EU probes Azeri-Greek merger

The European Commission said Wednesday it had started an in-depth investigation to assess whether the proposed acquisition of the Greek gas transmission system operator DESFA by the State Oil Company of Azerbaijan Republic (SOCAR) would be in line with the bloc's merger regulations. It said SOCAR had offered 400 million euros ($500 million) to secure a majority stake of up to two-thirds in DESFA.

SOCAR's activities include the production of natural gas and the upstream sale of gas in Greece. DESFA owns and operates Greece's sole high-pressure gas pipeline and its only LNG terminal.

The EU executive noted it had concerns that the planned deal might reduce competition on the upstream wholesale supply market for natural gas in Greece as it could allow the merged entity to hinder SOCAR's competitors in accessing the Greek gas transmission network.

On second thoughts …

The Commission said it aimed to ensure that the sale of DESFA as part of the Greek government privatization program did not result in reduced competition and ultimately higher gas prices for consumers in Greece. Brussels now has until March 23, 2015, to take a decision.

When talks about a merger first appeared in July of this year during a meeting between the Greek and Azeri presidents in Athens, EU officials were glad to hear the news, arguing it was linked to the planned Trans-Adriatic Pipeline (TAP) project as a key instrument for diversifying energy supplies to the European Union and decreasing the bloc's dependency on Russian gas.

The idea is to transport Azeri gas by pipelines via Turkey and Greece to Albania, Italy and other European markets.