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Slovak gas giant looks to profit in Greece

The Slovak gas company Slovenský Plynárenský Priemysel (SPP) is looking far over the border into Greece to buy its way into a regional gas distribution company that SPP officials are confident would generate profits supplementing the slim returns it makes on gas sales within Slovakia. SPP has leaped into an international tender to sell gas transported via a newly-built gas pipeline stretching from Russia through Bulgaria to Athens. According to SPP spokesman Ľuobomír Rabaj, SPP is competing in the tender to buy 49 percent of the Greek distribution firm EDA that would channel gas to northern Greece. While the Greek government is expected to announce the tender results by the end of the year, Rabaj ranked the chances that SPP - Slovakia's sole gas distributor - would win the tender as "very high."


General Director Arpád Demko is leading SPP past Slovakia's borders.
Vladimír Hák

The Slovak gas company Slovenský Plynárenský Priemysel (SPP) is looking far over the border into Greece to buy its way into a regional gas distribution company that SPP officials are confident would generate profits supplementing the slim returns it makes on gas sales within Slovakia.

SPP has leaped into an international tender to sell gas transported via a newly-built gas pipeline stretching from Russia through Bulgaria to Athens. According to SPP spokesman Ľuobomír Rabaj, SPP is competing in the tender to buy 49 percent of the Greek distribution firm EDA that would channel gas to northern Greece. While the Greek government is expected to announce the tender results by the end of the year, Rabaj ranked the chances that SPP - Slovakia's sole gas distributor - would win the tender as "very high."

If it wins the tender, Rabaj said, SPP has offered EDA training and technical support to distribute the gas. Rabaj estimated operating the pipeline, partly built by the European Union at an annual cost of $2 billion, will cost the company 500 million Sk ($16.5 million) a year, but he exuded confidence that sales will more than make up for the investment.

"Our profit will not come from bringing gas to Greece, but from the sale of gas in Greece," Rabaj explained. "Our money will come back to us faster than in Slovakia, where the price of gas to customers is still state-regulated."

"In Slovakia, we buy gas from Russia for more than we can sell it to our own citizens," Rabaj continued. "Clearly, in Greece, we'll see a bigger and quicker return on our investment."

EDA shares distribution for central and southern Greece with its Greek corporate sister, ENA. Both are daughter companies of the Greek oil firm DEPA. Gas de France, the Italian gas company ENEL, and an American company called Eurostar are also bidding to service the central and southern regions of the Greek market.

Rabaj said that although the pipeline has been ready for three years, "the distribution system has not been worked out, which is what this tender is all about."

"We want to finish the distribution net while training Greek specialists to distribute the gas, because they have no experience," SPP's spokesman continued. "The know-how we provide will make it a third less expensive than using electricity or other oil-based energy. We expect to have 30 percent of all the companies [partaking in this venture] interested in getting or buying this gas."

Asked why SPP had chosen Greece for its expansion outside Slovakia, Rabaj said SPP's specialists had spotted a niche it could fill cheaply, with the immediate objective of getting the gas network going. "What the EU wants is to complete the whole net, which means connecting the other parts of the system with this one, but the European firms are not so focused on getting the gas to customers," Rabaj said.

"Another source of profits includes the technology that we intend to build in Greece," Rabaj continued. "This is very important. To physically widen the whole system, we're going to use the profits from the gas we sell; in other words, we're not going to wait three more years to complete the whole system before we start selling it."

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