Enagas SA, one of Spain's major gas network operators, could sell some of its assets to fund new pipeline projects in Europe to help Europe wean off Russian energy that the Kremlin has been accused of using to influence global geopolitics. Tallgrass stakes could be part of the long-term disposal.

In an interview held on October 19, 2022, Enagas SA Chief Executive Officer Arturo Gonzalo said the firm can sustain its dividend policy up to 2026 and fund the $ 1.3 billion expenditure as stipulated in the company's strategic plan. However, towards the end of 2026, the company will need "something more." The company will need more funds to build gas pipelines from Spain to France and Italy.

The CEO reiterated that Enagas has a 30% stake in Tallgrass, and it's ready to help fund the US midstream company's plan of making growth a priority. However, as a long-time finance solution, Enagas may consider losing its holding together with other company assets outside Europe.

According to Gonzalo, "a clear option" would be when the assets are mature and market conditions allow their disposal. Meanwhile, Tallgrass must "take advantage of current opportunities" at a time when "the US has become Europe's great liquefied natural gas supplier, and its midstream is working at full capacity," he said.

Gas Connections

Gonzalo said Madrid-based Enagas also intends to strengthen Europe's gas infrastructure. This step would enable the area to get excess regasification capacity in plants situated in Spain since Europe lacks an inter-country connection that allows the continent to intensify west-east flows. Gonzalo said that is the biggest weakness of a gas system designed to be fed with Russian fuel.

Such pipelines, which might carry hydrogen, would be more efficient and cost-effective. Gonzalo likened the FSRUs to boats requiring crews and staff to operate them and go into dry dock to maintain them.