Proposed sale of major gas importing group to Turkish-Russian venture raises legal concerns

LONDON (ICIS)–Three Turkish gas importers that had supplied 10% of the country’s annual gas demand were due to be sold to a Turkish-Russian company with a controversial ownership structure that raised concerns about the legality of the transaction, an ICIS investigation has found.

This means that the uncertainty over the new ownership could jeopardise Turkey’s ability to secure natural gas ahead of winter and at a time when its annual demand has been soaring to record levels in excess of 60 billion cubic metres.

Importers of Russian gas Akfel Gaz, Enerco Enerji and Avrasya Gaz, which belong to the Akfel Commodities Turkey group, were sold to Eurogaz Enerji Insaat in February of this year and energy regulator EPDK was expected to give its final approval this summer.

The group is critical to the energy security of Turkey, as the three companies included in the group have historically imported a total of 5.25 billion cubic metres/year of gas from Russia.

Akfel Gaz holds a 2.25bcm/year contract with Gazprom which is due to expire in 2043 but the contracts held by Enerco Enerji and Avrasya Gaz expired in 2021 and were due to be renegotiated.

The legal uncertainties linked to the new owners could lead to further delays in negotiations.

SALE

The group was valued by independent experts at close to $500m in 2016, a few months before it was nationalised by the Turkish government, and was put up for sale on 23 February for Turkish lira 245m ($13.5m) according to official reports seen by ICIS.

Final approval from energy regulator EPDK for the transfer of the company to the new owners was due this summer.

Under a decree issued by then prime minister Vladimir Putin in 2011, counterparties of Russian state companies such as Gazprom, including those residing abroad, need to disclose their ownership structure.

It is unclear whether Gazprom had approved the new ownership structure.

Gazprom and EPDK did not comment.

As ICIS was carrying out research into the shareholding structure of the buyers, the group’s trustees the Savings Deposit Insurance Fund (TMSF) reportedly announced on Friday the sale did not go through. This was confirmed by legal sources involved in the matter.

TMSF did not reply to questions from ICIS on Friday and there was no official announcement on its website as of Friday 14:00 hours UK time.

If the sale had been cancelled an official announcement would have to be made shortly.

INVESTIGATION

An ICIS investigation has found that Eurogaz Enerji Insaat is a partnership between Swiss-registered Globen GmbH in Zug and Russia-based Gefest Corporation LLC, a company with multiple activities, including construction and engineering.

Official documents seen by ICIS show that Globen GmbH holds a 75% share.

On the Russian side of the partnership, the ICIS investigation points to minority stakeholder Gefest Corporation LLC, which was liquidated and struck out on 13 December 2021, according to official government records.

Under Turkish law, liquidated companies cannot become shareholders in companies. Any such transactions would be deemed illegal.

Documents researched by ICIS indicate Gefest Corporation LLC included several subsidiaries, including in oil and gas upstream. The company lists as its chairman Dmitry Sergeev.

ICIS contacted the Gefest Corporation LLC via the company’s gefest.me website.

In response, the company responding to ICIS from gefest.me said it was not linked to Gefest Corporation LLC.

It said it was in fact called LLC Corporation Gefest, established in September 2019 and active in catering, construction and retail trading. The company is in operation and has an altogether different management than Gefest Corporation LLC.

However, when ICIS checked the domain name of the gefest.me website, it found that its registrant was Dmitry Sergeev, the same chairman as Gefest Corporation’s LLC.

TURKISH OWNERSHIP

On the Turkish side, the Eurogaz Enerji Insaat ownership can be traced back to Halil Ibrahim Bacaci, a Turkish businessman widely known as a close friend of Bilal Erdogan, the son of the Turkish president Recep Tayyip Erdogan.

Official documents researched by ICIS show that Bacaci holds the 75% stake in Eurogaz Enerji Insaat indirectly through Swiss-registered Globen GmbH which, in turn, is 100% owned by Dutch-registered Intener BV.

Intener itself is 100% owned by Port Ululslararasi Enerji Yatirimlari AS.

Bacaci was the sole shareholder of Intener via a company called Port Madencilik but the shares appear to have been transferred to Port Uluslararasi on 19 April 2022.

Eight days prior to that date, the sole shareholding structure of Port Madencilik was abandoned and split in half between Bacaci and Eti Bakir, a subsidiary of Cengiz Holding, one of Turkey’s largest conglomerates.

This may point to the fact that the Cengiz subsidiary may also be a shareholder in Intener BV, and through it in Eurogaz Enerji Insaat, the buyer of the Akfel Commodities Turkey group.

Seref Cengiz, the vice-chairman of Eti Bakir, along with other members of the Cengiz family come from the eastern city of Rize, like the Turkish president.

Official data point to the fact that Cengiz and Bacaci became joint authorised signatories in Port Madencilik on 11 April. However, in a statement to ICIS, Cengiz Holding said Eti Bakir became the partner of Halil Ibrahim Bacaci on 11th April 2022 officially but denied it was aware of the transfer of Intener from Port Madencilik to Port Uluslararasi on 19 April.

ICIS tried to contact Halil Ibrahim Bacaci but he could not be reached.

If the transfer was to be approved, the shareholding structure may raise concerns about the company’s political links.