May 30, 2008 / 2:54 PM / 10 years ago

UPDATE 1-Enagas sees extra 2.2 to 3 bln euros investment

(Adds details, background, shares)

MADRID, May 30 (Reuters) - Spanish gas distributor Enagas (ENAG.MC) sees new investment totalling 2.2 to 3 billion euros ($3.41 billion to $4.64 billion) under the government’s new 2008-16 infrastructure plan, the company said on Friday.

The spending, expected in the period 2013 to 2016 would come on top of 5 billion euros in investments already included in the company’s 2007-2012 strategic plan, the company said.

The new projects include pipelines, expansion of regasification plants in Huelva and El Musel and underground storage facilities.

Gas demand should grow by 5 percent a year until 2016, Enagas thinks.

Peak demand, which the company said is used to determine the need for new infrastructure, is expected to rise by 80 percent over the period, compared with the latest record demand day last December.

Enagas said the rise in demand would would be met by new supply from the Medgaz pipline from Algeria which is expected to come online in 2009 coupled with the start of the El Musel plant in 2011.

Earlier, Spain announced a boost to investment in its electricity and gas distribution networks to 19 billion euros ($29.4 billion) from a previous 18 billion over the period to 2016.

Of this amount, 10 billion euros will be spent on the gas distribution network with the balance going to the power grid, the Industry Ministry said.

Enagas said it viewed the Government’s plan positively, saying it would ensure future gas supplies for domestic and industrial users and for the generation of electricity.

Both Enagas and Red Electrica have their returns set by the government. In February, it set an average return of 7.71 percent for installations entering operation after Jan. 1 this year.

By 1425 GMT, Enagas shares were 0.5 percent lower at 20.30 euros compared to a 0.6 percent gain in the Ibex 35 index .IBEX. (Reporting by Jason Webb and Joe Ortiz; Editing by Andrew Hay and Quentin Bryar)

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