DONG AS urges flexibility in Danish gas decontrol

An amendment to Danish natural gas legislation could increase competition and split Dansk Olie og Naturgas AS's gas activities into numerous subsidiaries, Chairman Sven Riskær told shareholders. He urged lawmakers to allow DONG to compete in the production and marketing of other forms of energy, including electricity.


By the OGJ Online Staff

HOUSTON, May 22 -- An amendment to Danish natural gas legislation could increase competition and split Dansk Olie og Naturgas AS's gas activities into numerous subsidiaries, Chairman Sven Riskær told shareholders.

"This so-called corporate unbundling is intended to ensure greater transparency in DONG's pricing of storage and transport services," Riskær said. "It therefore looks as though the opening of the gas market and the corporate unbundling will take place earlier in Denmark than in most of the other European countries."

For the short term, the liberalization will weaken DONG's position relative to its competitors, he said, adding lawmakers provide DONG with a wider scope for its commercial activities, enabling, "an equal footing in the competition with other energy companies."

DONG must have the possibility of producing and selling other forms of energy including electricity, and DONG must be able to enter into alliances with other companies, particularly electricity companies, he said.

Riskær said DONG also needs the political support for establishing gas pipelines to the UK and Poland to ensure new markets for Danish gas.

"In addition, DONG must have the possibility of extending its activities with exploration and production of oil and gas to the whole of the North Sea with a view to counteracting the predicted falling earnings from the Danish fields and to creating a new basis for growth of production and earnings from this business area," Riskær said.

He emphazied that DONG deserves the same commercial possibilities of operating as its competitors already received from a broad political majority in the Danish Parliament in a May 8 parliamentary resolution.

"DONG is naturally delighted that there is broad political backing for the company's future business scope because that provides the stability in relation to the company's business partners and lenders that is necessary for a good commercial development," he said.

DONG acquired Naturgas Syd in 1999 and acquired Naturgas Sjælland in 2000. DONG now has direct access to serve 100,000 natural gas customers, representing more than 70% of the Danish market.

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