PARIS/MILAN/LONDON The grids that channel electricity and gas around Europe are among the most immovable of assets, yet they are changing hands as if they were cattle at a country fair.
From this tangle of wires and pipes, an EU grid champion is struggling to emerge.
The past few years have seen a battle between cash-strapped energy grid operators and deep-pocketed infrastructure funds to buy European grid assets from utilities that under EU law can no longer control those networks.
Grid operators like Italy's Snam, Germany's Open Grid Europe, Belgium's Fluxys and Dutch-based TenneT are keen to link with peers, but many grids have ended up in the hands of infrastructure funds, who buy them for the steady returns they provide.
These same financial investors are likely to play a key role in the eventual formation of major European network firms. They could do that by selling their stakes, or by combining them into larger, cross-border grids.
"There's going to be consolidation and a race to see who will be the EU champion. Snam is a clear front runner," an Italian infrastructure advisory banker told Reuters.
In the meantime, the networks sector is buzzing with merger activity.
Snam leads a consortium set to pay 2.4 billion euros ($3.1 billion) for French gas grid TIGF, while German insurer Allianz and Canadian fund Borealis are paying 1.6 billion for Czech gas pipeline operator Net4Gas.
In the electricity market, the Netherlands is considering a stock market flotation for grid operator TenneT, while Finland's Fortum is looking at selling its power network.
Bankers and lawyers expect many more deals in coming months, as utilities offload networks that by law they can no longer control as they did before the EU-imposed separation of energy production and distribution.
The stakes are high.
The renewable energy boom requires improved grids to integrate and balance out intermittent solar and wind energy, and the EU needs to reduce reliance on Russian gas through better connections with LNG terminals in Spain and Italy that bring in gas from North Africa and the Middle East.
Among potential sellers are France's EDF, which could sell part of its RTE grid, and GDF Suez, which could put part of GRTgaz on the block.
In Germany, EnBW could sell its power and gas networks, E.ON its Finnish network and VNG its gas grid Ontras. Many small municipally-owned girds are also prime acquisition targets.
Spain's Iberdrola and Gas Natural could sell distribution assets, while grids in Scotland, Switzerland and Austria are also on bankers' watchlists.
Many deals are likely to follow the pattern of past years, with yield-hungry funds and insurers buying grids from utilities that want to use the proceeds to pay off debt, invest in renewables or in traditional power generation in emerging markets.
Illustrating this trend, RWE's sale of Net4Gas last month came on the same day E.ON bought a stake in Brazilian power company MPX Energia.
The Net4Gas deal also illustrated the difficulty for grid operators in outbidding funds. No longer backed by the utilities they were once a part of, grid operators need to seek finance from their state, municipal or private shareholders.
Snam's TIGF acquisition was a rare example of an operator winning a tender, albeit with backing of Singapore's sovereign wealth fund GIC and EDF's investment arm.
Snam plans to invest 6.9 billion euros ($9 billion) over the next four years as it aims to integrate Europe's patchwork of gas grids. It also set up a joint venture with Fluxys, which has bought a stake in Interconnector (UK), which owns an underwater gas pipeline linking the UK and Belgium.
With TIGF - which operates a gas grid in southwest France - Snam is in position to access Spain's network of LNG terminals.
"We are working on developing a north-south corridor, as our deal with Fluxys shows, but also an east-west axis as witness the TIGF deal which could unbottle Spain and its LNG supplies," Snam CEO Carlo Malacarne told Reuters.
In the electric realm, an EU grid is still embryonic.
In 2009, TenneT bought E.ON's high-voltage grid in central Germany, making it the first power grid operator to own combined networks in two countries.
A year later, Belgium's Elia, supported by an Australian fund, outbid a group of funds for a grid in eastern Germany from Sweden's Vattenfall.
But while Italian, Belgian and Dutch players could be a catalyst for the emergence of a big European grid operator, it is unlikely this could happen without the involvement of German and French firms.
And there's the rub, as the EU's two heavyweights take an opposite approach to grid control.
The German gas and electricity network market is highly fragmented, as Germany complied with the spirit of EU energy directives and allowed its grids to be acquired by international companies and financial investors.
Two of its four top power grids are in foreign hands (TenneT and Elia), while RWE's grid Amprion was sold to German financial investors. State-owned EnBW is believed to be reviewing whether to hold on to its power grid TransnetBW and its TerraNets gas grid joint venture with Italian Eni.
In gas, the situation is similar. Last year, E.ON sold its Open Grid Europe to a consortium led by Australia's Macquarie, which earlier had also acquired RWE's Thyssengas.
There are more than 10 German gas grids, some of them owned by foreign firms including Fluxys, GRTgaz and Dutch Gasunie.
In France - which fought the EU's unbundling drive tooth and nail - two large utility-owned grids dominate gas and electricity transmission.
Reseau de Transport d'Electricite (RTE), France's high-voltage power network, belongs to state-owned Electricite de France (EDF), which also controls low-voltage distribution company ERDF. Similarly, GDF Suez (36 percent state-owned) controls 75 percent of gas transport unit GRTgaz.
French firms themselves could go on the acquisition trail - last year, GDF Suez did consider bidding for Open Grid Europe.
The most likely catalyst for the creation of a major EU grid player would be the emergence of a secondary market in grid operators, if and when funds start offloading their networks in the quest for a quick profit.
At the moment, Europe's fragmented energy grid looks a bit like the early stages of a Monopoly boardgame, with infrastructure funds buying up as many properties as they can, hoping to combine them into lucrative holdings.
"Many financial investors are trying to get as many chips as they can find on the table," Stephan Kamphues, CEO of Open Grid Europe, Germany's largest gas grid, told Reuters.
Kamphues added these players probably hope to consolidate these stakes and then sell them in a second wave of deals.
Kamphues, like many other industry specialists, expects consolidation will happen first in the gas grid sector, because governments see electricity as more strategic, and because the gas business it is more international.
Most electricity is consumed within 100 kilometers of where it is produced. Gas typically comes from thousands of kilometers away.
Either way, one London-based banker said he expects consolidation among grid operators over the next one or two years. "We could end up with a north-south network from Norway to Rome and an east-west network from Germany to Ukraine." ($1 = 0.7658 euros)
(Additional reporting by Christoph Steitz in Frankfurt; Editing by David Holmes)