Bloomberg News

Mestrallet Says GDF Suez Might Bid for Repsol’s LNG Assets

October 17, 2012

GDF Suez SA (GSZ), the biggest buyer of gas in Europe, is considering a bid for Repsol SA’s liquefied natural gas assets, according to Chief Executive Officer Gerard Mestrallet.

France’s largest supplier of the fuel has been looking at the properties, Mestrallet said yesterday in an interview. It’s “normal” to look at holdings such as Repsol’s because they are similar to those GDF Suez already owns, he said. “We haven’t yet decided to put an offer on the table,” Mestrallet said in Palmas, Brazil.

Repsol said earlier this year it will take bids on liquefied natural gas stakes as it seeks to cut debt. The company announced in July the sale of its Chilean liquefied petroleum gas unit for about $540 million. The Madrid-based oil producer aims to raise as much as 4.5 billion euros ($5.9 billion) from asset sales over a five-year period.

GDF Suez rose as much as 1.4 percent and was trading 9 cents higher at 17.85 euros as of 1:58 p.m. in Paris. The Euro Stoxx Utilities index climbed as much as 1 percent.

The French company would join OAO Novatek in looking at Repsol (REP) LNG assets after Leonid Mikhelson, chief executive officer of the Russian energy company planning a $20 billion LNG plant in the Arctic, said he is “interested.”

Mestrallet’s comments on Repsol are “not a surprise given the GDF Suez focus on the global gas and LNG markets,” Citigroup Inc. analyst Sofia Savvantidou said in a report today.

Repsol Profit

“We received a document describing the assets that could be sold,” Mestrallet said on a later conference call on which he reiterated no decision has been made on a possible bid.

Repsol LNG’s operating profit more than tripled to 386 million euros last year after commissioning of a plant in Pampa Melchorita, Peru, which has an annual capacity of 4.4 million tons, according to the company’s website.

In addition to having exclusive marketing rights over this production, Repsol LNG also has stakes in the Canaport LNG plant and the Atlantic LNG plant in Trinidad and Tobago and is in an alliance with Petroleo Brasileiro SA (PETR4), BG Group Plc (BG/) and Galp Energia SGPS SA (GALP) for studies for a floating liquefaction plant in Brazil’s pre-salt area.

GDF Suez, based in Courbevoie, France, is also considering a partnership with Petrobras, to which it supplies LNG, to develop a natural gas business in Brazil, Mestrallet said. The business could be gas production as GDF Suez is already a producer in other parts of the world, he said.

Activities in Brazil

“All opportunities to develop our activities in Brazil other than electricity will be looked at with a lot of attention and interest,” he said on the conference call.

While GDF Suez’s gas operations, which include production and distribution of LNG and distribution of natural gas, represent about a third of global operations, it hasn’t yet entered that market in Brazil, where it is an independent electricity producer.

Mestrallet was in Brazil to inaugurate the 1,087-megawatt Estreito hydropower plant on the Tocantins river. GDF Suez has a 40 percent stake in the project through its Tractebel Energia unit.

The French utility reported 2.1 billion euros in earnings before interest, tax, depreciation and amortization last year in its global gas and LNG division with a 60 percent jump in the number of cargoes to Asia from the previous year. It wants to double LNG sales to third parties by 2020 mainly in emerging markets.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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