Socar in Last Ditch Desfa Talks

Azerbaijan state oil and gas producer Socar's president Rovnag Abdullayev plans to hold talks with the Greek government in Athens next week on the acquisition of 66% stake in the Greek gas distribution company Desfa. The talks represent a last opportunity to salvage a deal agreed in 2013.

"I plan to visit Athens at the end of September for talks with the Greek government on the issue; they are waiting for us," Abdullayev told reporters late September 22. He urged the media not to create a fuss around the deal as, according to him, it is necessary to respect the Greek government position.

It was reported earlier that Socar is awaiting a compromise on the part of the Greek government for the successful completion of the acquisition of a 66% stake in Desfa. In particular, the Greek side has changed the rules for the calculation of tariffs for gas, which, according to Socar's estimations, will lead to at least a 50% loss of Desfa’s value. Socar said that it is not ready for new conditions as they are not so interesting for the company.

Socar president Rovnag Abdullayev (Photo credit: Socar)

Socar said it is ready to continue to participate in the privatisation of Desfa on the original terms and it awaits a compromise from the Greek side. The term of the letter of guarantee from Socar to participate in the Desfa privatisation expires on September 30, 2016.

Socar agreed to buy 66% of Desfa for €400mn ($446mn) after winning an international tender in 2013. After being ordered by the European Commission (EC) to surrender a 17% share to a certified European operator, Socar agreed to resell part of its 66% to Italian gas grid Snam. Earlier this month, Abdullayev acknowledged that talks were ongoing between the Greek government and Snam.

Greek newspaper Ekathimerini reported September 21 that prime minister Alexis Tsipras wants to lead the privatisation talks, as his energy minister Panos Skourletis does not see eye-to-eye with either Socar or Italy's Snam; it said that Snam officials met with Skourletis on September 20.

On September 22, Snam and German insurer Allianz signed an agreement to acquire a 49% interest in Austria's gas grid operator.

Azerbaijan Desk