Azerbaijan's state-owned oil and gas producer Socar over the weekend signed an agreement to buy a 66% stake in Greece's gas transmission operator DESFA for a total of Eur400 million ($547 million).
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The move strengthens its role in southern Europe's gas supply system.
Socar bought a 35% interest in DESFA from Greece's oil, gas and power company Hellenic Petroleum and a 31% interest from the Hellenic Republic Asset Development Fund, Socar and HRADF said in separate statements, with both adding the deal is pending approval from relevant national and EU authorities.
The Greek state controls the balance 34% stake in DESFA.
Socar, the Hellenic Republic and HRADF signed a separate agreement on the administration of DESFA after the stake deal is completed, HRADF said.
"The signing of these agreements will lead to the injection of additional investment capital necessary for the modernization and strengthening of the competitiveness of [Greece's] energy sector," it said.
The deal will also increase Azerbaijan's role in strengthening European energy security, Socar said in its statement.
Greece launched the privatization of 66% of DESFA and 100% of gas company DEPA in February 2012 in an effort to raise funds for its struggling economy.
DEPA has yet to be privatized.
Socar and its partners in the major Shah Deniz gas project offshore Azerbaijan signed the final investment decision for the project's phase two in mid-December, which aims to increase energy security in Southern Europe and Turkey. Phase two is expected to supply 16 billion cubic meters/year of gas to the international market; 10 Bcm/year to Europe and 6 Bcm/year to Turkey.
DEPA is among the buyers of the future volumes, along with Switzerland's Axpo Trading, Bulgargaz, Italy's Enel, Germany's E.ON, Spain's Gas Natural, France's GDF Suez, Italy's Hera Trading, and Shell.
The gas volumes will be supplied to Europe through the so-called Southern corridor that comprises the expanded South Caucasus Pipeline via Azerbaijan and Georgia, the future Trans Anatolian Gas Pipeline across Turkey, and the future Trans Adriatic Pipeline running across Greece, Albania and into Italy.
From January 1, BP is set to hold a 28.8% operatorship stake in the Shah Deniz project, while Socar will hold 16.7%, Statoil 15.5%, Total 10%, Lukoil 10%, Iran's Nico 10% and Turkey's TPAO 9%.