Gaz de France (GDF) and Suez say that they expect to sustain an ambitious capital expenditure programme once they have merged in 2008. The planned investments – which will amount to EUR10 billion per year – will help the new group to develop top-flight positions in all of its businesses.
GDF-Suez is intending to consolidate its leadership positions in its domestic markets as well as accelerating development in the upstream oil and gas industries and power generation. The two companies announced in September that they would merge, forming the world’s fourth-largest energy utility group.
The announcement regarding the group’s industrial strategy comes amid accusations that the merger amounts to the nationalization of Suez. The Financial Times has reported Wulf Bernotat, CEO of German utility E.On, as calling the merger “a step in the wrong direction”.
Suez-GDF has also outlined ambitious earnings targets, expecting EBITDA growth of around ten per cent in 2008 and earnings before tax reaching EUR17 billion in 2010. While the newly-merged group will focus largely on Europe, it will also look to strengthen its presence in some fast-growing markets in other areas.
Bernotat said that the merger of GDF and Suez will make it difficult for anyone to compete on equal terms in the French energy market, according to the Financial Times. The French state will hold seven out of the ten GDF seats on the 23-strong board of the merged company.
GDF-Suez wants to maintain its leading position on the French natural gas market and is aiming to capture a 20 per cent share of the electricity market. It wants to increase its installed capacity in France to over 10 GW by 2013.
Outside Europe, GDF-Suez is already positioned in the USA, Brazil, Thailand and the Middle East and intends to break into new markets such as Russia and Turkey. It intends to continue developing IPPs in fast-growing markets and to increased its managed production capacity in Europe (outside France) and internationally to 90 GW by 2013.