Wednesday, June 29, 2011

Will Gazprom Purchase Greek Gas Company?

Stratfor analyst Marko Papic believe the European Union has reduced its support for Nabucco, in favor of the Trans-Adriatic Pipeline (TAP) and the Italy-Greece-Turkey Interconnector (IGTI), according to a report by Papic believes that the Russian gas giant Gazprom has its eye on a key link to both of these systems, the Greek natural gas company DEPA. "As the state-owned national gas company in Greece, a stake in DEPA by Gazprom would give the Russians considerable say in what projects are transiting Greece," he said.

Why would Gazprom want to control DEPA? Papic explains that all three of the Southern Corridor projects (Nabucco, TAP, ITGI) are supposed to be routes to bring non-Russian gas to Europe. If Gazprom controlled DEPA, however, Papic believes it would undermine this strategy and allow Gazprom to maintain its position as near-monopoly supplier. "The Russians are looking to slowly geographically block out as much as possible, and Greece fits into that. One possiblility would be that they would use their influence in Greece's natural gas infrastructure to pump their own gas through these supposed alternatives." CNBC reports that the TAP managing director, Kjetil Tngland, concurs that a likely motivation for a Gazprom takeover is the increasing influence that Gazprom could exert over discussions on regulation and transportation.

Under the European Third Energy Directive, energy suppliers are supposed to "unbundle" their control of energy transport networks. So, how would ownership of DEPA help Gazprom? According to Papic, the Third Energy Directive has not been successful in breaking Gazprom's control of other projects. "We've seen in Poland, for example, how the close relationship between the Polish national gas compnay and Gazprom has allowed Gazprom to have a say in how Warsaw was going to regulate the Third Energy Directive...The independent energy regulator ended up not really being as stringent as the European Commission would have wanted," he said.

Comment: The government of Greece is considering privatizing DEPA. With the Greek government in deep financial crisis, the possibility of Gazprom purchasing DEPA at firesale prices is a real possibility.