SOCAR expects to resolve DESFA issue by end of the year

/By Azernews/

By Fatma Babayeva

Azerbaijan’s state energy company SOCAR expects the issue of purchase of 66 percent stake in DESFA- the Greek gas operator to be resolved by late 2016 with further sell of 17 percent stake to another European company.

“SOCAR’s purchase of a controlling stake in DESFA is of great importance to Azerbaijan, giving it control of a European gas supplier and enhancing its role in providing energy security for Europe,” a source in the company said, emphasizing that this process is expected to be completed in late 2016.”

SOCAR won an international tender for the acquisition of 66 percent of DESFA shares for 400 million euro in 2003. However, the European Commission launched a revision of this transaction on competition issues.

Later, the Greek government offered SOCAR to sell a 17 percent stake of DESFA shares to third parties. For the completion of the sale of the 49 percent controlling stake in DESFA to SOCAR, 17 percent must be sold to a European Union firm, with the SOCAR also having a say in the selection of the new stakeholder.

The source denied rumors that company was set to withdraw from the DESFA deal, instead noting that SOCAR has a serious interest in selling liquefied natural gas (LNG) to the EU.

“Plans to upgrade the LNG terminal in Revythoussa near Athens will meet these interests and is important for gas supply in the wider region beyond current route of the Southern Gas Corridor,” the source said.

Although the Hellenic Republic Asset Development Fund (HRADF) received a formal offer from the Italian company Snam alliance Fluxys-Enagas about the purchase of 17 percent stake in DESFA, later Fluxys refused from this plan.

Dutch Gasunie and Italian Snam also were among those interested in purchase of DESFA’s 17 percent shares.

Baku has earlier claimed that from Azerbaijan's perspective, there was no conflict of interest in acquiring a majority stake in DESFA as the gas owner to be pumped through the SGC was not Azerbaijan, but the Shah-Deniz Consortium.

The European Commission does not want the control package of such a big Transmission System transferred to the hands of non-EU country, but remain under the Greek control.

Greek Energy Minister Panos Skurletis recently announced that the deal with SOCAR is delayed due to the stance of the European Commission.

“The privatization of DESFA is delayed due to the fact that the EC opposes the transfer of a majority stake in gas operator to SOCAR,” he said, adding that the Greek government has no plans to privatize other energy assets.

Azerbaijan will start supply of 10 billion cubic meters of gas per year to Europe via the Trans Adriatic Pipeline (TAP) in the first half of 2020 which construction will begin in May 2016.

TAP pipeline will stretch across 870 kilometers through Greece, Albania, the Adriatic Sea and the south of Italy. The pipeline will be connected to Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border near the city Kipoy.

TAP's shareholders are BP (20 percent), SOCAR (20 percent), Statoil (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).