Naturgy: Commodities, networks, Yamal... Plenty of tailwinds while you wait for the M&A

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Naturgy: Commodities, networks, Yamal... Plenty of tailwinds while you wait for the M&A

eration in earnings momentum ex one off and Style Exposure

could benefit from additional positive one offs in 2027-28; 3) management made

clear that the company is positively leveraged to the higher gas and power prices

indicated by the forward curves despite the hedged positions; and 4) as a

conclusion, management made a very strong reiteration of the 2027 guidance even

if there were zero contribution from Yamal LNG, which is an implicit €0.2bn

upgrade on an lfl basis. The day after the H1 results the EU failed to agree on a ban

on European companies to transport Russian LNG to third countries, which creates

an opportunity for Naturgy to sell its contracted volumes from Yamal LNG (35-

38TWh/year) into the rest of the world, keeping some or all the €0.2bn estimated

EBITDA contribution from the contract.

• Yamal LNG should now make a contribution to 2027 earnings. On 23 July

(see here and here) the EU member states failed to approve a proposal that

would restrict European firms from transferring Russian LNG to third

countries. Instead, they now allow transfers of LNG to third countries for

contracts concluded before February 2022; under the compromise

governments agreed this would be a renewable one-year exemption, with

annual reviews of the arrangement. The failure to sustain a ban on Russian

LNG transfers by European companies came as a positive surprise to us, as we

had assumed a ban would be implemented and hence Yamal LNG would make

zero contribution to 2027 earnings. The contribution from LNG diversions

from Yamal is uncertain, as Naturgy should agree terms and conditions with the

seller (and there is always a risk that Russia refuses to allow the LNG