Partnership prospects for energy firms

Former electricity and natural gas monopolies Public Power Corporation (PPC) and Public Gas Corporation (DEPA) were not enthusiastic supporters of market deregulation, at least initially. Now it is a fact, they are trying to take advantage of synergies created by a deregulated market, and cooperate. The deregulation of energy markets has allowed some state-controlled companies to diversify. Refiner Hellenic Petroleum, for example, has branched out into electricity generation, while PPC has entered the telecommunications market. The companies’ managements have also shed the previously held view of their companies as isolated fiefdoms, often at loggerheads with each other, and are looking for ways to cooperate, as is done across Europe. According to sources, DEPA’s management has proposed to PPC that they cooperate in the bidding for the construction and operation of a liquefied natural gas (LNG) terminal in Crete. This is a project that makes sense for both companies: DEPA is active in the gas market and PPC wants to switch to the use of natural gas for its power generating plants in order to diversify its sources and become more environmentally friendly. The project calls for the transport of compressed natural gas from Algeria and Egypt. It will provide an opportunity to replace the old, expensive oil-consuming power plants with combined-cycle units. However, talks between DEPA and PPC are still at a preliminary stage. DEPA has also sounded out Hellenic Petroleum for cooperation in finding natural gas deposits. DEPA got the idea from the signing, on May 7, of a memorandum of cooperation in the oil and gas sectors between the Egyptian and Greek governments and the announcement by Hellenic Petroleum that it would diversify into gas. «Why should Hellenic Petroleum, an oil group, become active in drilling for natural gas and not us?» DEPA Chairman and CEO Assimakis Papageorgiou told Kathimerini. After making some contacts of his own in Egypt, Papageorgiou proposed to Hellenic Petroleum’s board that they cooperate. In both cases, the LNG project and the natural gas drilling, cooperation, if it is agreed, will take the form of jointly owned subsidiaries, Papageorgiou said. He added that DEPA will eventually become a group of companies, even ahead of its stock market listing in 2007. Even though it is much smaller than either the Public Power Corporation or Hellenic Petroleum, the Public Gas Corporation has significant growth prospects due to international developments that could turn Greece into a hub for the transport of natural gas from the Caspian Sea area to Europe.