Greek utility sale risks undermining EU energy goals

* Depa award due in January

* Depa tender remains competitive - sources

* Gazprom pursuing interests in East Med region

By Oleg Vukmanovic

LONDON, Oct 23 (Reuters) - The sale of Greek gas firm Depa as part of European Union-backed state asset sales could undermine EU efforts to reduce Russian involvement in Europe's energy markets.

Russia's Gazprom has expressed the strongest interest out of the prospective bidders, according to two Greek energy sources with knowledge of the matter.

They said the Russian firm has lobbied across media, industry and government ahead of a sale decision which is due in January.

Both sources shied away from touting Gazprom as the likely tender winner, however, stressing that the outcome remained wide open.

Depa plays a key role in integrating south-east European energy markets with interconnectors.

Greece could also become a vital link in bringing vast East Mediterranean and Caspian Sea gas resources to western Europe.

"Gazprom has expressed the strongest interest in Depa and [oil refiner] Hellenic Petroleum ...although the European Commission are not so happy about this," a source familiar with the situation said.

Greek sales of energy assets, imposed by lenders including the EU to help repay debt, could contradict wider EU energy goals if Gazprom beat rivals to buy the regionally strategic gas company, he said.

Gazprom's pursuit of Depa clashes with EU efforts to diversify gas supplies away from Russia, which provides about a quarter of Europe's gas demand, by bankrolling new import corridors from the Caspian Sea via Azerbaijan and Turkey.

The EU has also launched a probe into Gazprom amid allegations that it was hindering the free flow of gas across the continent and overcharging customers.

"Gazprom as well as all other potentially interested investors should be treated equally as long as compliance with third (energy) package (regulations) and merger rules are guaranteed," said an EU official, who wished to remain anonymous.

Gazprom is also pursuing other interests in the region, including a stake in Israel's Leviathan gas field, the source with knowledge of Depa said.

As an acquisition target, Depa, which is also in talks with Texas-based Noble Energy and Israel's Delek Group to combine gas exports from Leviathan via a pipeline to Europe, offers Gazprom a chance to head off competition from new suppliers in the East Mediterranean.

Other companies bidding for Depa, including Azeri state-run energy firm Socar, Italy's Eni and Edison, Spain's Gas Natural and Algeria's Sonatrach among others, also stand to benefit strategically.

Non-binding offers and business plans are due by Nov. 6.

Greek privatization agency HRADF will take particular note of business plans submitted by bidders, a source from HRADF said, who also confirmed Gazprom's leading interest in Depa.

Companies will then submit final, binding offers ahead of a final selection in January, the HRADF source said.

"The wish from the government is for Depa to become a regional player in south-east Europe, and these concerns will probably be prioritised," the source with knowledge of Depa said.

The East Mediterranean has emerged as a significant gas province on Europe's doorstep in recent years following a string of discoveries in Israeli, Greek-Cypriot and Lebanese waters that companies are now racing to develop.

Currently, Russia supplies Greece with a majority of its gas under a 20-year deal set to expire in 2016.