The U.K. government approves French utility Electricite de France's (OTC:ECIFF) $24B plan to build Britain's first new nuclear reactor in decades, backed by $8B of Chinese cash.
The decision to proceed with the Hinkley Point project in southwest England, which ended weeks of uncertainty that strained ties with China and France, included a new investment policy designed to give the U.K. government greater control over future deals when foreign states were involved in buying stakes in "critical infrastructure."
The two new reactors at Hinkley Point are expected to provide ~7% of Britain's electricity.
The U.K. government has told France that it has approved Electricite de France’s (OTC:ECIFF) controversial Hinkley Point nuclear project in southwest England, subject to unspecified conditions, Bloomberg reports.
New U.K. Prime Minister May's surprise decision in July to review Hinkley Point had cast doubt on the £18B ($24B) project approved by her predecessor David Cameron as a way of reducing greenhouse gas emissions.
EDF's Jean-Bernard Levy has said the project is key to ensuring the health of the French nuclear industry and providing work for its struggling Areva nuclear group.
Plans to build the first new U.K. nuclear plant in 20 years are dealt an unexpected delay after the British government postponed making a final decision on the £18B ($23.7B) project until the fall.
The postponement came late yesterday just hours after the board of French state-controlled power utility Electricité de France (OTC:ECIFF) voted to approve the project at Hinkley Point in Somerset, southwest England; EDF had expected to sign contracts today to build two reactors.
Critics of the project have warned of environmental damage and potential escalating costs, as well as foreign involvement in the plant's construction; one third of the cost is being provided by Chinese investors.
The Dunkirk liquefied natural gas terminal in France received its first cargo today, raising the country’s gas import installations to four, just as a wave of new supply hits the market.
Dunkirk will receive ~20% of all the gas consumed in France and Belgium, according to Electricite de France (OTC:ECIFF), which owns 65% of the project; Total (NYSE:TOT) is among the terminal’s other shareholders.
European LNG imports are forecast to rise ~13% this year to 45M metric tons, according to the Energy Aspects consultancy.
EDF (OTC:ECIFF) says the U.K.'s decision to leave the European Union will have no impact on its business and strategy and does not affect its project to build the Hinkley Point nuclear power station.
CEO Jean-Bernard Levy says the British energy minister and "Vote Leave" campaigner had come out in favor of maintaining the U.K.'s nuclear and decarbonization policies and the Hinkley Point project, so "there are no consequences from this vote."
EDF shares were down ~9% in early afternoon Paris trading, in line with the broader market.
French nuclear power company Areva (OTCPK:ARVCF) details plans to raise as much as €8B ($9B) mostly from the government and selling assets in a wide-ranging restructuring of the state-controlled group after years of losses.
As part of a restructuring under which Areva will sell its nuclear reactor unit to state-owned utility Electricite de France (OTC:ECIFF), Areva will spin off its uranium mining, nuclear fuel production and recycling, and decommissioning activities into a new company, in which the French government would keep two thirds of the capital.
Oil demand in 2016 will stay strong and support crude prices, but the market is unlikely to rebalance by year-end, Total (TOT -0.1%) CEO Patrick Pouyanne tells a French Senate committee.
The CEO sees global oil demand at ~1.4M bbl/day but will not rebalance completely by the end of the year; the International Energy Agency said in its May forecast that 2016 global oil demand growth was broadly unchanged at 1.2M bbl/day.
Pouyanne also says plans to ban imports of U.S. shale gas to France may be unworkable, noting that the gas is liquefied in the U.S., and shale and conventional gas are mixed together in pipelines and cannot be separated.
France's Energy and Environment Minister said this month that she would examine ways to ban imports of shale gas, and has asked Electricite de France (OTC:ECIFF) and Engie (OTCPK:ENGIY) to import only conventional gas.
Electricité de France (OTC:ECIFF) warns that the cost of building two nuclear reactors in the U.K. could reach £20.7B, ~£3B more than it said in October.
The French utility says the equity commitment on the Hinkley Point project includes a contingency margin which could reach 13.8B for EDF and 6.9B for Chinese partner CGN, for a total of 20.7B; in October, EDF put the equity financing at a respective £12B and £6B, for a total £18B.
EDF also says it would commit to provide "limited" financial guarantees to CGN, particularly in the case of cost overruns related to delays, but does not specify the size of the guarantees.
The French government says it will lead a €4B ($4.49B) capital increase for state-controlled power utility Electricité de France (OTC:ECIFF), providing cash the debt-laden firm needs for projects that are considered political priorities including the purchase of a majority stake in state-owned nuclear reactor maker Areva.
The French government, which owns 85% of the utility, says it will inject €3B as part of the share sale, slightly diluting its stake, while EDF says it plans to sell ~€10B in assets by 2020.
The cash injection and asset sales will help EDF address investor concerns that it cannot shoulder its €37.4B in net debt while grappling with lower energy prices.
Electricité de France's (OTC:ECIFF) CFO Thomas Piquemal resigns after a disagreement over the financial impact of the £18B (~$26B) project to build new nuclear reactors in the U.K.
Piquemal reportedly was concerned that a final investment decision on the Hinkley Point project in southwest England could be announced as early as April, a move he warned might jeopardize EDF’s financial situation.
CEO Jean-Bernard Levy wants to build two 1,600 MW plants at Hinkley Point, but proceeding as soon as this year would mean that nearly 60% of EDF’s equity capital would be tied up in new nuclear projects by 2018, Bloomberg reports.