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    Spanish GN Earnings Down, But October Sales Up



A decline in the earnings of Spain's main gas utility so far this year may be checked in 4Q, if October's strong gas sales continue.

by: Mark Smedley

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Spanish GN Earnings Down, But October Sales Up

In its first earnings announcement since a New York fund became a core shareholder, Spain’s Gas Natural (GN) reported net profits for January-September 2016 of €930mn ($1,030mn) down 15% year on year.

Overall gas sales for the first nine months of 2016 were only 0.9% lower at 213 TWh gas (19.8bn m³), but included Spanish sales which fell by 5.3% to 111.4 TWh (10.4bn m³), the Barcelona-based utility said November 2.

Electricity sales in Spain were 15% lower too at 20 TWh, and the company noted that its Spanish hydropower production grew by 72% in the period whereas its gas-fired generation there fell by 27%. Yet power and gas sales in Spain by all suppliers increased last month (see below).

Gas Natural's new chairman Isidre Faine (left) and his predecessor for 12 years until September, Salvador Gabarro (Photo credit: Gas Natural)

GN’s infrastructure earnings were 2.3% higher at €221mn, thanks to a higher tariff in its part-owned Maghreb-Europe gas pipeline from Algeria to Spain. GN also said it entered Brazil's solar market this month, buying 68 MWp there through a 75%-owned subsidiary; it did not disclose the price paid.

Overall GN earnings before tax and amortisation (Ebitda) for the 2016 nine-month period were €3.64bn, down 7%.

New York-based Global Infrastructure Partners in September acquired a 20% GN stake for €3.8mn on a 50-50 basis from Repsol and Catalan investment fund Criteria Caixa; the trio then agreed a new shareholders pact and GN board

October sees strong Spanish gas sales

Spain’s gas grid operator Enagas said a week ago that October 2016 consumption of gas in power generation was on target to be the highest monthly so far this year, at 7.3 TWh gas (679mn m³). The figures reflect sales by all suppliers in Spain, and not just GN.

Last month was the highest monthly figure since 2015 and second-highest since October 2012; it was also 38% higher than in October 2015.

Record levels in October 2016 were due to less wind power generation that month and higher electricity exports from Spain, said Enagas, noting it showed “the importance of natural gas in the power generation mix.” Overall Spanish gas demand was due to be 7.5% higher year on year.

Data from Spain’s power grid operator REE on October 31 bore out Enagas’s estimates. While mainland Spanish electricity demand was only 0.7% higher year on year at 19,866 TWh, REE said the contribution by gas-fired power plants (CCGTs) was 16.2%, so almost double their 9.2% contribution during the first ten months of this year.


Mark Smedley