Russia's Sintez Sees Potential in Greek Gas

January 17, 2013

SINTEZ Group, the independent and privately-held Russian energy company, was informed by the Hellenic Republic Asset Development Fund (HRADF) January 17 that its subsidiary Negusneft OJSC has been selected to advance to the final round in the privatization of Greece’s national gas company DEPA and gas grid operator DESFA. SINTEZ Group and its advisers will now carry out the further due diligence required to make a comprehensive binding offer for the companies.

“We are pleased to have progressed to the final bidding round in the privatization process and we reaffirm our strong interest in the DEPA and DESFA businesses. SINTEZ Group is an independent company and we do not have the conflicts of interests as with some other bidders, who are state-owned gas producers. If we win the DEPA/DESFA auction we will be committed to comply in full with EU energy regulation, while at the same time diversifying gas supplies and investing in infrastructure to transform Greece into a natural gas transit hub. We remain confident that given our strategic focus on the Balkans and relevant sector expertise, SINTEZ Group is the right fit to further develop DEPA and DESFA,” said Andrey Korolev, Chief Executive Officer of SINTEZ Group.

Gazprom and Negusneft, a subsidiary of Sintez Group, are currently the main bidders in the sale of Greek gas distributor DEPA, according to a number of open sources. Currently, the overall cost of DEPA's company assets is estimated at over 1 billion Euro. The Greek government's final decision regarding DEPA's sale and privatization of the country's gas industry is expected in March, but industry experts believe that the decision to privatize DEPA might be delayed further due to political risks involved with the issue.

As reported by Kommersant, citing market sources, allowing Russian companies to purchase DEPA is causing concern in the European Commission, as it threatens to strengthen the monopolization of Greece's gas market and contradict the European Commission's Third Energy Package. At the same time, however, Greece is under increasing pressure from creditors, who are looking to reap as much profit from privatization as possible, reports the Financial Times (FT). The current foreign aid program to Greece requires the country to attract almost 19 billion Euro for privatization programs by 2015. "This leads to the question: what happens if Russians make an offer that we cannot refuse?," FT reports in an interview with a source in Greece. Other companies are also bidding for Greek assets, including Azerbaijan's SOCAR and Greek companies M&M GasCo and GEK Terna. These companies, however, are bidding only on the sale of Greek gas pipeline operator DESFA.

According to unofficial sources, writes Kommersant, Gazprom is ready to offer approximately 1 billion Euro for DEPA assets, but it is currently not interested in DESFA. Sintez Group confirms that it is bidding on both groups of assets and is offering between 1-2 billion Euro for both. Sintez believes that DEPA and DESFA can play a key role in the transformation of Greece into a new transit hub