French gas market opening bid headed for Parliament

By an OGJ correspondent

PARIS, Sept. 16 -- The French government has opted for a broad debate in Parliament to transpose into French law the European Union directive opening up the country's natural gas market—a process that was originally scheduled to have been done by Aug. 10, 2000.

The parliamentary debate will replace the fast-track process that Industry Minister Nicole Fontaine had initially suggested.

The previous government had never got around to transposing the EU directive into French law, for it had linked the official opening of France's gas market with the public offering of the capital of Gaz de France (GdF), thereby causing an explosive issue with the trade unions. In fact, GdF has not waited for the law to open up its market, but this fact has been disregarded by some countries, namely Spain, which has banned GdF from its gas network until the opening becomes official.

France's Parliament will begin the debate in October. But it is not certain it will be able to pass the law before yearend so that France might be spared a condemnation by the European Court of Justice for lagging so long.

GdF buyer prospects
Meanwhile, Gerard Mestrallet, chairman and CEO of the Paris-based Suez Group, told a press conference earlier this month that if the government asks him to take a stake in GdF—whose opening has been decided by the current Government—"he would be prepared to look into the matter." He explained that he had been asked the same thing 2 years ago and had then declined.

Since then his group has greatly developed its activities in gas, including LNG, and electricity worldwide, namely through Belgium's Tractebel, Electrabel, and Distrigas. Suez Group has already developed a partnership with GdF involving a joint venture in the Paris air-conditioning services network. Mestrallet said his company's interest in GdF would not be only financial but industrial as well.

The Suez Group could well be a satisfactory choice for the government. Previously, TotalFinaElf SA and Electricite de France were thought to be the main candidates to acquire a share in GdF's opened-up capital.

TotalFinaElf Chairman and CEO Thierry Desmarest recently indicated that it is not within the group's strategy to "remain a lasting minority partner of the state." However, he said he is not averse to partnerships in "specific projects with Gaz de France."

EdF, in turn, would be prevented from taking over GdF because of EU competition rules.

According to analysts, GdF and Suez Group have complementary profiles. Suez Group, through Tractebel, owns Belgium's Distrigaz and Fluxys, which is in charge of Belgium's gas transportation and storage industries as well as the gas terminal Zeebrugge.

In addition, GdF and Suez Group would own four LNG terminals: Zeebrugge in Belgium, Montoir and Fos-sur-Mer in France, and Everett, Mass. Tractebel LNG also manages a 10% stake in the Atlantic LNG export plant in Trinidad and Tobago.