory authority for energy. According to sources, the proposal would lead to tight limits and bigger penalties in the case of deviations, surplus gas amounts and imbalances, Energypress reports.
“According to the provisions of the tender, the conditions must remain unchanged and not to reduce the yield, on which we counted acquiring a stake in Desfa”, Abdullaev told NGE. He says that tariffs for the gas network are regulated by the government; they should to ensure profitability level for investor.
“It is a good investment, as the profitability of the company guaranteed by the state. Under the terms of the tender the commercial attractiveness for investor should remain unchanged”, he added. “Desfa is not a top priority in Socar agenda. But we want to come to some final decision on long-lasting and honestly exhausting marathon and move on with our daily business”, he told NGE.
According to him, Socar considers Desfa an attractive asset, considering its plans for further expansion its business in Balkans. “We have other commercially attractive projects also, we have to come to some solution on the matter first,“ he said, adding that he hopes there will be some clarity by the end of the year.
Kama Mustafayeva