February 2021, Vol. 248, No. 2
Features
Big Four European Pipeline Owners Receptive to Change
By Nicholas Newman , Contributing Editor
Together, Spain’s Enagás, Belgium’s Fluxys, France’s GRTgaz and Italy’s Snam own and operate more than 62,000 miles (100,000 km) of gas pipelines and related infrastructure across Europe and beyond.
In addition, they own more than 50% of Europe’s liquefied natural gas (LNG) terminals and are currently engaged in developing more than 3,900 miles (6,200 km) of new pipelines and one new LNG import terminal.
More notably, and in contrast to North America, these four pipeline operators are partially owned by their respective governments. In 2019, their collective total profits amounted to over $2.42 billion (€2 billion), and at least three quarters of their dividends were paid out to investment and pension funds, including BlackRock and Lazard.
Not surprisingly, these four, like other European pipeline operators, are members of the Brussels-based Europe-wide industry lobby group, the European Network of Transmission System Operators for Gas (ENTSO-G).
However, their seemingly strong fossil-based market presence is under threat from the EU’s green agenda, which commits members to reaching net-zero carbon emissions by 2050 or earlier.
To their credit and in anticipation of these fundamental changes in their business environment, Europe’s gas sector companies are actively looking at a whole range of green technologies from carbon capture, biomethane and blue and green hydrogen. Nonetheless, one of their key current challenges is to find a way to reduce and prevent methane leakages in the gas supply chain at a cost-effective and efficient manner.
A new industry, large-scale hydrogen production, initially produced by a combination of fossil fuels and renewables, is attracting attention. Already, several countries including Britain are introducing, or plan to introduce, hydrogen into their natural gas pipeline network to reduce emissions.
Longer term there are ambitious plans across Europe to develop a hydrogen pipeline network, which will eventually replace natural gas as feedstock for power generation for industrial and residential customers, heavy-duty transport and even heating of residential and commercial premises.
Enagás, S.A.
Madrid-based Enagas, S.A. is the energy company and transmission systems operator, which owns and operates Spain’s national gas grid as well as the country’s four LNG import terminals sited at Huelva, Barcelona, Cartagena and Gijon. It also has subsidiaries in the rest of Europe, and further afield has a presence in both Latin and North America.
Enagás, S.A. employs 1,500 people and reached a turnover of $1.62 billion (€1.34 billion) in 2018. Its large international shareholder base includes Lazard Asset Management (5.07%), Oman Oil Company (5%), JP Morgan Securities (4.2%), Merrill Lynch (3.6%), Goldman Sachs (3.6%), as well as more than a hundred other banks and corporations.
The Spanish state holding company, Sociedad Estatal de Participanciones Industriales (SEPI), holds a 5% interest and is the only shareholder with veto rights over decisions made by other shareholders. The company’s current CEO is Marcelino Oreja Arburúa.
Enagás, S.A. participates in various projects including natural gas pipeline projects such as the recently opened trans-Adriatic pipeline, which links Turkey via Greece and Albania to southern Italy, as well as new pipelines at home, including the Proyecto Integral Morelos, MidCat and the failed Castor gas storage project. With an eye on the future, it is also engaged in development of a hydrogen supply network.
Fluxys
Based in Brussels, Fluxys employs about 1,200 people in its gas transmission, storage and LNG import terminal facilities. Under CEO Pascal De Buck, the former chair of Swedegas AB, the company enjoyed net operating revenues of $642.3 million (€530 million) and made an $83.6 million (€69 million) profit in 2019. Fluxys operates 4,722 miles (7,600 km) of gas pipelines and has a fleet of LNG import facilities with a total processing capacity of 312 Tcf (29 Tcm) a year.
In Belgium, the company operates and maintains 2,485 miles (4,000 km) of pipelines and the gas storage site at Loenhout. The company imports Russian Arctic LNG from the Yamal peninsula as well as from the US for its LNG import terminals in Zeebrugge and Dunkirk, and provides LNG bunkering facilities for both shipping and barges at the port of Antwerp. The company also has subsidiaries in France, Germany, Netherlands, Switzerland and the UK.
The company’s two leading shareholder groups are Publigas (77.5 %), a holding company owned by Belgian cities and towns and institutional investor Caisse de dépôt et placement du Québec (19.9%), which manages several public and parapublic pension plans and insurance programmes in Quebec.
GRTgaz
GRTgaz is a French natural gas transmission system operator located in Bois-Colombes, Île de France. The company operates 4,911 miles (7,904 km) of the country’s gas grid with high-pressure gas pipelines as well as a regional pipeline network of 15,300 miles (24,623 km).
GRTgas is a subsidiary of Enigie, formally Gaz de France, which operates transmission gas networks not only in France, but also parts of Switzerland, Germany, Austria and the Czech Republic.
The current CEO of the company is Thierry Trouvé, who supervises the company with a $2.78 billion (€2.3 billion) turnover and profits of $363.7 million (€300 million) in 2019.
Its main shareholders are Enigie with 75% and the public French financial institution with 25% Caisse des dépôts. As the result of recent energy reforms, the company shares can be bought by private investors.
The company operates all Enigie’s gas transport networks except for Nordstream 2. It also has interests in the LNG import terminal operator Elengy, as well as in Germany (MEGAL pipeline) and Mexico (Los Ramones Sur II, on behalf of Engie).
Snam
This Milan-based natural gas transport and dispatching energy company Snam operates Italy’s high- and medium-pressure network of 20,335 miles (32,727 km), as well as over 25,476 miles (41,000 km) of pipelines in other countries.
For example, the company holds interests in various gas grid transmission and storage companies, including in Albania (AGSCo), Austria (TAG and GCA), France (Teréga), Greece (DESFA) and the UK (Interconnector UK). It is also a major shareholder in the Trans Adriatic Pipeline (20%).
Snam also stores more than 215 Tcf (20 Tcm) of gas at home and elsewhere in Europe, making it Europe’s leading gas storage operator. Snam is also one of the continent’s main operators in regasification having processed 91 Tcf (8.5 Tcm) of LNG at its fleet of LNG import terminals in 2019.
Apart from a government stake, Snam’s main shareholders include CDP Reti SpA (30.4%), BlackRock (7.5%), Romano Minozzi (6.8%) and Lazard Asset Management (5.1%). Under its current CEO, Marco Alverà, Snam enjoyed revenues of $3.16 billion (€2.6 billion) and an adjusted net profit of $1.32 billion (€1.09 billion) in 2020.
These four big owners and operators of gas pipelines, transmission and despatch alongside imports and regasification of LNG in Europe also have significant foreign operations.
However, it is for their receptiveness to needed change and use of proactive measures to address the coming low-carbon environment that they should really be looked to as leaders.
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