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    Spanish demand, TAP boost Enagas

Summary

The national transmission system operator is seeing the economy pick up, as well as a jump in earnings from its subsidiaries.

by: William Powell

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Spanish demand, TAP boost Enagas

Spain's gas infrastructure operator Enagas reported a first-half net income of €213.1mn July 27, similar to last year's €236mn.

It said its subsidiaries and its efficiency plan were paying off, helping to offset the 2021-2026 regulatory framework, which came into effect in January of this year and determines its margins from infrastructure.

Subsidiaries – chiefly Tallgrass Energy in the US and the TransAdriatic Pipeline (TAP) which started last November – have paid in 48.1% more than in the same period of 2020 while efficiency gains have trimmed 5.3% from operating expenses. Enagas was able to pay shareholders 1% more than last year while retaining €3bn in liquidity at the end of June. TAP, of which Enagas owns 16%, transported 3bn m³  in H1 2021, but its open season for an expansion drew a blank.

Spanish gas demand was 6.3% higher than in the same period in 2020, despite the high spot prices. Long-term oil indexed contracts with Algeria – some of which have been renewed – will have helped keep down the weighted average cost of gas for shippers such as Eni and Naturgy.

There was a 9.8% increase in domestic and industrial demand, accounting for around 83% of the total. Residential demand rose 11.8%, thanks to the storm in January and industrial demand rose by 9% as the economy picks up.

Tallgrass is advancing the development of decarbonisation projects in North America and has had government funding as part of a national effort to advance next-generation clean hydrogen technologies.

The increase in demand has favoured positive results in Enagas' subsidiaries in Greece, Chile and Peru, while in Mexico there has been significant progress in the recontracting of capacity at the TLA Altamira LNG terminal, of which Enagas owns 40%.

At home Enagas is promoting 34 green hydrogen projects and 21 biomethane projects together with a total investment of  €6.3bn. These include projects such as a hydrogen pipeline to France and the Hydrogen Valley in the Community of Madrid.

And in the last seven years Enagas has cut its carbon footprint by 63%, thus advancing its goal of being a carbon-neutral company by 2040, or even earlier.