Enagas Profits Up: Update on Procedure with Peru
Clarifying the dispute resolution procedure with Peru, in the penultimate paragraph
Spanish gas grid operator Enagas reported October 17 higher profits for January-September 2017, and has provided updates on both construction of the TAP pipeline and its talks with Peru that relate to a concession dispute.
Net profit was up 1.6% year on year to €322.5mn ($379.5mn) for the period, based on Enagas’ 45.4% stake in Chilean terminal GNL Quintero. However, if based on the full GNL Quintero consolidation, they rose 18.4% to €375.7mn.
Net debt as of end-September 2017 was €4.6bn under the former measurement, but at around €5.3bn using the latter.
Enagas noted that Spanish gas demand in the nine months was 9.3% higher year on year, which includes a 33.2% increase in gas demand from power generators. The firm forecast that overall Spanish gas demand is expected to have grown by 4.5% year on year by end-2017.
It also said that the current level of completion of the Trans Adriatic Pipeline (TAP), in which it is a 16% shareholder, “exceeds 50% without any deviation from the schedule,” and envisages completion of the 878km-long pipeline in 2020.
The company also gave an update on the situation in Peru with Gasoducto del Sur Peruano (GSP), in which Enagas has a 25% stake. The GSP concession was terminated by the Peruvian government January 23 2017 after GSP project lead, Brazilian engineering group Odebrecht, failed to satisfy Lima that GSP would be adequately financed.
Enagas said that on October 11 all the GSP partners agreed, with Peru's ministry of mines and energy, on a procedure for how the concession’s assets should be handed over in order to re-tender them and added that talks are ongoing with the government to iron out any discrepancies regarding this.
A sentence from Enagas' October 17 presentation stated: "If Enagas' rights are not properly satisfied on the concession agreement, through the procedure regulated herein or an alternative one, it could urge the legal actions established in the concession agreement to defend its interests."
NGW took this to mean that Enagas reserves the right to initiate arbitration proceedings against Peru under the original GSP concession terms. But Enagas has since told NGW this is not the correct interpretation, and instead told NGW that: “Enagas repeated that if its rights are not satisfied it may initiate direct negotiations (legal actions) with the Peruvian administration under the original GSP concession terms.”
Enagas' interest in a separate Peruvian pipeline concession, TgP, is unaffected by the dispute over GSP.
Spanish natural gas demand (Graphic and data credit: Enagas)
Mark Smedley