Repsol Considers Sale of Stake in Gas Natural Fenosa
Spain’s Repsol is “seriously thinking about” a possible sale of its $6 billion stake in utility Gas Natural Fenosa, while signing two agreements with the same company to secure supply of liquefied natural gas for 20 years.
Repsol Chief Financial Officer Miguel Martinez said that the Spanish company could further rebalance its portfolio after the deal with Royal Dutch Shell agreed in February. The $6.7 billion transaction included LNG assets based in Bay of Biscay, Trinidad and Tobago, and Peru.
“We are not in a hurry, but it is true, that is something we have to seriously think about,” said Martinez on Friday, referring to the sale of its stake in Gas Natural Fenosa. Repsol holds 30% of Gas Natural Fenosa’s share capital at 31 December 2012.
Also on Friday, Repsol signed two contracts with Gas Natural Fenosa.
‘Gas Natural Fenosa and Repsol have signed two medium- and long-term gas supply agreement,’ reads a note released on Friday.
According to the press release, Repsol will acquire 1 billion cubic metres a year of liquefied natural gas for a period of 20 years and 2 billion cubic metres of gas a year between 2015 and 2018.
Repsol's Second Quarter
Repsol beat forecasts for the first half of the year in the wake of good results in Brazil and Russia, reads a note released by the company on Thursday.
‘Net income during the first half of 2013 rose 2.6% to €1.054 billion. The increase is especially significant as the year-earlier period included earnings from YPF,’ reads the note referring to Yacimientos Petrolìferos Fiscales, a vertically integrated Argentine energy company, whose renationalization was initiated in 2012 by President Cristina Fernàndez de Kirchner.
Results beat all the forecasts of the most important polls, both in terms of net profit and EBITA.
‘The Upstream unit consolidates the trend of earlier quarters, posting operating profit of 1.161 billion euros due to increased output,’ explains the company, adding that also the Downstream unit’s operating income increased (by 9.9% to €311 million).
‘The improved results are based on a strong performance from all of the company’s business units. Net income from continuer operations rose 4.7% to €945 million,’ adds the note.
The company also surpassed its 2012-2016 divestment goals at the end of February following the agreement to sell to Shell LNG assets for $6.653 billion.
‘The transaction is expected be complete in the fourth quarter of the year,’ underlines the company.
On the other hand, the operating income of Gas Natural Fenosa was €464 million in the first half of 2013, a fall of 2.3% ‘as higher wholesale gas sales margin were unable to make up for the lower contribution from Union Fenosa Gas and lower earnings of the electricity business in Spain due to the new tax regime.’
Gas Natural Fenosa said this week that it intends to rebalance its portfolio, increasing its activities abroad to compensate for weakness at home in the wake of recession and recent overhaul of the Spanish energy sector.
Gas Natural Fenosa is not ruling out the possibility of legal actions over the measures.
Earlier this month, Rajoy’s government announced it would introduce measures to reduce the gap between regulated power prices and generation costs. The Spanish government will promote price rises (3.2% in electricity bills for consumers) and cost savings measures, such as a cut in the fees charged by companies distributing and transporting electricity. The government will also scrap subsidies to renewable power producers.