Russia's Sintez May Take Foreign Partner in Bid for Greece's Depa

By James Marson

MOSCOW--Russia's Sintez Group could add a foreign partner in its bid for Greek gas firm Depa in the hope of allaying concerns of excessive Russian control over the country's energy market, its chief executive said Tuesday.

The sale of Depa is a flagship for Greece's European Union-backed privatization drive, aimed at bolstering the country's finances and paying off debt.

But the sale comes as the EU is pushing to reduce Russian involvement on Europe's energy markets, and Western officials have raised concerns with Athens over the bids by privately owned Sintez and Russia's state-controlled OAO Gazprom (GAZP.RS).

"We hope a partnership will remove any concerns," Sintez Chief Executive Andrey Korolev said in an interview.

Besides Sintez and Gazprom, the other companies to have made the final stage are two Greek groups and Azerbaijan's state energy firm Socar. The finalists are allowed to form consortiums with any of the nine approved bidders that didn't advance, but those five companies can't partner with each other.

Sintez, controlled by tycoon Leonid Lebedev, isn't in talks with those firms, Mr. Korolev said, but looks "positively" on the idea of working with a partner.

"We're interested in working with companies that can add value in some way. Some have experience operating gas distribution networks and trading, some are suppliers, others have technology or financing," Mr. Korolev said.

Eligible firms include Italy's Eni SpA (E) and Edison SA (EDN.WA), and Spain's Enagas SA (ENG.MC).

Mr. Korolev added, however, that Sintez may not have enough time to reach an agreement with potential partners, as the deadline for any such agreement is March 15.

Greek officials say the U.S. and the EU have privately raised concerns over the Russian bids, but insist that they will accept the highest offer.

"We would like other companies to be given the opportunity, mostly from Europe, to join a consortium," said a senior Greek official familiar with the country's privatization plan. "But the privatization procedures don't take into account politics. Whoever offers the highest bid will win the tender."

The sales of Depa and its subsidiary Desfa, the gas-grid operator, are expected to fetch up to 2 billion euros ($2.67 billion).

The EU is seeking to reduce the influence of Gazprom, which supplies around a quarter of Europe's needs, on its energy markets through regulatory measures and by encouraging countries to find other sources.

A spokeswoman for EU Energy Commissioner Guenther Oettinger couldn't be reached for comment Tuesday. Commenting on the Depa sale in January, U.S. State Department spokeswoman Victoria Nuland said the U.S. advises countries "to have diverse sources of supply for their national energy needs so that they can't be held hostage."

Sintez's Mr. Korolev touted his company's bid as chiming with the EU's aims, saying it favors the construction of a second liquefied natural gas terminal and a pipeline that could bring gas from Azerbaijan to Europe via Greece. Russia's OAO Gazprom covers around 80% of Greece's supplies.

Mr. Korolev said Sintez sees Greece as a potential gas-transportation hub for supplies from the Mediterranean. Sintez is also bidding for Desfa and would invest $3 billion in the companies, he said.

Sintez has power-generating assets in Russia and Macedonia, as well as oil and gas fields in Russia.

Some analysts and officials have questioned the bid from the relatively small and little-known company.

"It's the odd one out. It's a small company that doesn't really do gas," said one EU official.

Mr. Korolev said the company is acting on its own and not fronting for a bigger player such as Gazprom, which is only able to bid for Depa, and not Desfa, due to EU regulations. He said Sintez has lined up financing from Russian banks.

Binding bids for Depa and Desfa are due April 12, and the results of the tender are expected to be announced in early May.

--Alkman Granitsas and Philip Pangalos in Athens and Alessandro Torello in Brussels contributed to this item.

Write to James Marson at [e-mail]

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