The privatisation of Greece’s state gas company DEPA and operator DEFSA, in which Russia’s Gazprom is the most high-profile bidder, has been complicated by reservations from Washington regarding Moscow’s interest in one of the Greece's most dynamic companies and could possibly become a "geo-strategic minefield" for the government of Antonis Samaras.
On Tuesday night, US State Department spokesperson, Victoria Nuland, stated America's position against the possible sale of DEPA-DESFA to Russian gas giants Gazrpom and Sintez. Washington had already warned Athens through the office of US Ambassador to Azerbaijan Richard Morningstar not to let DEPA fall into Russian hands.
In response to a question regarding the sale of DEPA, and Russian interest, and whether or not the US government is cautious about such a perspective, Victoria Nuland said that the "United States supports open and transparent trade discussions and negotiations on issues of power in the Mediterranean." She said that the US advises all nations to have different sources for national energy needs, so they can not be held hostage. Asked if the US government fears that Greece would become a hostage by Russia on energy matters," she argued that "It is a general comment about our policy anywhere in the world."
Her statements only come to prove what we here at HellasFrappe have said from the start, the Eastern Mediterranean Energy Corridor (East Med) and the Southern Gas Corridor are in all reality the setting for an all out US-Russian energy war and unfortunately our nation is caught right smack in the middle of it. The impressive thing is that there is not one single American company that has submitted a proposal for this privatisation venture, therefore the spokeswoman's statements are not protecting US corporate interests, but only support our argument.
So who are the bidders?
Non-bidding offers have come from Russian gas monopoly Gazprom, Russian energy firm Sintez Group (participating via its subsidiary Negusmeft), the Azerbaijani state oil and gas company SOCAR, and two Greek consortiums that comprise of M&M GasCo, Mytilineos Holdings, Motor Oil Hellas Corinth Refineries and a joint bid by PPF and GEK Terna Holding Real Estate Construction. Some or all of these companies are expected to advance to the next stage of bidding offers. Gazprom and Negusneft have reportedly raised the price tag seemingly for geopolitical reasons.
So what has been going on behind the scenes?
The government has been under pressure to find a formula to keep the Russian Gazprom and Sintez out of the game, but the Sintez company seems to have a strong alliance with the Latsis group and this is becoming a little difficult. (This kind of explains why there are so many negative articles about the Latsis family lately both from the US and the UK.)
Similar pressure has also been placed on the government by Greek corporate interests but this group is in no position to face off with the (very generous) Russian bids.
If the government takes the friendly advise of the US (and some movers and shakers in Brussels) then it might even postpone the bidding and focus on other major privatisations taking place.
Interestingly, the money offered by the Greek consortiums against the ones made by the two Russian giants is more or less a joke. Specifically, the Russian bids range between 1,14-1,33 billion Euros and the Sintez bid is said to have reached as much as 1.9 billion Euros! Moreover, the Greek consortiums interested in this privatisation, should really come as no surprise. Most of these groups have significant bank debts and their bids cannot match those given by the two Russian giants. More exactly, the company M&M Gas Company is a consortium comprised of the Vardinoyannis/Motor Oil-Mytilineos groups, and they only want DEPA. On the other, the GEKTERNA-PP Fund (we are guessing Bobolas led) wants to buy only DESFA.
As we said they cannot match the Russian bids, but, these consortiums can collaborate and/or join forces in the next phase of bidding and thus take the whole package, rather than vie for each company separately. This is not as unrealistic as it sounds, because some reports claim that the Vardinoyannis family has represented interests in the GEKTERNA / PP Fund.
The only negative aspect of this is that these oligarchs will not dig deep into their pockets to come up with the amounts needed to match the generous bids made by the Russian giants, and they might end up doing it in a more "business a la Greek" manner: First we take control of what we want because of our political connections, and then we simply borrow the money. If they choose another plan of action they might also come out looking as "strong players". For instance, they can present the required liquidity by using their political leverage within the government and then make an appearance alongside other giants such as Russia's Rosneft or Lukoil, etc. But the US veto will block any such development, and these Greek groups cannot go against the will of the US with which they cooperate very closely.
So what happens next?
Common sense. A government that respects its citizens, natural reserves and public wealth should not be intimidated by any sort of advice, and in this case that of the US. The notion that the company which imports the gas has to sell or cannot be the owner also of the pipeline is not a law or regulation in the EU, but only a general guideline, and ultimately it was very easy when the previous government launched this venture last year to include this directive in the notice. If they had done this then the Russians and the Azeris would have overlooked this bid and would have not expressed their interest. But this directive was not included in the original notice, so it can not be ignored now. Nonetheless this has not stopped some movers and shakers at the EU Commission to remind Greece of sticking to EU rules.
The US State Department Spokeswoman also commented on the issue of the "energy games" being played in the Mediterranean, (or on the Israeli, Cypriot and Greek cooperation, the protests of Turkey, the involvement of US companies, and Russian interest in the region). She said that obviously the US supports "open and transparent trade discussions and negotiations" while on the subject of Cypriot gas exploration she underlined that: The US continues to support the right of Cyprus to conduct surveys in offshore areas. "Of course, within this context, we strongly support the negotiating process conducted under the United Nations effort to reunify the island into a bi-zonal, bi-communal federation. We continue to believe that the island's oil and natural gas, as well as all its resources should be shared equally between both communities in the framework of an overall solution".
Obviously folks, this whole issue is more political than economic. This privatisation falls under the general geopolitical context of the gas discoveries in Cyprus and Israel, the exploration for hydrocarbons south of Crete, the Eastern Mediterranean Energy Corridor (East Med) and the Southern Gas Corridor. That is why we are afraid that the government is going to postpone this privatisation because it is a "political risk" and comes in a period when we are getting set to proclaim our EEZ and need the support of all these nations.
Editor's Note - HellasFrappe is not going to take a position in this ongoing energy war, but we are upset that most of the talk on the Greek blogsphere on Wednesday was highly critical about her statements. In fact some blogs and news sites even said that it was a direct intervention into Greek internal affairs, and a move that is reminisent of American intervention in Greece during the 50s and 60s. As a North American blog, with North American writers, we believe that the privatisation of a company is a sole and sovereign decision of a nation, as it would for any country. If Greece complies with national legislation and with the regulations set forth by the European Union then there shouldn't be any problems. This venture should not become a reason for ill feelings between nations.
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