PARIS Feb 27 GDF Suez, with its
traditional European business under pressure, plans to focus
investment on power production in fast-growing emerging
economies and on Europe's shift to renewables and energy
The French former gas and power monopoly plans to invest 9
to 10 billion euros per year in the next three years, of which
only 2.5 billion to maintain existing assets, with a focus on
small to medium-size acquisitions. In 2013, GDF invested 7.5
"It is clear that the utilities business model is changing.
We want to grab all new opportunities," Chief Executive Gerard
Mestrallet told a news conference about 2013 earnings.
GDF announced a 15 billion euro writedown on European
gas-fired power plants and gas storage facilities that knocked
the firm to a 9.74 billion euro loss.
Mestrallet said that once two planned power plants in
Germany and the Netherlands are finished, GDF will build no new
power plants in Europe for the foreseeable future and will focus
generation investment on growth markets.
At the end of 2013, GDF had 15 gigawatts of projects under
construction or under advanced development, of which close to 90
percent in fast-growing markets. One gigawatt is roughly
equivalent to the output of one nuclear plant.
The group is also targeting strong international growth for
energy services. It wants to increase revenues from energy
efficiency by 40 percent between 2013 and 2018 and to double
sales outside Europe by 2019.
GDF unit Cofely is the European market leader in energy
services - heating, cooling and ventilation systems and services
- with sales of around 15 billion euros.
GDF also aims for more growth in its liquid natural gas
(LNG) business, which is booming due to high demand in Japan and
other Asian countries.
It is targeting production of 59 to 63 million barrels of
oil equivalent (mboe) by 2016 vs 52 mboe in 2013 and aims to
develop its LNG supply portfolio from 16 million tonnes per
annum (mtpa) to 20 mtpa by 2020.
The former French monopoly gas supplier's unions are not
happy with the shift out of GDF's traditional French market and
have denounced the 2008 merger between GDF and Suez that created
In an interview with Le Monde newspaper, Mestrallet said GDF
cannot cling on to its old monopoly supplier heritage.
"This old world, I am writing it off in our accounts. I want
to change GDF's culture and invest in the new world," he said.
Mestrallet told a results briefing on Thursday that GDF's
investments in Europe would focus on the socalled energy
transformation - a shift to less polluting sources of energy and
greater energy efficiency.
The group wants to be a leader in renewable energy, he said,
adding that GDF is investing strongly in biogas.
He has also created a new division that will focus on new
activities like smart grids, digital metering, demand management
and LNG retail. The new unit reports directly to Mestrallet.
Mestrallet said that, with GDF's debt now under 30 billion
euros, a year ahead of schedule, it has halted a divestment
programme that targeted 11 billion euros of asset sales and
which realised 5 billion euros worth of sales in 2013.
The firm plans to return to its normal rhythm of two to
three billion euros worth of "rotational investment", focused
entirely on growth.
(Editing by Tom Pfeiffer)