Naturgy agrees to sell its stake in Damietta, rescind its Egyptian gas contracts and depart from Unión Fenosa Gas (UFG)
- UFG’s partners (Naturgy, ENI and Egas) have reached an agreement according to which Naturgy will receive a series of cash payments adding up to US$ 0.6bn and most of UFG’s assets outside of Egypt as well as release Naturgy from its c. 3.5 bcm annual gas procurement contract to supply its CCGT’s in Spain which was due to end 2029.
- This agreement, which could not be concluded in February due to certain conditions precedent not being meet, has been closed on similar terms to those agreed in February and resolves the complex situation at the Damietta plant, which has lingered since 2012.
- The commitments were ratified signing an agreement preceded by the resolution adopted by the Egyptian Council of Ministers on November 25th.
- Naturgy once again demonstrates its management capacity to continue simplifying its business portfolio and to reduce its gas procurement commitments, all the while improving its financial position to focus on the areas which can maximize value creation.
Naturgy, ENI and the Arab Republic of Egypt have reached a new agreement to amicably resolve the disputes affecting Unión Fenosa Gas (UFG), a 50%/50% joint venture between Naturgy and ENI. The parties have signed an agreement whereby Naturgy will receive a series of cash payments adding up to approximately US$0.6 bn, as well as most of the assets outside of Egypt, excluding UFG’s commercial activities in Spain.
The new agreement, approved by the Egyptian Council of ministers, is aligned with the former agreement reached in February 2020 (terminated in April due to certain conditions precedent not being met) and values UFG (100%) at a total consideration of up to US$1.5bn, depending on the energy scenario, of which US$1.2bn relate to its Egyptian assets (including the outstanding legal proceedings), and the remaining US$0.3bn for the assets outside of Egypt.
The agreement has been following the ratification of their Council of Ministers last November 25th.
The President of Naturgy, Francisco Reynés, stated “this agreement is very positive. It represents a clear progress in simplifying and reducing the company’s exposure to gas, releasing Naturgy from its 3.5 bcm annual gas procurement contract to supply its CCGT’s in Spain which was due to end 2029, and it resolves a complex situation lingering since 2012 and which couldn’t be resolved in the Spring because of the pandemic”.
The completion of the transaction, planned during the first months of 2021 once customary conditions precedent are met, including the restart of operations in Damietta planned in the first quarter of 2021, will result in Naturgy’s departure from Egypt and the end of its joint-venture with ENI.
With this agreement, Naturgy continues to demonstrate its ability to simplify and reduce the risk of its business positioning in order to allocate its capital and resources to those businesses that maximize long-term value creation for all its stakeholders.
Madrid, 1st of December 2020