SHARES STRONGLY UP/DOWN this week 02/01/06 (Master RSI)

Higher spot gas prices could raise cost to Gaz de France of blocked tariff
hike

PARIS (AFX) - A source close to Gaz de France declined to rule out the
possibility that the financial impact of a cancelled Jan 1 tariff rise could
increase if spot gas prices are higher than expected amid cuts in Russian
supplies.
The tariff hike, blocked by the French government as it reviews the tariff
setting system, was meant to recoup costs of obtaining gas. Gaz de France
estimated the financial impact of the move at 250 mln eur in the first quarter.
Spot gas prices have not moved much since Russian state-controlled Gazprom
cut exports via Ukraine Sunday amid a dispute over the price Ukraine pays for
Russian gas, but increased demand for gas on the spot market to compensate for
lost Russian supplies is widely expected.
Gaz de France already stepped up its spot gas purchases last week, the
source confirmed. It also raised the volumes of gas it obtains through existing
long term contracts.
Spot purchases account for a minority of Gaz de France's supplies, but the
source did not provide a current percentage or comment on the magnitude of the
increase in spot purchases. The company's most recent published data showed 15
pct of its gas was bought on the spot market in 2004.
It said yesterday that its supplies from Russia had fallen 25-30 pct since
Sunday night, although Russia later said it would restore shipments via Ukraine
to near normal.
Gaz de France secured 21 pct of its gas from Russia in 2004 under long term
contracts, but the source said that figure may have been less than 20 pct in
2005 as other long term contracts led to greater imports from Algeria rose and
new imports from Egypt.
Egyptian gas is expected to rise to 10 pct of the company's supplies in 2006
and 2007.
All of Gaz de France's long term contracts specify ranges of gas rather than
fixed volumes, giving Gaz de France flexibility to buy more gas under the
contracts without paying higher prices.
The source said Gaz de France's gas storage facilities are "pretty much
full" at present.
Separately from the financial impact of the blocked tariff rise, Gaz de
France recently said a regulatory proposal for rates for access to its
infrastructure would add 2 pct to the EBITDA of its French gas distribution
business in 2006-07.