UPDATE 1-Enel CEO looking at stake of up to 20 pct in TAP pipeline

Tue Mar 26, 2013 4:59pm EDT

Related Topics

* Decision on TAP stake expected Sept-Oct

* Rules out sale of Endesa assets, Enel Green Power stake

* Urges repeal of renewable subsidies

* Says lack of clarity in emissions trading scheme hurting energy firms (Releads; adds CEO comments, background)

By Ethan Bilby and Francesco Guarascio

BRUSSELS, March 26 (Reuters) - Enel, Italy's biggest utility, is interested in taking a stake of up to 20 percent in the Trans-Adriatic Pipeline (TAP) project that aims to pump Azeri gas to Europe, the group's chief executive said on Tuesday.

"There's talk of a 10 to 20 percent share that we would be happy to take. The decision should be taken, I believe, in September or October," Fulvio Conti, the CEO, said on the sidelines of a conference in Brussels.

Enel, Europe's second-biggest utility in terms of installed capacity, uses gas to fire part of its power generation fleet and to sell to customers.

Earlier on Tuesday, Conti told reporters that while he was ready to take a stake in TAP, the primary goal was to have gas. "I am not a transporter of gas, I am a utiliser of gas," he said.

TAP is competing with the Nabucco West project to carry 10 billion cubic metres (bcm) of natural gas per year from Azerbaijan's Shah Deniz II gas field to Europe after 2018 and reduce the European Union's dependence on Russian gas.

The project is proposing a route from Turkey through Albania and Greece into Italy, while Nabucco West offers to ship gas from Turkey's border with Bulgaria to Austria.

The Shah Deniz consortium will decide in June which pipeline gets the nod to deliver the sought-after gas.

State-controlled Enel is developing a liquefied natural gas terminal on the island of Sicily and has a stake in the GALSI project which aims to bring Algerian gas into Italy.

Europe's recession and falling industrial demand has reduced gas consumption, and some gas projects are being delayed.

Enel, one of Europe's most indebted utilities, plans to sell 6 billion euros ($7.72 billion) of assets and cut costs to reduce debt and hang on to its credit rating.

Asked about the group's disposal plans, Conti ruled out the sale of shares in its Spanish unit Endesa or reduction of its controlling stake in renewable energy subsidiary Enel Green Power (EGP).

"We do not envisage the sale of any other Endesa asset. There will probably be buying and selling in EGP, but sales of very small minority stakes," he said.

SCRAP SUBSIDIES

Conti said European Union governments should stop subsidising renewable energy to relieve pressure on utilities struggling with economic weakness.

"If (governments) keep levying taxes and drying up all the cash flows, then all the shareholders will walk away as they have been doing," Conti told journalists in Brussels.

After years of recession in Europe, many analysts have declared the EU utilities sector incapable of attracting investment, with demand for power declining.

"This is true for all Europe, making the overall industry of energy uninvestable," Conti said, also calling for an end of subsidies for renewables in EU planning, which he said needlessly raised prices for consumers.

But the company head spoke more favourably about the EU's emission trading scheme (ETS), which sets a price for carbon emissions that can be traded on an open market.

Conti said he supported an EU proposal on backloading, the temporary withholding of emission allowances in the ETS, that is due to be voted on by the European Parliament on April 16.

But he said continued lack of clarity over the scheme was hurting power firms.

"Whenever you are speaking about regulations, if they are not clear and stable they are a bad regulation." ($1 = 0.7777 euros) (Writing by Stephen Jewkes in Milan; Editing by John O'Donnell, Anthony Barker, Richard Chang and Leslie Adler)

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