US-based Linden Energy Ltd. said in early July it has signed an agreement to acquire a 50% stake in Bulgarian natural gas supplier Overgas Inc for an undisclosed price. Until the end of 2020 the same interest was held by Russia's Gazprom, Overgas's decade-long partner. The deal has a symbolic meaning, as the Russian energy giant is now replaced by an American shareholder, signaling US support for termination of Moscow's gas supply monopoly in the Balkans. The new partners have already announced plans to import American LNG in the region.
For some time, Overgas owner Sasho Donchev has had plans to attract a new shareholder and sell the stake held until recently by Gazprom, sources recall. Overgas Inc CEO Svetoslav Ivanov said the deal would not result in a capital increase, as the Texas-based company was acquiring shares already issued. He did not specify if the deal would have to pass clearance by the Commission for Protection of Competition.
Overgas Inc was the connection between Sasho Donchev and Gazprom: half of the shares was held by Overgas Holding, and the remaining half was owned by Gazprom Export and Gazprom. Until 2016 Overgas Inc was actually the umbrella company of Overgas's entire business but the changes started after Gazprom terminated supplies to its Bulgarian subsidiary in late 2015. The majority package of shares in network operator Overgas Mrezhi, which had until then been fully owned by Overgas Inc, was acquired by UK-registered DDI Holding Ltd (indirectly owned by Sasho Donchev and his family). The change of control in Overgas Mrezhi was carried out through a 202.5-million-lev capital increase in favor of DDI Holding. At the moment Overgas Mrezhi's parent companies are DDI Holding and Overgas Inc.
The payment to Gazprom had to be settled back in 2016 but it was not until January 2021 that Donchev's company received a 117-million-euro loan to complete its divorce with the Russian gas giant. There is no information when the relations were ultimately terminated but data from the Bulgarian trade register show that since this spring Gazprom has had no representatives in Overgas Inc's management.
More customers and LNG through Greece
The separation with Gazprom will have no direct effect on Overgas's activities, as 2019 data show the company buys natural gas from several sources: state-owned Bulgargaz (65% of supply), Greece's Mytilineos and DEPA, US Kolmar, as well as Bulgaria's Energiko. According to sources of Capital, Donchev's company has also purchased gas from its future partner Linden Energy.
"The Linden team is very excited to continue our work in Bulgaria and the Balkans and I believe that Overgas is the perfect partner to expand from a leader in the Bulgarian gas market to a leader across the Balkan region," Stephen Payne, Linden Energy president, said in a statement. "In addition to our investment, Linden will take an active role in supporting Overgas' efforts to diversify the energy market in Bulgaria by adding other sources of natural gas, one possibility being US LNG."
He noted that with Linden's prior commitment to utilize 10% of the Interconnector Greece-Bulgaria (IGB) pipeline capacity, the Overgas deal would further solidify the US company's investment portfolio in Bulgaria and support new growth in the region's gas network development.
"In addition to what we plan to do to help Overgas build out its network and expand its customer base here in Bulgaria, we also are looking hard at the Western Balkans. As you know Albania and Kosovo basically do not have any kind of last mile gas network at all. So we hope to take what Overgas has done and put it in the Western Balkans as well," Payne said.
Overgas CEO Svetoslav Ivanov pointed out that Linden Energy's joining Overgas would support the Bulgarian company's ambitious ideas for development of the markets of the Western Balkans."