Madrid — Spanish gas grid operator Enagas said on Tuesday its was on track to reduce its net debt to the lowest level since 2008 as it prepares to invest billions of euros in hydrogen projects.
The sale earlier this year of its 30.2% stake in U.S. energy infrastructure company Tallgrass Energy allowed Enagas to cut debt by roughly 1 billion euros ($1.08 billion) to around 2.4 billion euros, a level it expects to be maintained until 2026.
The U.S. disposal followed other asset sales in Chile and Mexico as the company refocuses on Spain and Europe.
With Spanish gas demand falling in the past two years, the company is moving to diversify from its traditional gas business to managing a network of hydrogen infrastructure.
To this end, the company will present a new strategic plan in the first quarter of next year, Chief Executive Arturo Gonzalo said, adding that it will include investments to enter the ammonia and CO2 businesses.
“We have strengthened our balance sheet and this gives us room for solid execution of the hydrogen investment plan,” he told analysts in a third-quarter results call.
“We are financially and technically prepared” to be a key green hydrogen player in Europe, Gonzalo added.
This will require gross investment of almost 6 billion euros, including in a planned hydrogen network in Spain and its flagship trans-European H2Med corridor aimed at connecting Iberia’s hydrogen networks with northwest Europe.
Including subsidies, it expects to make net investments of around 3.2 billion euros through 2030. To help fund the plan, the company has already slashed its dividends.
Enagas – in which the state owns a 5% stake – will sound out potential interest in the H2Med hydrogen corridor by launching a call for interest along with its partners on Nov. 7.
Enagas’ strategy is in line with the Spanish government’s ambition of making the country a European a leader in green energy to tackle carbon emissions and improve energy security.
The company said it was on track to beat the targets it revised in July after posting a loss of 130.2 million euros for the first nine months of the year.
It said in July it expected to post a loss of between 80 million and 90 million euros for 2024 as a whole, after a capital hit resulting from the sale of the U.S. asset.
In the first nine months of last year, the company had a profit of 258.9 million euros.
($1 = 0.9243 euros)
Reporting by Pietro Lombardi; Editing by David Latona, Jan Harvey and Louise Heavens – Reuters
