Hellenic Petroleum to pip DEPA to being sold first

The market is discerning shifts in the privatizations program for energy enterprises the Public Gas Corporation (DEPA), the gas grid operator (DESFA), Public Power Corporation (PPC) and Hellenic Petroleum (ELPE).

DEPA may be considered ripe for the picking, but at the moment the impression that most people have in the market is that ELPE will creep in to be the first in the series of sell-offs planned by the government.

Hellenic Petroleum came close to being sold last year when Qatar expressed an interest in the Greek oil group, although the Arab state ultimately pulled out. This time, however, Qatar?s place has been taken by Russian energy giant Gazprom, which has made no secret of its interest in ELPE and is seeking to buy it through its oil subsidiary Gazprom Neft, while also taking part in the tender for DEPA.

Sources say that the boards of the two groups, Gazprom Neft and Latsis (which controls the ELPE management), are already in talks. The Latsis group, which came into ELPE share capital through Paneuropean Oil and Industrial Holdings in 2003, holds a controlling stake of about 42 percent. All this renders the Latsis group instrumental in ELPE?s privatization, whether it decides to sell its holding or to remain as the strategic investor.

The former option would obviously allow the government and the new management of the Hellenic Republic Asset Development Fund (TAIPED) to show some progress in the crucial sector of structural reforms, which has been plagued by major delays. The word in the market is that such a scenario would actually facilitate DEPA?s privatization, too, as the gas company?s geopolitical relevance would come to the focus of attention.

It has already become clear from the tender for the gas utility that interest in it derives from its geopolitical features and not its commercial ones. According to reliable sources, the European Commission is concerned about the issue of the participation of Gazprom, which has serious chances of winning the tender, with Brussels being in favor of energy policies that would reduce dependence on Russia. Similarly, the United States would not want DEPA to become the entry point into the Eastern Mediterranean basin, after the potential that the discovery of new hydrocarbon reserves has created.

The subject of stopping Gazprom?s entry into DEPA has, market sources say, become the subject of diplomatic contacts between the Greek government, the European Commission and the US, as all sides share the view that the Russian firm is determined to offer a high price to win the tender.

What Asimakis Papageorgiou, Greece?s deputy minister for energy, said recently in reference to DEPA?s sale was no coincidence: ?The price may not be the sole criterion; the country?s national strategy is one of the quality criteria that should be accepted from the start by potential investors.?

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