Azerbaijan's SOCAR to extend DESFA purchase guarantee

Azerbaijan's state energy company SOCAR has agreed to extend by a month a letter of guarantee for its acquisition of Greek gas network operator DESFA, the office of the Greek prime minister said on Tuesday.


The guarantee letter was due to expire on Sept. 30 and SOCAR had previously said it would only go ahead with the deal if the cost was cut significantly, given that a number of snags had emerged since it first agreed to buy DESFA in 2013.


SOCAR President Rovnag Abdullayev met Greek Prime Minister Alexis Tsipras on Tuesday to discuss the issue and the Greek statement said the meeting took place in a "positive atmosphere".


"Within that framework, SOCAR announced it would extend, for another month, its letter of guarantee," the statement said, adding that the two sides would hold talks to reach a mutually beneficial solution during that time.


SOCAR's purchase of a 66 percent stake in DESFA hit a snag when the European Union ordered it to dispose of a 17 percent stake in the Greek operator on competition grounds.


The deal was further complicated this year when Greece passed a law raising DESFA's gas tariffs at a lower amount than SOCAR had expected, potentially eating into its future profits.


Italian gas grid operator Snam SRG.MI is still interested in buying the 17 percent DESFA stake that SOCAR has to sell to satisfy EU conditions, the Azeri company has said.


DESFA's sale is part of a privatisation programme required under Greece's international bailouts.


It is expected to raise 188 million euros for state coffers this year, which will go towards helping Greece meet its 2016 bailout target for  privatisation proceeds of 2.5 billion euros.

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