NEWS briefs
Companies
Results - Mannheim-based MVV’s first quarter group sales are up 10% year-on-year to EUR 885 million. The company attributes the results to increased power and gas sales, up 19% to EUR 393 million and 11% to EUR 177 million respectively. Gas volumes sold rose 1% to 6.408 TWh despite milder temperatures that reduced industrial off-take in the first quarter under long term supply contracts.
Strategy-wise, c.e.o. Rudolf Schulten said: “The price of stakes in municipal utilities has fallen due to the federal cartel office’s stand against major utilities’ acquisition of such stakes as well as the departure of many international firms (from Germany). We therefore see very good chances for MVV to profit on these lower prices and expand our network of municipal utilities and expand our market position.”
Results - National Grid Transco (NGT) has reported a 14% increase in underlying pre-tax profits for 2003, reaching £1.416 billion (EUR 2.10 billion) compared with the £1.246 billion it achieved in 2002.
Operating profits rose by 2% from £2.185 billion to £2.238 billion, although at constant US$-GB£ exchange rates this would have been a 4% increase.
NGT reported that the underlying operating profits from its UK gas distribution business were up by over 30%, from £554 million to 729 million, due mainly to a £103 million reduction in controllable costs and a £84 million increase in revenues.
However, underlying operating profit from UK gas and electricity transmission was £769 million compared with £820 million in 2003. This decrease was attributed to a number of factors, including a change to the charging reform, depreciation and the impact of a one-off benefit gained in 2002. Adverse movements in weather patterns and the sterling-dollar exchange rate impacted the contribution made by the country’s American operations. (£1 = EUR1.5)
Germany
Imports - German gas import volumes increased during the first quarter by 4% from the same period last year to 1,002,033 tera joule (TJ), according to preliminary figures from the federal office for economics and export (Bafa).
However, this figure contrasts with the estimates of gas industry association Bundesverband der deutschen Gas- und Wasserwirtschaft (BGW), which records a slight weather-driven decline in import volumes. BGW analyses physical gas flow data as provided by gas importing companies, while Bafa relies on customs data.
Bafa said average border price dropped in the same period by almost 10% to EUR 3,093.39/TJ year-on-year.
In March, the average border price stood 12% lower than one year ago at EUR 3,047.81/TJ (March 2003: EUR 3,464.86/TJ).
Infrastructure - Wingas, the German/Russian gas supplier is reconsidering strategy for its infrastructure position in Europe, the company’s head of special projects, Ingo Neubert told EGM. Investing in infrastructure and offering security of supply has helped build a customer base in Germany, said Neubert, but “now banks are coming to us and saying we should sell our infrastructure as it has no or only limited value.”
Neubert said that heavy-handed regulation in Germany would damage Wingas, although it is a competitor of gas incumbent Ruhrgas.
Wingas is still interested in increasing its flexibility through storage capacity, but is not particularly targeting the Etzel facility put up for sale by Ruhrgas. Wingas’ current underground storage capacity covers over 30% of its sales volumes.
Plans for expansion outside Germany will focus on the UK and Belgium.
TPA - Ruhrgas Transport, the transportation arm of gas group Ruhrgas, is noting a general trend towards rising volumes under transportation contracts with third parties (TPA) instead of increasing contract numbers, chairman Hans-Peter Floren told EGM recently. His comment follows the signing of around 40 TPA contracts between January and April on the back of 400 TPA requests.
The number of TPA counterparties rose to a total of 50 from 30 last year. Floren said the tendency towards larger contractual transmission volumes is still visible if the contracts with Ruhrgas´s own trading unit – which is now formally a customer – are excluded.
Last year, Ruhrgas signed about 200 TPA contracts with 30 customers, with total volumes amounting to about one tenth of the overall capacity in its transmission network.
Sales - German regional supplier E.On Westfalen Weser, which emerged from the combination of three utilities, is expecting to benefit from synergies this year after its annual result for 2003 was partially impacted by merger costs and one-off effects and saw energy sales volumes drop. The firm reported a 0.7% decline of pro forma power sales volumes to 10.74 TWh and a 2.4% decrease of gas sales to 4.25 TWh. Pro forma figures compare the combined result of the merged utilities with a hypothetical previous year figure when the company did not exist. The E.On subsidiary is primarily active in the southern part of Lower Saxony and eastern Westphalia and claims to be one of the country´s ten largest regional suppliers.
Ireland
Production - Aberdeen-based oil and gas exploration and production company Ramco Energy has completed its initial technical review of the Seven Heads gas field in the Celtic Sea, following the field’s poor performance.
The company said: “A key conclusion, upon which the reservoir model used for planning the development and for reserves estimates was based, is erroneous”.
Ramco’s latest technical review shows the existence of multiple gas water contacts (it originally believed that a common gas water contact existed across the field) suggesting the reservoir is more compartmentalised than was previously thought. This means each of the five producing wells may be connected to smaller volumes of gas bearing rock.
“If this proves to be the case, it is likely that further wells will be required to enable maximum reserves recovery. It is also likely that a different well design will be required for optimal gas recovery”, Ramco said in a statement.
A more in-depth technical report – required to support a revised reserves report on the field – will take several more months to complete, Ramco said.
Daily production from the field since the beginning of April has been set and maintained at 25 million standard cubic feet per day (mmscf/d), though the field partners had previously nominated gas production for the first contract year (1st October 2003 to 30th September 2004) at a rate of 60 mmscf/d.
Italy
LNG - Enel, Italy’s power market incumbent and second largest gas distributor, is cautious about committing to new gas pipeline projects, chief risk officer Paolo Girino has told EGM. He said “it would be stupid to build up import capacity and destroy value with new pipelines.” Given the high cost, Enel is waiting to see if the much-publicised “gas bubble” will come to Italy.
Enel has a 50% stake in BG Italia’s Brindisi LNG terminal and is very confident that this project, coupled with its pipeline volumes from Algeria and Nigeria would give it a strong competitive advantage on the gas market.
Enel may also release some of its Brinidisi gas for distribution in Italy, instead of reserving it all for power generation. Enel expects Brindisi to create arbitrage opportunities, notably with the US.
Girino would not comment on whether Enel had been participating yet in the new gas trading platform, the Punto di Scambio Virtuale (PSV).
Aquisition - E.On subsidiary Thüga is poised to take over a 20% stake in Italian municipal utility AMGA, marking the first step towards grouping Italian minority holdings in communal companies under its umbrella.
The expected acquisition of shares in the Udine-based gas supplier – which sold about 1.5 TWh of gas last year – will bring the number of stakeholdings managed by Thüga´s local affiliate Thüga Italia in June to 43.
Earlier this year, the firm bought majority stakes in the private-run utilities Metanifera PreAlpina and Fin.Ficu Group. But its first investment in a public utility widens the scope of its buying activity to the communal sector. The majority of Thüga´s Italian holdings are located in the northern part of the country.
Portugal
Competition - Portugal will complain to Spain about its energy regulator’s criticism of Portugal’s sale of part of its state-controlled Galp refining and petroleum retail company, the economy ministry said in Lisbon.
Spain’s National Energy Commission called the sale a “limited competition” and accused Portugal of not opening the bidding in a report on 6th May. The wrangle is the latest between the neighbours as companies jockey for position in the developing Iberian market.
Spain’s largest oil companies Repsol and Cepsa were not asked when Portugal issued private invitations for a strategic partner to buy 33.34% of Galp.
A decision is due early in June on four bids from London-based investment group CVC, US-based financiers Carlye Group and local interests.
Spain
CCGT - Spain’s environment ministry has approved Union Fenosa plans to build a 1.2 GW CCGT at the Mediterranean port of Sagunto near Valencia. The three 400 MW units will be linked by gas pipeline to the LNG terminal due to be opened nearby in 2006 by Union Fenosa Gas, which is 50% owned by Italy’s Eni.
The first unit will be operating by the second quarter of 2006 and the last by 2007. Fenosa has also applied to further double capacity.
Last year, Europe’s first integrated CCGT-LNG project was opened in Bilbao by the partners BP, Iberdrola and the Basque local government. CCGT plants are also being built near Enagas’ Huelva LNG terminal. The group’s first 400 MW CCGT in Spain is due to start up in May near Gibraltar.
LNG pricing - Spain’s Union Fenosa negotiated a $24/barrel price cap in its oil-indexed contract with Egyptian state producers to supply gas to its LNG liquefaction plant at Damietta on the Nile Delta, according to analysts.
The 25-year contract for 4.4 billion cubic metres (Gm3) a year was signed late last year before Brent reached levels near $40/barrel recently. Damietta is due to start shipping LNG to Spain in the first quarter of 2005. The Fenosa spokesman said that the price cap in its Omani supply contract was a little higher than $24/barrel.
Damietta is 80% owned by Union Fenosa Gas and 20% by Egyptian state oil and gas producers.
United Kingdom
Storage - ScottishPower, the UK generator and energy supplier, has finally been given planning permission to build a new gas storage facility near Byley, Cheshire. The £100 million (EUR 1.48 million) facility is due to start up late in 2007 and will have capacity of 3,162 GWh and a high deliverability rate of 310 GWh/day.
ScottishPower’s executive director UK, Charles Berry, said in a statement: “The UK will soon become a net importer of natural gas and this facility will help provide greater security of supply, particularly at times of peak demand. Byley’s short cycle time will also enable it to respond to the expected increase in overall demand and price volatility.”
ScottishPower told EGM that it is planning to offer “significant volumes” in the new facility to third parties. It already owns and operates the Hatfield Moor storage site, which has a lower capacity of 1,260 GWh and a deliverability rate of 310 GWh/day. There is currently no third party access at Hatfield Moor.
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