Gaz de France, TotalFinaElf to buy French gas pipeline systems

Gaz de France and TotalFinaElf SA have made offers to the French government to buy the interests in certain gas pipeline systems that they don't already own. GdF has made an initial payment of 176 million euros for the state's 30% stake in Gaz du Sud-Ouest (GSO) and for the state's 70% interest in Cie. Française de Méthane (CFM). TotalFinaElf has made an initial bid of 12 million euros for the government's 70% holding in GSO and 200,000 euros for Ste. Elf Aquitaine Réseau.

April 16, 2002

2 min read

By an OGJ correspondent
PARIS, Apr. 16 -- Gaz de France and TotalFinaElf SA have made offers to the French government to buy the interests in certain gas pipeline systems that they don't already own. GdF has made an initial payment of 176 million euros for the state's 30% stake in Gaz du Sud-Ouest (GSO) and for the state's 70% interest in Cie. Française de Méthane (CFM). TotalFinaElf, meanwhile, has made an initial bid of 12 million euros for the government's 70% holding in GSO and 200,000 euros for Ste. Elf Aquitaine Réseau—an historic pipeline link to Lacq gas field.

The final amounts to be paid—which have yet to be established by a commission set up for this purpose—must be handed in by Sept. 30. It will include not only the actual price of the gas lines but other assets, as well as account for future pipeline revenues. The final purchase price of the lines will be reduced by the indemnity due to France for early costs related to ending the state's pipeline monopoly concessions, which is scheduled to occur generally by 2017.

The initial offers have been made subject to the condition that the final price remains reasonable. However, it is considered unlikely that either company will not follow through on its bid to acquire the gas pipeline networks, as that could potentially bring new players into the liberalizing French natural gas market.

GdF Chairman and CEO Pierre Gadonneix said, "What I wish with regard to our heritage is that Gaz de France maintain, whatever happens, its control over its transport network." He has also said that GdF would not divest any of its many natural gas storage installations scattered around France.

Belgium and Spain also had pipeline monopoly concessions that were given up without either of the state-owned pipeline companies in those countries having to pay anything. France—not wishing to be seen as favoring state oil firm TotalFinaElf—had abandoned such a solution. Relinquishing the gas lines free of payment to GdF would have entailed also giving away TotalFinaElf's shares in the joint GSO and CFM joint ventures.