Portugal backs Galp-Moeve deal if Sines is protected

Portugal’s government is prepared to approve Galp’s planned merger of its Iberian refining and fuel retail businesses with Spain’s Moeve, provided the deal protects the strategic role of the Sines refinery, Economy Minister Manuel Castro Almeida said in an interview with Bloomberg. The issue matters for investors and the energy market because Sines is Portugal’s only operating oil refinery.

According to the minister, the government has been in talks with Galp over the transaction. Galp said in January that it planned to combine its downstream businesses with Moeve and expected to complete the deal in the coming months. Under the plan, Galp would contribute one refinery and Moeve two to an industrial joint venture in which Galp would hold more than 20%, while Moeve’s shareholders would own the rest. The companies would also separately combine their fuel station networks in a roughly 50-50 venture.

Castro Almeida said the government’s main concern is Galp’s refinery in Sines, which he described as an asset of “evident strategic value”. “When assets of that importance are involved, the state has an obligation to put the country’s interests first,” he said, adding that he believes it is possible to reconcile that goal with the transaction.

In the same interview, the minister said plans for a sovereign fund announced by Prime Minister Luís Montenegro in June remain at an “embryonic stage”, with the government still working on its structure and role. He also defended the state’s plan to acquire a stake of up to 20% in REN, Portugal’s electricity grid operator, saying energy infrastructure is becoming more important as investments such as data centres require large amounts of power.

Originally published at Eco.pt