Spanish energy player may drop out of DEPA deal
Spain's Gas Natural is considering pulling out of its 285 million euro deal to buy 35 percent of state gas firm DEPA the Public Gas Corporation. Greece's change of government cast doubts over the terms of the privatisation, said the former's chief executive Enrique Locutura. The company held a general shareholders meeting on April 14 and alluded to the possibility of dropping out.
Back in Greece, the government is mulling dividing DEPA into four companies.
This would scupper the pre-contract with Gas Natural for 35 percent of the whole group, signed under the Pasok government. However, the Spanish player is being contacted to restart talks as part of a new deal, the vice minister of development George Salagoudis said. The newly spun-off companies will consist of transportation, distribution, one for the network and the fourth for the trading, it said. The conservatives will likely want to see the state retain the transport division.
Gas Natural's own plans include venturing into exploration and production for the first time, investing 700 million euros over four years in a joint venture with major stakeholder Repsol-YPF. The decision, announced before April 14's annual general meeting, is a major strategy switch for the firm, which currently focuses largely on the sale and distribution of gas.
"We are going to take part with Repsol in various upstream (exploration and production) projects in North Africa or the Middle East," chairman Antonio Brufau said. The investment in "upstream" plans, similar to changes in business model carried out by other firms in the sector like British Gas, is part of a strategic plan for 2004 to 2008 that project's annual net profit growth of at least 10 percent.
Barcelona-based Gas Natural said it planned to invest 8.8 billion euros between 2004 and 2008, updating a previous plan to invest 7.5 billion between 2003 and 2007.
Part of that money will also be spent on boosting electricity generating activity in Spain and expansion within Europe, focusing on Italy. The investment should help the firm to reduce its high dependence on gas distribution in Spain, an area where it is market leader but regulations impede its growth and cut its exposure to Latin America.
At present, operations in Argentina, Brazil, Colombia and Mexico account for almost half of its clients on a global level. Gas Natural shares have been slipping in the market in recent days in a negative Madrid market. Shares in Repsol, which owns 30.8 percent of the gas firm, were also down. Unlisted savings bank La Caixa also holds a 34.5 percent stake in Gas Natural.
Liquefied gas market up
The strategic plan also aims to help the firm consolidate its position as a leading vendor of liquefied natural gas (LNG). It currently controls around 14 percent of the market which is growing rapidly, fuelled partly by US demand for the fluid. In 2003 it had sales of some 30 billion cubic metres (bcm), a figure it hopes to increase to 50 bcm over four years.
The upstream project includes investment in regasification plants for LNG in the United States as well as LNG production plants - probably in countries like Libya or Iran.
Brufau said that the deal with Repsol is not expected to lead to a merger between the companies, and added that the new plan will mean a previous deal to create a joint "midstream" firm will now be abandoned.
Lighting up new sector
Gas Natural, at present a very minor player in the Spanish electricity market, will also channel 2.4 billion euros, 27 percent of the total investment, into increasing its installed generating capacity in Spain to 5,845 MW by 2008 from 1,030 MW at the end of 2003.
Although the company said it has no plans to make a bid like one for utility Iberdrola that was blocked by regulators last year, it would like to take a stake in a firm specialising in renewable energy.
Gas Natural also aims to buy an Italian gas distributor before the end of the year, in order to increase the number of its Italian clients to 300,000 from 90,000 at present.
It is looking at starting sales activities in France, where it is in contact with other companies with a view to joint investment, and in Portugal.
(From Athens News)