Spain's Union Fenosa has announced a new business plan aimed at reducing debt by Eur 2,600 million ($2,566 million) over the next five years. A significant part of the saving will come from enlisting a strategic partner for its gas investment programme, including the liquefied natural gas (LNG) project now under way in Damietta (Egypt, MEED Special Report, 4:10:02, pages 34-36).
Union Fenosa says the selection of a strategic partner for its gas business 'would remove the commitments to future investment by over Eur 800 million [$784 million]'. The company says the selection is to be completed by the end of the year. Several companies have expressed interest, including the Royal Dutch/Shell Group, BPof the UK and France's TotalFinaElf.
However, energy sector analysts say the prospective partners may be concerned at the implications of other parts of Union Fenosa's business plan, in particular the placing of a limit of 2,000 MW on the construction of new combined cycle power plants. The company had earlier talked of adding 3,000 MW of new generating capacity.
Analysts say the reduced targets could raise questions about the size of the guaranteed market for Union Fenosa's LNG projects in Egypt and Oman.
The first train at Damietta is scheduled for completion by the end of 2004, and will produce 5 million tonnes a year of LNG. The project is now more than 25 per cent complete. However, Union Fenosa has yet to secure debt financing for the plant.
The company's total debt is estimated at about Eur 8,500 million ($8,400 million).