UPDATE 1-Gazprom pushes for concessions in sale of Greece's DEPA

Tue May 21, 2013 2:28pm EDT

* Binding bids for DEPA due May 29

* Sintez, SOCAR to bid for DEPA's gas grid unit DESFA (Adds meeting between Gazprom chief and Greek Prime Minister)

By Harry Papachristou

ATHENS, May 21 (Reuters) - Gazprom is squeezing Athens for better terms to buy DEPA, Greece's sole retail gas distributor, a Greek official said, as the Russian gas export monopoly leverages its position as the only major player in the running.

Binding bids are due to be submitted on May 29 for DEPA, which posted a net profit of 106 million euros last year. Gazprom last year made a preliminary bid of 900 million euros ($1.2 billion).

Gazprom is already DEPA's main supplier, providing about 60 percent of its gas last year. It cut its supply prices by about 7 percent in 2011, but Greek energy players say prices are still high compared with what Gazprom charges in other parts of Europe with more competition.

Gazprom's chief executive Alexei Miller arrived in Athens on Tuesday for talks with Greek Prime Minister Antonis Samaras and other Greek officials. It was the third visit by senior Gazprom officials since March.

Miller sought assurances that DEPA's austerity-hit customers will settle arrears of 380 million euros and a concession that Gazprom will not have to deposit 20 percent of the purchase price as a guarantee before the sale gets European Union approval.

"The two sides discussed their exceptional cooperation in the natural gas market," Gazprom said in a statement after Miller's talks with Samaras. Gazprom also said the two sides wanted to develop their "mutually beneficial cooperation" further.

If Athens fails to sell DEPA, it will miss a target to raise 2.6 billion euros from privatisations this year under the terms of its international bailout. It would then need to make up the shortfall with extra austerity measures, which it is loath to do.

EU OBJECTIONS

Greece has already agreed to reduce the required guarantee and is striving to resolve DEPA's liquidity problem, said Stelios Stavridis, chairman of Greek privatisation agency HRADF in an interview with state radio NET.

According to Greek sources close to the sale, Gazprom is concerned that the European Union might block the DEPA acquisition, in which case it would lose some of its deposit.

Gazprom's role as supplier to DEPA has raised concerns that the EU, already trying to loosen Gazprom's grip on Europe's energy market, might block or impose stringent conditions on the deal.

Gazprom's only rival for DEPA is M&M Gas, a joint venture by Greek energy firms Motor Oil and Mytilineos.

But M&M's initial bid of about 550 million euros was far below Gazprom's, and its parent firms owe money to DEPA and compete with it in the wholesale gas market.

Sintez, a small Russian energy firm controlled by Russian tycoon Leonid Lebedev, is expected to submit a binding bid just for grid operator DESFA, which is part of DEPA but can be sold separately, Stavridis said.

Sintez's major rival for DESFA, a regulated business with a steady profit margin, is Azerbaijan's state gas firm SOCAR.

Greek-Czech consortium PPF/Terna, another contender for DESFA, may drop out of the race, according to two officials close to the group. "It can't be taken for granted that PPF/Terna will submit a final bid," one of the officials said. ($1 = 0.7778 euros) (editing by Jane Baird and Jane Merriman)