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In 1860, GDF SUEZ took its first steps in international business by obtaining concessions for gas street lighting and urban transport electrification – a marriage of gas and electricity which typifies the Group to this day. It was the beginning of an extraordinary story, full of interesting developments. Looking back through one and a half centuries of history, we have to admit that there are very few parts of this world left unexplored by the Group’s teams. Today, GDF SUEZ is the most international company in its market sector, a unique position resulting from its managers’ vision, its employees’ pugnacity and, most of all, its customers’ trust. This is the long story of GDF SUEZ, outside its home base of France and Belgium, that we would like to share with you.

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150 anni di storia di GDF SUEZ.

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Page 1: Storia di GDF SUEZ

In 1860, GDF SUEZ took its first steps in international business by obtaining

concessions for gas street lighting and urban transport electrification – a marriage

of gas and electricity which typifies the Group to this day. It was the beginning

of an extraordinary story, full of interesting developments. Looking back through

one and a half centuries of history, we have to admit that there are very few parts

of this world left unexplored by the Group’s teams. Today, GDF SUEZ is the most

international company in its market sector, a unique position resulting from its

managers’ vision, its employees’ pugnacity and, most of all, its customers’ trust.

This is the long story of GDF SUEZ, outside its home base of France and Belgium,

that we would like to share with you.

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150YEARS

SHARED ENERGYIN WORLD MARKETS

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GDF SUEZ is the result of a 150-year process of

expansions and mergers in a variety of businesses

and geographical areas. Our current identity builds

on those national and international industrial tra-

ditions, whether it be building the Suez Canal, dis-

covering gas fields in Norway, lighting up our towns

and cities or bringing natural gas to half the homes

in France in less than a generation. GDF SUEZ is a

company at once firmly rooted in its national history

and resolutely focused on the wider world. This open-

ness to the world is part of our company’s genetic he-

ritage and sets us apart from others in our industry.

Drawing on this vast heritage, we have become Euro-

pe’s leading gas player in terms of size, geographical

diversity and supply portfolio flexibility, and a

leading electricity company in the private sector

in terms of installed electric capacity both within

GDF SUE

expansion

and geogra

on those na

ditions, whet

covering gas f

and cities or b

in France in les

company at once

GÉRARD MESTRALLETCEO & CHAIRMAN

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and outside Europe, from Latin America to Southeast

Asia and the Middle East. These two arms of our bu-

siness – our domestic markets and our international

development – enhance and strengthen one another

through acquired experience and expertise.

The combination between GDF SUEZ and Interna-

tional Power marks a further step in the company’s

international development.

For these reasons, GDF SUEZ today is ideally placed

to benefit from the growth of the emerging econo-

mies: Brazil (where we are the leading private produ-

cer), the Middle East and Southeast Asia.

Openness to the world is not only an absolute ne-

cessity for European companies in our sectors: it

is also an opportunity for France and Belgium,

the two countries in which GDF SUEZ originated.

It is an opportunity, too, because being open to ever-

evolving and complex markets forces us to innovate

continually. Last but not least, it is an opportunity

because it gives our people the human diversity they

need to adapt and seize the opportunities offered by a

world which, though now globalised, retains the rich

local diversity of its companies and territories.

REAP THE PAST’S REWARDS TO PREPARE A CHANGING WORLD FOR THE FUTURE

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A GROWING GROUPIN A CHANGING WORLD

The age of concessions (1860-1895)A world without borders (1895-1914)

Nationalism and monetary instability (1914-1940)

Towards other forms of international presence (1940-1985)

Neoliberalism: users become customers once more (1985-1990)

Take-off (1990-1995)The boom years (1995-2000)

From one crisis to the next (2001-2008)A global group (2008-2011)

1860

2011

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Turkey: power plant

The age of concessions (1860-1895)

A world without borders (1895-1914)

Nationalism and monetary instability (1914-1940)

Towards other forms of international presence (1940-1985)

Neoliberalism: users become customers once more (1985-1990)

Take-off (1990-1995)

The boom years (1995-2001)

From one crisis to the next (2001-2008)

A global group (2008-2011)

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GROUP EXPERTISE DEPLOYED GLOBALLY

Nuclear The rise of natural gas and LNG

Natural gas exploration and productionRenewable energies

Energy trading

Thailand: cogeneration plant

INTERNATIONAL PRESENCE DOUBLED

Northern Ireland – the fi rst step; Reuniting Eastern and Western Europe; The West European ‘copper plate’; The ‘electricity islands’ of the Mediterranean

Return to Argentina; Chile – the land of copper; Peru follows the Chilean model; The Brazilian challenge

The North American giant; Central America : Mexico, Panama

From Siam to Thailand;Tigers, dragons and other emerging powers;Success in the Gulf States

Nuclear

The rise of natural gas and LNG

Natural gas exploration and production

Renewable energies

Energy trading

INTERNATIONAL POWER – HOW GDF SUEZ DOUBLES ITS INTERNATIONAL PRESENCE

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The GDF SUEZ Group’s history is marked by the

convergence of 3 business activities: natural gas,

electricity and energy services. Gas and electricity

businesses have always been intricately related. At

the dawn of the 20th century, large companies started

up for supplying these types of energy and some

distributed water as well. The use of electricity and

natural gas was developed to bring more and more

comfort and modernity to homes, businesses and

local authorities.

As with electricity, traditionally gas was closely lin-

ked with the concept of public service. While France

of supply sources included the United Kingdom,

Egypt, Qatar, Trinidad & Tobago and Azerbaijan.

GDF SUEZ got involved in exploration-production

at the end of the 1990s, fi rst of all in Germany and

the British North Sea, then via new sites in Africa/

M-E (Egypt, Algeria, Qatar, …), Europe (the Netherlands,

Norway, the UK, …) and Asia (Indonesia, Australia, …).

In this way, the Group is developing even more internatio-

nally by consolidating its presence throughout the natural

gas value chain.

From the beginning of the 1990s, GDF SUEZ had been

interested in the privatisation of numerous public

services worldwide. GDF SUEZ became interested in

refurbishing gas networks in Russia, and staked its

claim in reunited Germany and in Portugal. In 1998,

GDF SUEZ was supplying gas in both Berlin and Mexico

City. Later, it took holdings particularly in European

companies, especially alongside the main pipelines.

The Group also chose the European continent for

storage, transport and distribution activities, making

Canada the exception as a non-European country.

Thus, in 2011, GDF SUEZ, took a stake in the major

Russian transport network project, “Nord Stream”.

GDF SUEZ’ energy story shows the Group’s ability

to fulfil multiple missions: ensure security of supply

to its customers, guarantee a high quality of service

and offer competitive prices.

had produced gas on its territory directly from coal

right up to the Second World War, the arrival of

natural gas, one of the least carbon-rich energy

sources, definitively changed the energy landscape of

the 20th century. The 500-odd French coal gas works

identified in 1946 gradually closed down, while large

gas and oil fields were discovered in the Sahara

desert as from 1956.

The invention of gas liquefaction in the 20th century

marks a key step in the international history of energy.

Industrialisation of this new technology has in fact

made it possible to transport gas by sea. The Group

pioneered the development of LNG (liquefied natural

gas) chains. As a result, in the 1960s the very first LNG

transport shipping line was set up between Algeria

and France. In 2000, GDF SUEZ took over the running

of the oldest operational LNG terminal in the USA

(in Boston) and in 2007 helped strengthen security

of supply in the north of Chile, building a natural

gas terminal. The Group has also held a stake in two

Indian terminals since 2006.

In order to ensure the security of its natural gas

portfolio, in the second half of the 20th century GDF

SUEZ set out to diversify its supply sources. This

determination gradually bore fruit: Algeria in 1965,

the Netherlands in 1967, Russia in 1975 and Norway

from 1977 became the Group’s major suppliers. Other

countries taking part in this geographic diversification

JEAN-FRANÇOIS CIRELLIVICE-CHAIRMAN, PRESIDENT

4

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DIRK BEEUWSAERTEXECUTIVE VICE PRESIDENT IN CHARGE OF THE BRANCH ENERGY EUROPE & INTERNATIONAL

The success of GDF SUEZ’ global expansion called

on numerous skills in multidisciplinary development

and the management of large projects. These strengths

are ensured by the quality of the women and men

who work day to day to serve the economic, sustai-

nable growth of the regions where the Group is active.

In doing this, they display their know-how throughout

all the activities deployed by GDF SUEZ to carry out

the development and operational management of its

business.

We rely on 150 years of experience in power plant

operations, installation and maintenance, and elec-

trical systems management, including trading and

sales operations, on the expertise of a world-renowned

energy design and engineering company and on a wide

network of sound references in nearly 35 countries.

Our know-how also comes from being an acknowledged

player in natural gas exploration and production, with

teams who manage the largest European gas pipeline

and storage network, and those who operate a fleet

of 18 LNG carriers on all the world’s seas.

Lastly, our know-how is our capability to work closely

with financial, industrial and institutional partners

such as international financiers, public authorities

and all types of development agencies who make such

projects possible. Every day, 210,000 Group employees

help make GDF SUEZ a recognised leader in the world

of energy.

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A GROWING The age of concessions (1860-1895)A world without borders (1895-1914)

Nationalism and monetary instability (1914-1940)

Towards other forms of international presence (1940-1985)

Neoliberalism: users become customers once more (1985-1990)

Take-off (1990-1995)The boom years (1995-2001)

From one crisis to the next (2001-2008)A global group (2008-2011)

6

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GROUPIN A CHANGING WORLD

1860

2011

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

Turkey: power plant

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[1860...

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THE

AGE

OF C

ONCE

SSIO

NS Concessions are a form of partner-

ship whereby public authorities

at national, regional or local level

contract out the development,

fi nancing and/or operation of

services of public interest (utilities),

with or without associated infra-

structure, to the private sector for

a fi xed period of time. Concessions

exist for a range of services

including public lighting, water

and energy supply, public transport

by railway, tram or boat, toll roads,

and waste disposal and processing.

The concession-holder provides

the service in return for a fee

charged to users or customers. [...]

[...] C ontracting out the development of infrastructure and amenities to the private sector may be done for techni-cal or financial reasons. O ften, the au-thorities are simply reluctant to expose the public to the financial risks asso-ciated with developing an innovation.

This was the case in the 19 th century with public lighting, which had long been the responsibility of town and city coun-cils. A t the end of the 18th century, a new lighting fuel called coal gas was ‘ discovered’. Industrial investors seized on the invention and offered to award gas-lighting concessions to the muni-cipal authorities. The idea was to har-ness a safe market – public lighting – in order to gradually develop another market: domestic, or home, lighting.

In 1812 , London became the first city to light its streets with gas, followed by Brussels in 1818, P aris in 182 0, Berlin in 182 6 and V ienna in 184 2 . In that age of pioneers, few major towns or cities had publicly-run systems of gas lighting.

A fter a time, groups specialising in gas technology began to emerge. Their aim was to operate multiple conces-sions si mul taneously and so become multi na tionals in the sector. GDF SUEZ is the heir to several of these groups, one of the oldest of which, founded in 1862 , had plants at Leuven, Tournai and C harleroi in Belgium, as well as in P rague, C hemnitz , Siena, R imini and C atania. Later, it also operated in France and P ortugal.

Paris (France). The City of Lights at the time of gas street lighting

1860

1895

Having begun as a public-lighting and tram operator,

GDF SUEZ simultaneously developed its electricity and gas activities.

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THE

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Urban development in the 19th century played a key role in the rise of GDF SUEZ.A nd so, it was in the gas sector that the concept of the public utility group was born. H owever, other companies soon emerged with the aim of building and operating multiple concessions, including railways, water supply networks and urban transport networks. A t that time, GDF SUEZ was particularly active on the Italian P eninsula, via a company es ta-blished in Brussels in 1880 which spe-cialised in the construction of narrow-gauge railways. This company built and opera-ted narrow-gauge rail networks around Bergamo and Turin, and in 1882 acquired the tram networks in N aples, Florence, Turin, Trieste and elsewhere.

A round 189 0-9 5 a new set of groups emer-ged, specialising in electricity generation and distribution. Financially, the appea-rance of these specialist groups was prom-pted by the increasingly capital-intensive

nature of public utilities. The era of sche-mes pioneered by general or limited part-nerships was over: that of public limited liability companies had begun. Because the groups specialised in particular fi elds (gas, electricity, trams, railways, etc.), they began to establish their own technical offi ces, the forerunners of today’s design and engineering departments.

Irrespective of their core business, these specialist groups shared some common characteristics. First and foremost, there were always networks to be built, which ne-cessitated some encroachment on the land, whether in the form of ballast to support rails, poles to support cables or under-ground pipes. Secondly, with the exception of the railway sector, the authorities gran-ting the concessions were municipalities, which were keen to develop the facilities available to their residents. Urban develop-ment in the 19 th century therefore played a key role in the rise of GDF SUEZ – and vice versa.

Belgium: laying of gas pipelines (around 1900)

Lisbon (Portugal): cleaning the ovens at a gas works in Belem (around 1925)

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OF C

ONCE

SSIO

NS 1860

1895

13

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THE

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Milan (Italy): tram shelter used as a stand by a group that GDF SUEZ stems from, for the 1906 International Exhibition

Such were the similarities between public utility activities that some groups aspi-red to operate several simultaneously. Because gas was a potential rival to electricity for some applications, many companies combined the two. It was also common for one GDF SUEZ subsidiary or two separate subsidiaries to operate the local tram network and the electri-city concession in the same town or city: the tram system ran on electricity, so its users guaranteed the electricity com-pany a certain baseload consumption. In O dessa, the Group operated no fewer than four concessions: gas, electricity, trams

and telephone. In other places, such as Tunis, one subsidiary was responsible for supplying both water and gas.

Even in the 19 th century, concession-hol-ding companies in all areas of business faced issues that still exist today, such as the setting and revision of fares and tariffs, the need for conditions favourable to competition, the obligation to supply and the tendency for public authorities to terminate contracts prematurely, either to transfer the running to another ope-rator or to bring it back under public control.

Kazan (Russia): a Compagnie Gaz et Électricité de Kazan (Kazan gas & electricity company) share certifi cate, 1909

1860

1895

...1895]

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A WORLDWITHOUT BORDERS

During the global economic boom from 1895 to 1914,

the world saw increased competition between

economic powers: Britain’s unrivalled supremacy was

over, its dominance challenged by the industrial might

of Germany and the emergence of the United States. [...]

[...] In terms of international presence, this was a golden age for public utility groups like GDF SUEZ. They conquered new markets, including R ussia, Spain, South A merica and a number of coun-tries in A sia. Their investments were fa-cilitated by the free movement of capital and goods, while the convertibility of most world currencies meant that the fi nancial risk of overseas investment was limited.

Specialising among other things in the electrification of tram networks, GDF SUEZ was particularly active in the R ussian Empire, with subsidia-ries in this sector operating in K ursk, K iev, K azan, O dessa, O rel, Saratov and Simfe ropol. Between 189 8 and 1913 , GDF SUEZ secured simultaneous elec-tric-lighting concessions in K azan, K ursk, O dessa, O rel, St. P etersburg,

The Group’s unprecedented international expansion was hampered by public authorities’ interventionism, despite the fact that its businesses were deeply rooted locally.

[1895...The stock market played an important part in the rapid development of companies GDF SUEZ originated from

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Saratov, Simferopol and V ladikavkaz . In other Eastern European countries, the Group developed or electrified urban transport networks in Zagreb (C roa-tia), Galati (R omania) and Belgrade (Serbia). Further east, GDF SUEZ was very active in the O ttoman Empire, winning tram and electricity conces-sions at Salonica in 189 6 and Smyrna (Izmir) in 19 09 .

with the outcome of this collaboration, the two groups expanded into the Spa-nish market in 189 9 and the Syrian market in 19 05 . O ther consortia were formed by GDF SUEZ and rival groups to split the risks associated with ope-rating urban transport networks and power stations in Bilbao, C onstanti-nople, Buenos A ires, Bucharest and Szeged (H ungary).

O perating ever further from their home markets, tram, gas and electricity groups felt the need to limit the resul-ting ‘ country risk’ by working together more closely. GDF SUEZ, for example, joined forces with the Empain Group in 189 5 -9 6 to establish two joint ven-tures in Egypt, one to operate trams in C airo, the other to run a narrow-gauge rail network in the N ile Delta. P leased

The Group’s foreign subsidiaries were generally highly efficient. H owever, by the end of the 19 th century, the interna-tional expansion of public utility groups was regarded in some quarters as a form of economic colonisation, despite the efforts made by these groups to cultivate their image. In R ussia, rela-tions between the companies holding lighting and tram concessions and the

Tram, gas and electricity groups were extremely active outside their home markets.

Cairo (Egypt): the tram service to the Pyramids, around 1920

Saint-Petersburg (Russia): a share certifi cate of the Compagnie d’Éclairage Électrique public lighting company, founded in 1897

1895

1914

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authorities awarding them (i.e., munici-palities) quickly became very strained. A s soon as a concern proved profitable, municipalities would try to wrest it back in order to operate it themselves. In Bilbao, from 19 06, and M adrid, from 19 2 0, GDF SUEZ subsidiaries placated local opinion by promoting the invest-ment of local capital in the tram enter-prises they controlled. In both cities, companies incorporated under Spanish law were founded to manage the busi-nesses, part of whose capital was held by Spanish investors. In Bangkok, the royal

family and government officials held stakes in the local company that opera-ted the electricity and tram networks. Despite these efforts to root their bu-sinesses locally, some networks were taken over by the public authorities from the turn of the 2 0th century onwards. In W arsaw, the tram network operated by a Group subsidiary was taken over by the city authorities in 189 9 , while in 19 03 the Italian parliament passed a law al-lowing municipalities to buy back tram networks before the relevant conce-ssions had come to an end.

...1914]

Istanbul (Turkey): electric trams on the Galati bridge in 1930

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1914

1940

[...] A fter the First W orld W ar, the nationalist fervour seen in some places in the late 19 th century became wides-pread. In the wake of the Second R ussian R evolution, the C ommunist government ordered businesses to be nationalised and one after another the tram and lighting companies in R ussia lost control of their operations; staff were forced to hand over to the Soviets companies which had been expanding rapidly in 1914 .

Elsewhere, some municipalities and provinces decided to run their public utilities themselves. In Galati, R omania, a GDF SUEZ subsidiary was dispos-sessed of its networks in a particularly arbitrary way. Galati’s tram system had to cease operating in late 19 16, initially due to the hostilities and later because it was impossible to procure the spare parts and equipment needed to main-tain the infrastructure. In 1919 , the municipality seized control of the bu-

siness, arguing that the company had forfeited its rights since operations had been suspended for over 3 0 consecutive days! In Belgrade too, the municipality took forcible possession of the tram and lighting companies, without any legal justification, forcing GDF SUEZ to take diplomatic steps in order to obtain compensation.

The Group’s activities abroad were also hampered by a new phenomenon, infla-

NATIONALISMAND MONETARY INSTABILITY

The First World War brought the Group’s development

to a sudden halt. Communications between GDF SUEZ

and many of its centres of operation were cut off,

causing technical and fi nancial diffi culties. In some cases,

it was possible to maintain communications with foreign

subsidiaries via London or Paris. As for the Group’s ope-

rations, their profi tability was increasingly undermined

by a relentless rise in the price of raw materials, espe-

cially fuel. Some also suffered physical damage:

in Belgrade, for example, installations were sabotaged

by the occupant troops. [...]

Vladimir Ilitch Oulianov, alias Lenin (1870-1924), leader of the 1917 Bolshevik Revolution

[1914...

Despite the nationalism in some countries, GDF SUEZ emerged from the First World War with a presence

on four continents.

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NATIONALISMAND MONETARY INSTABILITY

Electrifi cation spread to ever vaster areas.

Cairo (Egypt): Choubra power station under construction, around 1932

tion, which threatened the financial stability of tram, electricity, gas and water concessions. C oncession-holding companies faced new and unexpected costs as wages and raw material prices rocketed. The advent of the eight-hour day was an added problem for public utility operators. In these exceptional circumstances, which nobody could have foreseen when the contract speci-fications were being drawn up, conces-sion-holders had no alternative but to ask the authorities that had awarded the concessions to allow tariffs and fares to be adjusted to bring them into line with the new economic condi-tions, in order to offset the extraor-dinary costs that were crippling their businesses. H owever, these demands

created tensions with the public autho-rities, varying in intensity depending on the country. In Italy, the authorities gradually drove tram companies to fi-nancial ruin by refusing their requests for fare rises.

A lthough the positions of its subsi-diaries were threatened around the globe, resulting in a growing focus on the domestic market, GDF SUEZ remained present in many countries, most notably in South A merica, A sia (Thailand and C hina), the M editerra-nean (Spain, Greece, Turkey, Syria and Egypt) and Eastern Europe (P oland and R omania). In R omania and C ongo, it built power stations for major indus-trial groups.

1914

1940

Cluj (Romania): the power station’s boilers, 1929

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For technical reasons, growth in the gas industry was relatively slow: gas was a by-product of coal distillation, which meant that supply was inelas-tic. Electricity, on the other hand, was powering ahead. Group subsidiaries were electrifying ever vaster areas: networks were expanding outside ur-ban and industrial areas and becoming regional. GDF SUEZ consulted with other public utility groups to determine their respective areas of expansion, establishing joint ventures where ne-cessary and interconnecting networks in order to enhance security of supply and help pay for major fixed assets in the shape of increasingly powerful and efficient power stations.

The Great Depression of the 19 3 0s dealt a heavy blow to the profitability of foreign investments and the mobi-lity of capital. H owever, the impact of the crisis varied considerably from country to country. In some parts of the world, it had a significant impact from as early as 19 3 0. This was the case in Damascus, where the devaluation of the Syrian currency impaired the profitability of local businesses. In Lods, P oland, the deep crisis in the textile industry affected the electricity com-pany’s results from 19 3 0 onwards. In Lithuania, on the other hand, the profits of the local subsidiary conti-nued to grow until 19 3 7 . Similarly, the Tientsin tram and electricity company

in C hina saw revenues start to dip only in 19 3 7 , as a result of the Sino-J apanese conflict. The C hinese curren-cy of account was then devalued seve-ral times and the company’s dividend plummeted.

The Great Depression also made it harder to repatriate profits generated by GDF SUEZ subsidiaries abroad. The protectionist legislation introduced in almost every country in the world significantly hampered the progress of Group businesses. In overall terms, the relative importance of foreign as-sets in the market valuation of GDF SUEZ portfolios declined substantially in the 19 3 0s in favour of the Group’s

Wall Street (New York), during the 1929 stock market crash

NATIONALISMAND MONETARY INSTABILITY

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domestic markets, namely France, Bel-gium and their colonies.

Lastly, the economic crisis further heigh tened the nationalism already in evidence around the world. In Syria, the Damascus electricity company was boycotted on the grounds that it was foreign-owned. GDF SUEZ subsidia-ries had to deal with the nationalist government of V enizelos in Greece, the K emalists in Turkey and the Francoists in Spain.

1914

1940

Mwadingusha (Congo): installing turbines in the power plant, around 1929

...1940]

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TOWARDS OTHER FORMS OF INTERNATIONAL

PRESENCEThe concession model gave way to public ownership. The industrialisation of developing countries leads to a new

form of Group expansion driven by its engineering business.

W ith the outbreak of the Second W orld W ar, GDF SUEZ was once again comple-tely cut off from most of its foreign sub-sidiaries. The occupation forced these companies to become self-reliant, and many of them experienced great diffi -culties in sourcing fuel and procuring the spare parts needed to operate power stations effectively. In addition, some facilities were badly damaged in the hostilities. This was the case at Tientsin following the J apanese occupation. The J apanese also dismantled a large part of the Shanghai power station, in which the Group had a fi nancial interest. Des-pite these diffi culties, GDF SUEZ sub-sidiaries strove to ensure continuity of service in often hazardous conditions.

In C ongo, the electricity industry sup-ported the A llied war effort, and output at the country’s hydropower plants was only limited by an unusual succession of dry years.

By 19 4 5 , the system of public service concessions had become completely discredited, and was regarded abroad as a correlate of colonialism. There see-med to be one obvious solution: collec-tivisation. This was adopted by many countries, including France and Great Britain. In Belgium, some on the left also called for electricity companies to be nationalised. In the end, the power companies pledged to adopt a single tariff and to limit their profi ts. This

agreement, concluded in 19 5 5 , commit-ted the sector to a process of progres-sive integration, with the smallest, least profi table companies being gradually absorbed by the more successful ones.

Elsewhere in the world, the tram, electri-city and gas operations run by GDF SUEZ subsidiaries were nationalised or bought back for a pittance. The process had started during the war: in 19 4 1 and 19 4 3 respectively, the Greek and Turkish government authorities had bought back the installations and concession-holders’ rights from the tram and electricity companies in Salonica and Izmir before the concessions ended. In the aftermath of the hostilities, C hina and the countries

Charles de Gaulle (1890-1970) presiding over the nationalisation of the French energy market

[1940...

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1940

1985

In the 15 years that followed the end of the Second World War, consulting engineering work allowed the Group to

remain active in over 30 countries.

of Eastern Europe adopted communist regimes and immediately nationalised their transport, gas and electricity com-panies. The compensation awarded was sometimes derisory and took a long time to be paid. In the 19 5 0s, the phenomenon spread to Third W orld countries such as Syria and Egypt.

A nother factor hampering international expansion was “the impossibility of carry-

ing out certain fi nancial transactions

due to the inconvertibility of currencies,

the existence of exchange controls making

it impossible to protect oneself from the

instability of certain currencies … and

the threats of a new general war resul-

ting from the division of the world into

two camps separated by different outlooks

and ideologies. Ten years after the cessa-

tion of hostilities, we have not yet succeeded

in rebuilding an economic system in which

private capital can be exercised freely

and smoothly.”

Despite the nationalisation of its assets, GDF SUEZ continued to operate inter-nationally as a consulting engineer or general contractor. In the 15 years that followed the end of the war, the Group carried out consulting engineering work in the M editerranean (Italy, Greece, Turkey, etc.), A frica (C ongo, Senegal, etc.), the M iddle East (Saudi A rabia, Syria, etc.) and A sia (Thailand). In C olombia, it designed the A nchicaya hydropower

plant and the Y umbo coal-fi red power station. In Iraq, it was commissioned to design the Dibis and Baghdad South power stations as well as high-voltage interconnection networks. It also ope-ned local offi ces in Baghdad, Damascus, Bogotá and R iyadh.

This form of expansion developed fur-ther in the 19 60s. By 19 7 0, GDF SUEZ design and engineering departments were active in over 3 0 countries in A me-rica, Europe, A sia and A frica. M ost of these were developing countries that GDF SUEZ was already assisting with their industrialisation. Its arrangements with these countries were based on the transfer of expertise and included

Belgium: poster calling for socialism in the energy sector, 1961

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training skilled senior personnel on-site. Funding was often provided by inter-national fi nancial institutions such as the W orld Bank.

O f the many projects completed in the 19 7 0s, two prominent examples were the A nnaba and Skikda power plants in A lgeria. A lgeria was a focus of much GDF SUEZ activity. The Group helped draw up the country’s energy infras-tructure plan, was involved in design-ing the A rzew gas liquefaction plant and oversaw the construction of power

plants at natural gas and oil sites. H owe-ver, in a bid to spread its risks more evenly, the Group also looked to other countries such as Libya, N iger, Indonesia and P eru. A t around the same time it took over C oyne et Bellier, a fi rm specialising in engineering works, especially hydro-electric dam and nuclear power station construction. C oyne et Bellier was al-ready largely geared towards interna-tional markets at this time.

By 19 7 9 , GDF SUEZ had representa-tives in fi ve Latin A merican countries

(A rgentina, Brazil, Guatemala, M exico and V enezuela) as well as in the Ivory C oast, N igeria, Zaire, H ong K ong and Singapore. In the energy sector alone, Group companies developed power sta-tions and networks in Iraq, P ortugal, V enezuela, C hina, Zaire, the Ivory C oast, Libya, Turkey, Saudi A rabia, M orocco and A lgeria. They were co-responsible for carrying out studies commissioned by the Zaire and Guatemala governments and by the companies H ydro-Q ué bec (C anada) and Florida P ower C orporation (USA ).

Setubal (Portugal): power plant built in 1980

Sasolburg (South Africa): power plant in 1957

TOWARDS OTHER FORMS OF INTERNATIONAL

PRESENCE

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...1985]

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1985

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NEOLIBERALISM: USERS BECOME CUSTOMERS ONCE MORE

[...] During the 19 80s, however, this set-up began to be questioned around the world, amid a general revival of interest in liberal theories. In Europe, M argaret Thatcher was the first to privatise state-owned enterprises and

In the mid-1980s, the global energy sector was still

developing along largely national and self-reliant lines.

Electricity and gas production and distribution were

national monopolies held either by state enterprises

or by nationally-owned private enterprises under

the close control of the authorities. In the latter case,

tariffs were set so as to provide a ‘reasonable’ return

on invested capital. As soon as the return exceeded

what was necessary to tap the capital market,

the monitoring bodies (government, trade unions, etc.)

put pressure on the companies to redistribute

the surplus profi t to consumers rather than

to shareholders. [...]

dismantle state monopolies. This move was accompanied by market deregula-tion and an opening-up of the markets to foreign capital. W ithin some 10 to 12 years, ‘ competition’ had become the watchword around the globe, inclu-

ding in sectors traditionally conside-red as ‘ natural’ or ‘ logical’ monopolies. P ension funds backed the change, seeing in it the potential for lucrative investments.

W ithin the European C ommunity, a consensus emerged around 19 88-9 0 to abolish the legal obstacles to the trans-mission and import of electricity and to freedom of establishment for electri-city producers. The C ommission issued two directives during this period, one on the free transit of kW h and the other on price transparency.

A s a result, an electricity distribution com-pany wishing to import electricity from a non-neighbouring country could arrange to use the transmission system of a third country that it had to cross, subject to payment of a fee. ‘ C abotage’, the practice of supply ing consumers in the countries crossed, was provisionally prohibited.

Within 10 to 12 years, ‘competition’ had become the watchword – most notably within the European Community.

[1985...

In Eastern Europe, privatisations followed the fall of communism (1990 cartoon)

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H owever, this sudden renewed interest in competition and private enterprise was not confined to W estern Europe. In many emerging economies, the shift towards privatisation was hastened by the fact that foreign private capital now seemed the only available means of developing their infrastructure. Fur-thermore, international fi nancial in s ti-tutions encouraged the privatisation of public services and the dismantling of monopolies. In Eastern Europe, the collapse of the communist regimes in 19 89 and the break-up of the Soviet Union in 19 9 0-9 1 offered W estern groups new opportunities for expansion. In December 19 9 1, 5 1 states adopted the European Energy C harter, aimed at improving the security of their energy supplies, optimising existing facilities and facilitating technology transfer.

From 19 9 0 onwards, the trend in all parts of the world was towards priva-

tising public utilities and splitting in-tegrated energy companies into gas and electricity generation, transmission and distribution companies. This split was intended to promote competition bet ween producers by allowing their customers to freely negotiate the best possible prices. A new concept emer-ged, that of the ‘ independent power producer’ (IP P ). The IP P builds or buys power stations and then sells the power they generate to public utilities or high-consumption end-customers.

Looking back at the history of GDF SUEZ, it is striking how quickly Group companies identified the change that was under way and tailored their strategies to it. A s early as J une 19 88, GDF SUEZ launched an investment fund to allow private investors to participate in the impending privati-sation of the electricity sector. Buying and selling securities generated a

certain amount of profit. A s well as bene fits for the Group’s engineering business, there was potentially a 6-7 % return on investment, which was higher than the return under the regulated system. Two projects that the Group monitored particularly closely at that

time were the privatisation of R oose-cote power station in the UK – the first to be put up for sale by M argaret Thatcher’s government in 19 89 – and the planned sell-off of a thermal power plant in P ortugal (P ego). It also studied a natural gas terminal project to be

1985

1990

The Group closely monitored the privatisations of state-owned enterprises.

US President, Ronald Reagan and British PM, Margaret Thatcher, champions of neoliberalism

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NEOLIBERALISM: USERS BECOME CUSTOMERS ONCE MORE

built in P ortugal in partnership with Total.

In M ay 19 89 , GDF SUEZ unveiled a strategy of ‘ Europeanisation’ aimed at making the Group “one of the sector’s

leading private industrial players in the

European framework – whether liberal or

interventionist – which is set to gradually

replace the national frame works that cha-

racterise the sector today”. In the process, the Group would leverage the technical, fi nancial and mana gement experience it

had acquired in Belgium, which had made it “the number one wholly private player

in Europe”. In 19 9 0, a holding com pany was set up for all the investments the Group would acquire abroad as an inde-pendent power producer, and a business unit, called Electricity and Gas Interna-tional, was established.

The fact that it had been active abroad before the war only reinforced the Group’s conviction that it could become a strong international player.

By the end of the 1980s, GDF SUEZ was already

the number one wholly private player in Europe

UK: government proposals to privatise the energy supply industry, 1988...1990]

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In Europe, where the French and Ger-man markets were apparently closed for the time being, GDF SUEZ focused initially on two distinct geographical areas: ‘ peripheral’ W estern Europe (Scandinavia, the Iberian P eninsula, Italy, Greece, the United K ingdom and Ireland) and Eastern Europe (P oland, the C zech R epublic and H ungary). Its first major project was the acquisition, in M arch 19 9 2 , of generation facilities in N orthern Ireland, in partnership with a US company. In addition, trans-

national alliances were negotiated with other private electricity companies. A n agreement concluded with the Dutch firm SEP provided for optimum use of the two groups’ power plants, in order to reduce investment costs. In December 19 9 1, GDF SUEZ acquired a 3 .3 % stake in the Spanish private electricity com-pany Iberdrola in a deal that included the possibility of developing part-nerships elsewhere in the world. Talks had also begun with a number of other European electricity companies such as

the V eba and Scottish P ower groups. In each case, the idea was to swap minor investments and develop joint one-off projects. In 19 9 2 -9 3 , a GDF SUEZ subsidiary was instrumental in setting up a European ‘ club’ for private elec-tricity companies at which they could discuss such issues as the construction of shared power stations, difficulties encountered with nuclear energy, as well as terms and conditions for tran-siting electricity across the continent for cross-border sale.

O utside Europe, GDF SUEZ began sys-tematically monitoring energy-sector developments in a number of countries in three geographical regions: N orth A merica, South A merica (A rgentina, C hile and C olombia) and Southeast A sia (Thailand, M alaysia, Indonesia and V iet nam). Its first successes came in 19 9 2 with the acquisition of several power stations in the United States. In the same year, GDF SUEZ esta-blished a foothold in South A merica, participating in the privatisation of

1992 saw GDF SUEZ enter the US and South American markets

Rosario (Argentina): aerial view, around 1992

TAKE

-OFF

1990

1995

[1990...

Ryegate (USA): wood-fi red power plant in 1999

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By the early 1990s, the Group was a world leader in the field of combined-

cycle gas turbine technology.

TAKE

-OFF

the A rgentine gas industry with its Spanish partner Iberdrola.

A s the number of companies put up for sale increased, the Group be-came more selective. Its choices were dictated primarily by a risk map, which ranked countries according to their economic, financial and political prospects. It also focused on acqui-ring modest concessions at reaso-nable prices, knowing that paying over the odds for prestigious acquisitions would undermine their profitability for years to come. Instead, it looked for deals that would contribute quickly to the Group’s results. It also realised that targeting overly large acquisitions

would have forced GDF SUEZ to ally itself with a greater number of players, thereby preventing it from assuming the role of lead operator.

The Group had a number of strengths that helped it break into the global marketplace. First and foremost, it had always maintained an interna tio nal presence via its design and engineering activities. Secondly, it had conside-rable expertise in the design and ope-ration of power stations, whether fired by coal, oil, gas or enriched uranium. By the early 19 9 0s, the Group was a world leader in the rapidly developing field of combined-cycle gas turbine tech nology. Its international ambitions

also benefited from its long-stand ing status as a multi-utility group, active in both gas transmission and dis tri-bution and electricity generation and distribution. In addition to this, its development as an independent pro-ducer was boosted by its service activi ties for industrial customers (the management of heating networks, for example), as provided by its many energy-service subsidiaries. Last but not least, as a private group free from political influence, GDF SUEZ was seen by many countries as an ideal partner.

These strengths proved extremely useful in the financial planning that

preceded each acquisition process. In the consortia it was involved in – in which it always strove to be the industrial operator – GDF SUEZ never contributed its entire foreign currency component in the form of equity, because the cost of equity was much higher than the cost of bank loans. The challenge was there-fore to “convince banks that the ba-

lance could be financed, at no risk to

them, through a bank loan at a relative-

ly low rate”. Under this method of bank financing (known as ‘ limited recourse’ or ‘ project financing’), the collateral consists not of marketable assets but of a belief in the project’s profitability.

Chilca (Peru): transporting the third turbine of the ChilcaUno power plant, commissioned in 2009

...1995]

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Far-fl ung countries served as a test bed for the impending liberalisation in Europe.

[...] To foster growth abroad, and ensu-re a sustainable presence, the Group’s management opted for a highly decen-tralised organisational structure with activities managed locally by staff from the relevant countries. This policy allo-wed the Group to be responsive to the market and maintain its entrepreneu-

rial dynamism. For example, the team established in C hile in 19 9 5 -9 6 during the acquisition of the Tocopilla and C olbun power stations played a crucial role in the Group’s expansion into P eru.

In some cases, far-flung countries like C hile were furthest down the path of

liberalisation. These countries were to provide the Group with a test bed for the impending changes in Europe: A

completely open market demands fresh

responses such as an aggressive day-to-

day business approach, extremely tight

cost control, quick decision-making and

non-stop flexibility. It was therefore

Taweelah (Abu Dhabi): Prince Philippe of Belgium heads an economic mission in 2004

Hanjin (South Korea): map of households supplied by gas by a Group subsidiary in 1999

1995

2001TH

E BO

OM Y

EARS

The GDF SUEZ Group’s international

growth gathered pace in the years

1995-98. The following new markets

were developed: Hungary, Germany

and India in 1995; Chile, China,

Vietnam, Kazakhstan, Singapore

and Thailand in 1996; Peru in 1997;

Brazil, Mexico and Oman in 1998;

South Korea in 1999; and Abu Dhabi

and Poland in 2000. Between

January 1996 and May 1997,

no fewer than 13 acquisition

and development projects were

completed. The Group’s self-impo-

sed target of controlling more

generation capacity abroad than

in Belgium by the year 2000 was

met ahead of schedule. In July 1997,

GDF SUEZ ranked as the world’s

sixth largest IPP, behind three

American and two British companies.

A number of opportunities also arose

in the distribution sector, both gas

(in Argentina, Germany and Thailand)

and electricity (Bremen). [...]

[1995...

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outside Europe that the Group acqui-red its first experience as a merchant

producer. Under the liberalised system, manufacturers purchased energy on the basis of calls for tender and already the trend was towards shorter-term supply agreements. “The ‘merchant

plant’ concept is gradually being imple-

mented: it will result in a system where

producers will no longer be able to rely

on contracts to finance their investments

but will have to risk building units

and selling their kWh on the best pos-

sible terms to direct customers, who will

be able to renegotiate their contracts

regularly”.In Europe, a European P arliament and C ouncil Directive of December 19 ,

19 9 6 marked the start of electricity market liberalisation: by 19 9 9 , at least 2 3 % of the market would be opened up, this being the proportion repre-sented by industrial customers consu-ming more than 4 0 GW h per year. H owever, nationalist tendencies died hard in some countries and it remained difficult to gain a foothold in jealously guarded markets such as France and Germany.

In N orth A merica, the Group did not establish a significant position imme-diately, the market there being in-creasingly competitive and extremely fragmented. This contrasted with the Southern C one of A merica (A rgentina,

C hile, P eru and Braz il), where the in-vestment climate in the 19 9 0s was highly favourable: neo-liberalism was taking hold across the region, and go-vernments were engaging in large- scale privatisation. A fter landing a number of contracts in A rgentina and C hile, in 19 9 8 GDF SUEZ embarked on a transnational project to build a trans- A ndean gas pipeline linking A rgentina to the Group’s power stations in nor-thern C hile.

O ver time, therefore, the ‘ opportunis-tic’ approach of the early days began to alter, with some projects snowbal-ling into multi-country, multi-business ventures. For example, the project un-

In 2000, GDF SUEZ became the leading producer in the Netherlands

Jacques Delors, President of the European Commission from 1985 to 1994

Almaty (Kazakhstan): power plant in 1996

THE BOOM YEARS

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dertaken in K azakhstan between 19 9 5 and 2 000 had a ‘ systemic’ dimension. K azakhstan’s geostrategic situation was clearly vital to the energy future of Europe and C entral A sia. Unfortuna-tely, however, the K azakh project was not destined to go ahead.

N evertheless, this regrettable outcome should not overshadow the Group’s excellent track record in international projects. W ith a few exceptions (elec-tricity in Bremen, India and Ireland, natural gas distribution in C anada and Uruguay) , its involvement in such projects was long-lasting, in spite of various crises.

It was during the same period, 19 9 5 -2 000, that GDF SUEZ began to take an interest in energy trading. It took part in the first power exchanges in the United States and Scandinavia, and had the advantage of being one of the few operators active in both gas and electricity.

A lthough present in many regions of the world, the Group had yet to make a significant mark in the key markets of Europe and the United States. It did, however, acquire strong positions in the N etherlands, taking over the country’s leading power producer, Epon, in 2 000, following two years of negotiations.

Ilo (Peru): inauguration of the Ilo 2 power plant

Eems power plant in the Netherlands, combining traditional thermal power generation with a gas-steam turbine and wind turbines

1995

2001

...2001]

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FROM ONE CRISIS The global economy deteriorated

sharply in 2001-02. A number of

emerging economies –

Argentina, Indonesia and Brazil –

were plunged into a major crisis

and were unable to honour their

commitments to the public utilities

with which they had concluded

contracts. Many of these

companies were hit hard. [...]

These required all non-residential cus-tomers to be liberalised by J uly 2 004 and residential customers by J uly 2 007 . In the event, many countries acted in advance of these deadlines. In addition, transmission and distribution activities had to be separated from production and supply activities and a national market regulator established in each M ember State.It was in this new regulatory frame-work that GDF SUEZ acquired major

positions in Italy, Spain and Germany, often with the support of local players (public authorities or industrial groups). From this time on, GDF SUEZ would adopt a holistic approach to the Euro-pean market, in which it aspired to become the second biggest company. In 2 005 , it sold 14 5 .4 TW h of power in Europe: 68.9 % in the Benelux countries, 17 .7 % in the region spanning France, Italy and the Iberian P eninsula and 13 .4 % in P oland, Germany and H ungary.

[...] By 2 001, Europe’s national mar-kets had opened up sufficiently for GDF SUEZ to consider the whole of the continent as its domestic market. In J uly 2 001, the Group was managing facilities of over 2 5 ,000 M W and was trading on all markets.

2 003 saw a further shake-up of the European regulatory environment with the publication of two new directives on the electricity and gas markets.

Rosario (Argentina): Litoral Gas company operations in 2006

[2001...

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TO THE NEXT 2001

2008

By 2 009 , the Group aimed to achieve sales of around 2 00 TW h and a genera-tion capacity of 3 5 ,000 M W .

Elsewhere in the world, 2 003 saw an upturn in Latin A merica and A sia. By 2 004 , GDF SUEZ was resuming its expansion in the region. A mong other projects, it took over a new hydropower plant in P eru (Y uncan) and began work on two power stations in the Gulf States (Sohar in O man and A l Ezzel

in Bahrain). To free up capital for new projects and strengthen its local foothold of key ventures, a number of investments were scaled back, most notably in Thailand, P eru and Braz il. GDF SUEZ also sought to achieve a better balance between its hydro and thermal resources in order to be less vulnerable to rises in fossil fuel pri ces. Between 2 001 and 2 005 , total installed capacity at Group-operated po wer stations outside Europe rose from

11,5 00 M W to around 2 5 ,000 M W , a figure similar to the capacity of its European power stations. Latin A me-rica accounted for roughly half of the Group’s installed capacity and sales abroad.

The operation of public utilities by pri-vate bodies and, in particular, foreign-owned groups, sometimes met with local opposition. In 2 002 , for example, the P eruvian president, A lejandro Toledo,

had to abandon plans to sell the state-owned electricity companies Egasa and Egesur to the local GDF SUEZ sub-sidiary. Lastly, there was a real risk that certain countries with fossil fuel resources, such as A rgentina, would adopt a self-reliant policy, thereby jeopardising the Group’s systemic pro-jects. GDF SUEZ worked to improve the energy security of the countries in which it operated by diversifying their primary energy resources.

Al Ezzel (Bahrain): power plant unveiling, May 2007

...2008]

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A GLOBAL GROUP

On 16th July 2008, the Gaz

de France and Suez general

shareholders’ meetings approved

the merger of the two groups.

The creation of the international

energy company GDF SUEZ

was accompanied by a new

organisational structure that

pooled and redistributed both

groups’ activities. [...]

[...] This major industrial operation relied on a consistent and shared industrial and social master plan. It fell within the framework of a profound and rapid change in the European energy market. The merger of the two groups aimed at reducing the risk exposure associated with this change and ensuring long-term competitiveness. O n a more specifi c level, the industrial logic behind this operation was set out in four major parts. Firstly, reach a worldwide dimension so as to maximise supply. Secondly, enjoy a high level of geographic and industrial com-plementarity to be able to strengthen and widen the scope of a competitive offer on energy markets. Thirdly, have a well-balanced positioning in terms of businesses and regions, respecting different cycles. A nd finally, set up a strengthened investment strategy that

gives a favourable position up against market challenges.

Established in 7 0 countries worldwide in 2 010, GDF SUEZ now has consi-derable investments, so much so, in fact, that the countries in which the Group enjoys positions of strength account for four-fifths of its interna-tio nal investments. O n these markets that are sometimes as large as con ti-nents, it has had to pump in more capital to strengthen, or at least main-tain, its positions. In Braz il, for exam-ple, where the market is growing at a rate of 7 % or 4 ,5 00 M W a year, keeping pace with the growth is a challenge in itself, given that the Group already operates 8% of the country’s installed capacity – making it Braz il’s largest private producer.

O ne of the Group’s strengths remains the diversity of technologies at its command. Today’s combined-cycle gas turbine (C C GT) units are 5 8% efficient, making them the most environmen tally friendly of all fossil fuel-fired power plants. It is no surprise, therefore, that 5 4 % of the Group’s global installed ca-pacity uses natural gas as its primary energy. Y et it would make no sense at all to roll out gas across the board, indiscriminately. H ydropower has a big future in Braz il, where 7 0% of hydro potential remains untapped. M oreover, many countries rely on a mix of ener-gies to make them less dependent on other countries and less vulnerable to fluctuations in the weather. In Europe, R ussian gas plays a crucial role but a deliberate choice has been made to retain a variety of supply sources in

Everett (USA): liquid natural gas terminal in 2008

2008

2011

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cial transmission of power. W ith the development of trading in the wake of liberalisation, many cross-border inter-connection lines are on the verge of saturation. There is therefore a distor-tion between a largely ‘ Europeanised’ demand (from transnational industrial groups) and a still fragmented supply. O n the regulatory front, we still have 2 7 liberalised markets rather than one single market: there are as many regu-lators as there are countries, doing little to facilitate smooth trading.

concluded with commercial companies and manufacturers are very short – between one and three years – but their renewal rate is 7 5 -85 % . In this kaleidoscope of different situa-tions, Europe is not yet the uniform market one might imagine. The single energy market remains a work in pro-gress. There are still restrictions, par-ticularly technical ones, on electricity trading. The European high-voltage grid was originally designed to ensure security of supply, not for the commer-

In Braz il, 60% of the output is sold to distribution companies on the basis of auctions covering periods of up to 3 0 years. C ontracts are indexed, which means that financial flows are predic-table. The rest of the electricity gene-rated is supplied on shorter contracts to selected industrial customers, with priority going to those for whom elec-tricity is not a major component of their production costs. In the United States, by contrast, the Group markets electricity in 11 states and contracts

order to ensure a certain level of supply and price stability.

Similarly, GDF SUEZ has no pre-conceived notions about which business areas to prioritise. C ircumstances vary greatly from country to country, depen-ding in particular on local legislation. In Thailand, most of the Group’s cus-tomers are manufacturers supplied di-rectly under long-term contracts; they tend to consume both electricity and steam and have a stable offtake profile.

A GLOBAL GROUPMap ta Phut (Thailand): power plant of the Glow company, GDF SUEZ subsidiary, in 2005

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Northern Ireland – the fi rst step; Reuniting Eastern and Western Europe; The West European ‘copper plate’;

The ‘electricity islands’ of the Mediterranean

Return to Argentina; Chile – the land of copper; Peru follows the Chilean model; The Brazilian challenge

The North American giant; Central America: Mexico, Panama

From Siam to Thailand; Tigers, dragons and other emerging powers; Success in the Gulf States

KEY GROUP P42

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PROJECTSON ALL CONTINENTS

Estreito (Brazil), hydroelectric dam under construction in 2009

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NORTHERNIRELAND

THE FIRST STEP

NORTHERN IRELAND

[...] P rivatisation of the UK electricity industry began in 19 9 0 – four years after gas industry privatisation and eight years after privatisation of the telecommunications sector. O n the gene-ration side, the UK authorities decided to divide up the C EGB’s assets among three new companies: N ational P ower and P owergen were assigned 5 2 % and 3 3 % of installed capacity respectively,

while N uclear Electric took over the nuclear power stations. Later that year (19 9 0), the British go-vernment floated on the stock exchan-ge 12 regional distribution companies with a monopoly over consumers using less than one megawatt of electricity. There was no shortage of interest: se-veral of the companies were acquired by US groups, others by EDF. In De-

cember 19 9 0, GDF SUEZ had conside-red taking over one of the 12 privatised companies, Y orkshire Electricity, but these plans came to nothing. That left two other routes for breaking into this market: becoming an independent pro-ducer or investing in N orthern Ireland.

In N orthern Ireland, electricity genera-tion and distribution were in the hands

Belfast (Northern Ireland): Nigen power plant, around 1992

In 1983, the free-market government led by Margaret

Thatcher attempted to liberalise the UK’s electricity

market by opening up the sector to new players.

The experiment proved a fi asco, prompting

the government to take the more radical step

of breaking the de facto monopoly of the Central

Electricity Generating Board (CEGB). [...]

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of a state-owned company, N orthern Ireland Electricity (N IE), which ope-rated four coal- and oil-fired thermal power stations with a total capacity of 2 ,100 M W . The N orthern Ireland grid was unusual in being completely uncon-nected to any other network. W hen the British government announced its intention to privatise N IE’s assets in various lots in A ugust 19 91, GDF SUEZ

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and the independent US producer A pplied Energy Services (A ES) set up a 5 0-5 0 joint venture called N orth Ireland Generation (N igen). In N ovem-ber 19 91, N igen made an offer for two of the four power stations up for sale, namely K ilroot (660 M W ) and Belfast W est (2 4 0 M W ). The reason for the partnership with A ES was the latter’s

greater experience of acquisitions. The collaboration also had a technical com-ponent: “We complemented one another

perfectly: the Genk-L angerlo power sta-

tion operated by GDF SUEZ is a sister

plant to Kilroot, while AES had bought

an old facility, B eaver V alley, in the U S ,

which is very similar to B elfast West”. GDF SUEZ and A ES managed to limit

their investment to 10% of the purchase price. The remainder was financed by local partner banks. Through N igen, GDF SUEZ had made its first signifi-cant break into the foreign market. The venture was to last for eight years, until M ay 2 000.GDF SUEZ went on to acquire a number of power stations in the UK . In 2 003 ,

the Group bought the 2 10-M W Shotton combined-cycle natural gas plant in W ales.

Five years later, GDF SUEZ acquired the most powerful C ombined C ycle Gas Turbine plant in Europe, Teesside in nor-theast England. Built by Enron in 19 9 3 , it had a capacity of 1,87 5 M W .

Kilroot (Northern Ireland): power plant in 1992

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REUNITING EASTERN AND WESTERN EUROPE

[...] GDF SUEZ had substantial inte-rests in R ussia at that time. It was heavily present in the energy industry, controlling electricity generation and distribution in St P etersburg, O dessa, Saratov, O rel, K ursk, K azan and Simfe-ropol, among others.

In the 19 2 0s, GDF SUEZ invested hea-vily in Eastern European countries, including C zechoslovakia, R omania and Lithuania. O ne of the Group’s main fo-cuses was the electrification of P oland, where it had been active prior to 19 17 (when P oland was part of the R ussian

Empire). O f the total capital invested in the P olish electricity sector during the 19 2 0s, GDF SUEZ accounted for 15 -2 0% . This enthusiasm for P oland was partly owing to the country’s po-tential as a base for redeployment in R ussia.

A fter the Second W orld W ar, the countries east of the R iver O der fell within the Soviet orbit. A new wave of nationalisations took place and, although there was compensation this time, it was difficult to obtain and far from made up for the losses incurred.

EASTERN EUROPE

Kiev (Ukraine): tram network in 1908

Lodz (Poland): power plant in 1929

The year after their triumphant

R evolution in 1917, the Bolsheviks

decreed that R ussia’s industrial base

was to be nationalised. The decision

was greeted favourably by many

R ussians because the vast majority

of capital invested in the Empire had

been foreign. [...]

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For the next 4 0 years and more, an iron curtain was to divide Europe in two.

The iron curtain fell in 19 89 , and soon afterwards several countries from the former Eastern bloc announced their

intention to privatise their national electricity generation systems to a greater or lesser extent, and to invite W estern investors to acquire stakes in the new companies. A longside this, the European institutions supported a number of initiatives designed to integrate the countries of the East with W estern Europe by intercon-necting their power grids. In 19 89 , GDF SUEZ sent a delegation to Lech W alesa.

In H ungary, GDF SUEZ carried out a comprehensive assessment of the national electricity system in 19 9 0. A s in P oland, the authorities there wanted to halt nuclear investment, reduce the pollution levels of thermal power stations (most of which were powered by oil and lignite), and free the country from its dependence on other countries: a third of the power consumed in H ungary was imported from R ussia and the situation with

natural gas was even worse. By M arch 19 9 1, GDF SUEZ was working with several H ungarian partners to study

the opportunities presented by the bill privatising the national energy industry.

EASTERN AND

Lech Walesa, President of the Polish Republic from 1990 to 2000

The trade unionist, the engineer and the lessons of history“ Lech W alesa received us in his office in Gdansk. H e came across as very approachable. H e spoke without notes in a well-rehearsed way, using colour-ful examples… H e began by stressing that he was a practical man, not a theorist…

‘I plan to take over 8 0 % of the companies currently in the hands of the

communists… Y ou have to realise that there is no longer – in fact there

never was – any communism in P oland. This country is like a radish – a thin

outer layer of red, but white inside. H owever, there is no money to buy 8 0 %

of these companies … we need to set up joint ventures governed by new laws.’

“ W e informed M r W alesa that GDF SUEZ had been a precursor to this move, because in pre-war P oland, which he was taking as his model, it had ac-counted for 4 1% of foreign investment in the electricity sector. H e replied immediately that that was very good and that we could have 5 5 % of it now... A s for the guarantees that any foreign operator would demand in return for its financial commitment in P oland, Lech W alesa replied that the guarantee was W alesa, Solidarnosc, the prime minister and the government.”

REUNITING

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In the end, the Group had to wait until December 19 9 5 to see its ex-pansion projects in Eastern Europe come to fruition. In that month, GDF SUEZ pulled off a master stro-ke by buying 4 8.7 6% of the electricity generation company Dunamenti from the H ungarian government. Dunamen-ti was a power station com plex out-side Budapest with an installed capa-city (at that time) of over 2 ,000 M W , a third of H ungary’s total installed generation capacity. The Group’s am-bition was to make Dunamenti a very-low-cost generation centre capable of playing a role not only in the H unga-rian market but also in neighbouring countries such as Germany.

GDF SUEZ finally broke into the P olish market in A pril 2 000 when it bought a 2 5 % stake in the P olaniec power station. P olaniec was a coal-fired power station built in the 19 7 0s, 100 km from K rakó w. It had a total capacity of 1,800 M W and generated 6% of the power consu-med in P oland. A s with Dunamenti, the Group’s aim with this acquisi-tion was not only to become a ma-jor player in the P olish electricity market but also to exploit trading opportunities with the German mar-ket. In the years that followed, GDF SUEZ increased its stake in P olaniec, and ended up holding 9 9 % of the capital.

V ery early on, GDF SUEZ also laid foun-dations for long-term cooperation with Eastern Europe on modernising and de-veloping its gas infrastructure. In J une 19 9 0, GDF SUEZ negotiated a contract with R ussia for upgrading the M os-cow distribution network. In December 19 9 5 , the Group bought the distribution networks of Gyô r and Szeged in H ungary. These two concerns together accounted for 2 2 % of the H ungarian gas market. In R omania, the Group acquired Distrigaz Sud in 2 004 , the country’s second largest distributor of natural gas with a million customers, mainly in the capital Bucha-rest. The fi rm has expanded steadily since then, mainly through takeovers of small distributors. Polaniec (Poland): electric power plant’s coal stock in 2003

Dunamenti (Hungary): control room in the power plant acquired by the Group in 1995

WESTERN EUROPE

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THE WEST [...] N egotiations ground to a halt, but contacts were maintained with V eba and working groups were set up in 19 9 3 to look into possible collaborations. These resulted in 19 9 5 in a joint action involving subsidiaries of the two groups in connec-tion with the privatisation of the electri-city, gas and water utilities of the city of Bremen in Lower Saxony. GDF SUEZ acquired a 12 .5 % stake in the venture. Stadtwerke Bremen served a population of around 600,000 inha bitants, had an installed capacity of 1,100 M W and distri-buted electricity, gas and water. For GDF SUEZ, this was a landmark investment.

In 19 9 8, in partnership with the Ber-lin-based electricity company Bewag, GDF SUEZ acquired a 3 1.6% interest in GA SA G, the natural gas distributor for Berlin, under a 15 -year exclusive concession contract.

Saarbrü cken (Germany): Römerbrü cke power plant, in the Group since 2005

THE EUROPEAN ‘COPPER PLATE’

The privatisation of the East

German electricity system in 1989

attracted the attention

of GDF SUEZ. In early 1990,

the Group announced its desire

to participate in the modernisation

of the power infrastructure. [...]

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EUROPEAN

GDF SUEZ, realising that its minority stake in Stadtwerke Bremen did not really allow it to play a leading role, decided to sell the investment in 2 000. H owe-ver, in the same year, an agreement was concluded with Stadtwerke Saarbrü cken (SW S) which saw GDF SUEZ take over the latter’s gas- and coal-fired power sta-tions, with a total capacity of 2 3 0 M W e and 4 3 5 M W th. GDF SUEZ and SW S also founded a joint venture, Energie SaarLorLux, which would take over the SW S customer base and be responsible for the sale of electricity, natural gas and heating to industrial and residen-tial customers.

N earer to its home patch in Belgium, GDF SUEZ succeeded in establishing a solid footing in the N etherlands. In 2 000, after two years of talks, it bought the country’s leading power producer

Epon, which had a generation capacity of 5 GW (a quarter of total Dutch gene-rating capacity), including a state-of-the-art 1.8-GW C C GT plant.

GDF SUEZ notched up another suc-cess the following year, this time in East Germany. It signed a partnership agreement with Stadtwerke Gera under which it acquired 4 9 .9 % of two compa-nies set up to generate and/ or distri-bute electricity, heating and natural gas. Gera was one of the 10 largest cities in East Germany and was located in an area where reunification had spur-red major economic growth. Drawing on the assets managed as part of its collaboration with the Saarbrü cken and Gera Stadtwerke, GDF SUEZ gradually developed its sales outside these two re-gions. In 2 005 , the Group also took over the operation of R ö merbrü cke thermal

power station, increasing the plant’s ca-pacity by 4 1 M W . H owever, the main boost to its development as a producer in Germany came with the construction of one modern coal-fired power station in W ilhelmshaven (800 M W ), which be-gan in 2 007 .

In the N etherlands, GDF SUEZ entered the residential market in 2 006 through its acquisition of R endo Energie and C ogas Energie, with their 3 80,000 elec-tricity and natural gas customers.

In the natural gas sector, 2 007 saw GDF SUEZ expand into markets out-side its historical area of operation, in K iel, Lü beck and N orth R hine-W est-phalia. It also took over two companies in the federal state of Brandenburg. By 31st December 2 008, GDF SUEZ was providing natural gas to nearly

Energie SaarLorLux, a GDF SUEZ and Stadtwerke Saarbrü cken joint subsidiary for energy sales (2002)

‘COPPER PLATE’

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7 00,000 customers, thanks to 11,4 00 km of distribution networks and an under-ground storage capacity of over 1 bcm. In 2 008, GDF SUEZ continued its policy of acquiring strategic interests in local companies in both Germany and the N etherlands. For example, it concluded a collaboration agreement with W upper-taler Stadtwerke and acquired a 3 3 .1% stake in a joint venture.

A lso in 2 008, GDF SUEZ signed a me-morandum of understanding with the German group E.O N relating to the swap of generation capacity and nuclear drawing rights. The Group acquired E.O N ’s interests in 9 9 1 M W of conventio-nal power plants in Germany, as well as 7 00 M W of nuclear drawing rights on three German nuclear power stations. The deal strengthened the GDF SUEZ’ position in Germany and showed its wil-

lingness to observe the commitments it made in Belgium in the context of P ax Electrica II.

A t the end of 2 010, the Group inaugu-rated the M axima power station in the N etherlands. It comprises two ultramo-dern gas and steam turbine generator units, each of 4 4 0 M W . A t the same time, GDF SUEZ is constructing a 800-M W power station in R otterdam. W ith an installed capacity of more than 5 ,000 M W , GDF SUEZ is the country’s leading power generator.

A t the beginning of 2 011, following the purchase of five natural gas under-ground storage facilities, GDF SUEZ is now one of the leaders in the German storage market and number 1 in Europe in terms of natural gas storage capacities sales.

THE WEST EUROPEAN‘COPPER PLATE’

Maxima power station in Lelystad (Netherlands). Traditional thermal power together with gas and steam turbine generation.54

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PORTUGAL, SPAIN, ITALY, GREECE

[...] Italy is one of the oldest markets for our public utilities. In 1862 , before Italy had even become a unifi ed country, GDF SUEZ began building gasworks in Siena and R imini, and later in C atania. A decade or so later, the Group secu-red concessions for horse-drawn tram networks in Trieste, N aples and Turin, and later in Florence. A GDF SUEZ com-pany founded in 1880 built and operated narrow-gauge rail networks in various

rural areas on the Italian P eninsula, most notably the regions of Bergamo, Turin and Biella. A generation later, in 19 07 , GDF SUEZ sponsored the creation of an electricity company in the A lpine region of A damello. Its aim was to har-ness hydroelectric energy from the V al C amonica valley to provide power for the M ilan region, then in the throes of industrialisation. GDF SUEZ went on to acquire interests in several other

Italian ventures in Tuscany, the regions of Bari and Bologna and eastern Sicily.

H owever, during the interwar years, public utilities owned by foreign groups faced the growing problem of Italian na-tionalism, which culminated in the rise of fascism. The authorities refused to allow gas, tram and electricity operators to index their tariffs and fares, promp-ting GDF SUEZ to withdraw from Italy.

Florence (Italy): tram network, around 1900

THE ‘ELECTRICITY ISLANDS’ OF THE MEDITERRANEAN

From Egypt to Spain, Italy, Croatia, Greece,

Turkey and Syria, the Mediterranean has been

a favoured area of expansion for the GDF SUEZ

Group since the 19th century. [...]

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In 19 62 , the whole Italian electricity in-dustry was nationalised and transferred to the state-owned monopoly Enel (Ente N azionale per l’Energia Elettrica).

Like Italy, the Iberian P eninsula was an important operating region for GDF SUEZ. In 1887 , GDF SUEZ set up a sub-sidiary to operate a gas concession in Lisbon. In 1891, this company also se-cured a 4 5 -year electricity distribution concession for the P ortuguese capital. In 189 9 , 19 06 and 1911 respectively, GDF SUEZ established other subsi-diaries in Spain in order to unify and electrify public transport networks in M adrid, Bilbao and Barcelona. These companies had their own power sta-tions. Later, in the 19 2 0s, GDF SUEZ

became the largest shareholder and in-dustrial operator of Barcelona Traction Light & P ower.

In the late 19 2 0s, GDF SUEZ also tried to strengthen its presence in Spain by buying a generation and distribution com-pany, called R eva (R egadios y Energia de V alencia), in the region of V alencia.

A s in Italy, albeit slightly later than there, the activities of foreign utility groups in Spain came up against an in-creasingly virulent brand of nationalism. In Bilbao and M adrid, despite the fact that substantial stakes in the tram com-panies had been reserved for Spanish groups, the municipal authorities of the two cities forced through the creation of

Barcelone (Spain): Barcelona Traction Light & Power share certifi cate from the 1920s

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The Camaraja dam on the Noquera Pallaresa (Spain), in 1920

semi-public companies, and then took the tram networks back into public ownership immediately after the Second W orld W ar. A t around the same time, in 19 4 7 , the assets of Barcelona Light & P ower, then responsible for providing power to a large part of C atalonia, were confi scated by the Spanish courts. By the 19 80s, therefore, all foreign in-fl uence had been effectively banished from Spain and Italy. H owever, as soon as liberalisation of the European electri-city market was on the cards, GDF SUEZ began considering a return to these for-mer markets.

W hile waiting for the situation to develop, GDF SUEZ entered the Italian market as an independent producer. In 19 9 5 ,

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it began work on a C C GT plant at R osignano, in Tuscany, on the site of the Solvay chemical plant. The chemi-cal plant used a lot of steam, mainly in the production of soda ash. The C C GT plant, which was to have an elec-tric capacity of 3 5 2 M W and a thermal capacity of 82 M W , was the biggest independent power production scheme that Italy had ever seen. The project was also the first power station in con tinental Europe to be the subject of a project financing transaction. The steam was sold to Solvay, while all of the electricity was injected into the grid. R osignano was commissioned in J uly 19 9 7 .

In 19 9 9 , taking advantage of the ope-ning of the market, GDF SUEZ signed an agreement with the Swiss compa-ny EO S (É nergie O uest Suisse), which had substantial hydro resources and

was therefore well placed to provide peak load to the Italian market. In 2 000, GDF SUEZ founded a R ome-based subsidiary, Electrabel Italia, which focused on building combined-cycle power plants.

In 2 002 , the restructuring of the Italian energy sector gathered pace: the market was opened to more players, following a lowering of the eligibility requirements for indus-trial customers, and Enel began sel-ling off power stations. To ease its transition into the Italian market, GDF SUEZ sought an alliance with a local partner. In 2 002 , it joined forces with A cea, an electricity and water distribution company operating in the R ome area and controlled by the city authorities. The joint venture, named A ceaElectrabel, encompassed three areas: generation (A cea having

Leini (Italy), 385-MW CCGT plant commissioned in 2007

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Rosignano (Italy): cogeneration plant commissioned in 1997

contributed 2 3 0 M W thermal and 14 0 M W hydroelectric), sales to eligible customers and energy trading. A t that time, A cea had around 1.5 million cus-tomers.

In N ovember 2 002 , A cea and GDF SUEZ formed a second joint venture, EblaA cea, which linked up with Energia Italiana to acquire Enel’s power unit Interpower. Immediately renamed Tirreno P ower, this company had a net installed capacity of 2 ,611 M W , with hydro, coal-, gas- and oil-fi red power stations. A cea-Electrabel then embarked on a fast-track expansion of its generation facilities by building greenfield power plants. Three 3 85 -M W C C GT plants were commissioned, one at V oghera, near M ilan, in 2 005 , and another two at R oselectra and Leini in 2 007 . In addition, Tirreno P ower commissioned new C C GT units totalling 5 69 M W at the Torrevaldaliga power

station. A t the beginning of 2 011, a new agreement was signed between A C EA and GDF SUEZ. The Group has refocused on power generation, gas and electricity sales and trading and gas distribution.

GDF SUEZ did actually invest in Italy, in several links in the natural gas chain: sales, distribution and energy services, through two companies, A r-calgas et Italcogim (where GDF SUEZ has been present since 2 003 ). In mid-2 011, GDF SUEZ sold its distribution assets and aims to double its customers to reach 2 million by 2 015 . GDF SUEZ is the third-largest natural gas opera-tor, the leader in energy services and the country’s fourth-largest electricity operator.

In Spain, too, the GDF SUEZ Group lost no time in re-establishing itself. In

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19 89 , it made plans to acquire a 10% stake in Spanish company Iberduero, a one-time shareholder in Tramways et É lectricité de Bilbao (the Bilbao Tram and Electricity C ompany) along-side GDF SUEZ.

In 19 9 1, Iberduero merged with H i-droelé ctrica Españ ola to form the Iber-drola Group and GDF SUEZ acquired a 3 .3 % stake in the new entity. The agreement provided for the possibility of the two groups embarking on joint initiatives elsewhere in the world – which they in fact did, in several Latin A merican countries and in the United K ingdom (nuclear industry, in 2 009 ).

A t the time of the deal with Iber drola, the Spanish electricity market was still relatively cut off from the rest of the continent. GDF SUEZ sought to acquire H idrocantabrico, the smal-lest of the four Spanish utilities, in which it bought a 10% stake in J uly 2 000. Its ambitions were thwarted by vigorous competition from many

other groups and it ended up sel-ling its share to the Spanish group Ferroatlá ntica.

GDF SUEZ then fell back on the development of greenfield projects. In 2 002 , it sold the bulk of its inte-rest in Iberdrola. Shortly afterwards, the Group bought land from the US company Energy, on which it built a 800-M W power plant at C astelnou, 2 00 km west of Barcelona.

Still within the Iberian P eninsu-la, but this time in P ortugal, GDF SUEZ established itself by taking a share in P ortgas alongside Elyo and N Q F Gas. A s the second largest P ortuguese natural gas distributor, P ortgas supplies about 14 0,000 cus-tomers over a network of more than 2 ,2 00 kilometres.

In the Thiva region of Greece, GDF SUEZ holds a 5 0-5 0 stake with its Greek partner GEK TER N A in the country’s most modern and powerful power station, a 4 3 5 -M W C C GT plant.

Castelnou (Spain): power plant commissioned in 2006

THE ‘ELECTRICITY ISLANDS’ OF THE

MEDITERRANEAN

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RETURN TO

ARGENTINATH

E SO

UTH

AMER

ICAN

SUB

-CON

TINE

NT

ARGENTINA

[...] Three years later, the Group was in-volved in setting up the C ompagnie Gé -né rale des Tramways de Buenos A ires (the Buenos A ires General Tramway C ompany). In 1910, it helped to esta-blish the Socié té d’É lectricité de R osa-rio (the R osario Electricity C ompany). A fter the First W orld W ar, GDF SUEZ designed and built the P uerto N uevo super power station in Buenos A ires, complete with two 5 2 .5 -M W turbines, for the C ompania H ispano-A mericana

Rosario (Argentina): power station inauguration (around 1914)

GDF SUEZ began operating in Argentina in 1904, when it arrived in the country’s second

city R osario to build a network of electric trams. [...]

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spite of this, riots broke out in December 2 001. In J anuary 2 002 , the government ordered a total freeze of bank deposits and scrapped the automatic adjustment of public utility tariffs on the basis of peso-dollar parity and inflation, as pro-vided for in the contracts of regulated companies. The peso was devalued by 2 8% in relation to the dollar. In 2 005 , Duhalde’s successor, N estor K irchner, froze gas and electricity tariffs.

Economic activity began to pick up again, bolstered by public spending. By 2 005 -06, it was gathering pace. Litoral Gas sales resumed their upward trend. The company currently serves over 5 60,000 residential customers and near-ly 3 0,000 businesses and SM Es, as well as large industrial customers.

de Electricidad (or C hade), the electrici-ty concession-holder in Buenos A ires. A symbol of A rgentina’s industrial prowess at the time, this plant was expanded regularly between 19 31 and 19 5 7 , but around that time the A rgen-tine government took over the control of power generation and distribution in Buenos A ires and its province.

N evertheless, GDF SUEZ returned to A rgentina in 19 9 2 . This arrival of a foreign public utilities group coincided with the installation of C arlos M enem as president (19 89 -19 9 9 ). M enem pursued free-market policies, including pegging the peso to the dollar, privatisations, and economic and social reforms. The effect of this was an exponential eco-nomic growth. A s regards the energy

sector in particular, the government privatised the gas industry in 19 9 2 -9 3 . GDF SUEZ participated in this priva-tisation process in conjunction with its Spanish partner Iberdrola. Tibsa, a consortium comprising GDF SUEZ (5 3 .3 3 % ), Iberdrola (2 6.67 % ) and the lo-cal group Bemberg (2 0% ), won the right to acquire a 9 0% stake in the firm Lito-ral Gas in December 19 9 2 . The presence of a local partner within the sharehol-ding undoubtedly facilitated dealings with the A rgentine authorities.

Litoral Gas served a largely industrial customer base in the provinces of Santa Fe and Buenos A ires. A ccompanied by a massive capital flight, the 2 001-2 002 crisis was partially curtai-led by a drastic control of cash flows. In

RETURN TO ARGENTINABuenos Aires (Argentina): power plant known as the “South Dock”, in 1929 Rosario (Argentina):

natural gas distribution network in 1997Argentina, laying the NorAndino trans-Andean gas pipeline in 1999

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In 1982, Chile became one of the first countries in the world to privatise

its electricity sector – and it did so with the help of a GDF SUEZ engineer.

This move was driven not by economic circumstances, as in Brazil and

Mexico (which would later open their markets out of financial necessity),

but by political principles: the government in Santiago believed that the

state should not interfere in any industrial sector. The Chilean electricity

industry was divided into two independent grids. [...]

[...] The biggest of these was the C en-tral Interconnected System (Sistema Interconectado C entral, SIC ), which stretched over some 2 ,000 km and ser-ved 9 3 % of the population. The other, known as the Great N orth Intercon-nected System (Sistema Interconecta-do del N orte Grande, SIN G), served a large and relatively sparsely populated mining region.

GDF SUEZ took a great interest in the C hilean market from the early 19 9 0s onwards, not only because it was growing at an average rate of some 7 -8% a year but also because “it has a stable political system, favourable

economic conditions and a comprehen-

sive and coherent legal environment.

M oreover, in terms of electricity market

organisation, it is an extremely interes-

ting test bed which can be put to use

eventually in Europe and right away

in neighbouring countries”. Last but not least, C hile was a potential mar-ket for A rgentine natural gas. A trans-A ndean gas pipeline was scheduled for completion in 19 9 7 ; this would significantly alter C hile’s energy mix, which until then had consisted lar-gely (7 8% ) of hydropower. GDF SUEZ could exploit this developing energy situation by drawing on its C C GT expertise.

In 19 9 5 , C odelco, a C hilean state-ow-ned company and the world’s leading copper producer, began looking for a

strategic partner to take over some of its energy assets. In December, a con-sortium comprising GDF SUEZ, the Spanish company Iberdrola and Ena-gas from C hile acquired the 600-M W Tocopilla coal-fired power station in northern C hile. This gave GDF SUEZ 4 0% of the installed capacity in the SIN G. It assigned operation of the power station to a specially created company, ElectroA ndina.

Less than a year later, the state holding company C orfo decided to privatise C olbun, one of the few power com-panies that had not been privatised in the early 19 80s. It controlled 12 % of C hile’s installed capacity, making it the country’s third largest pro ducer. CH

ILE T

HE L

AND

OF C

OPPE

RCHILE

Machicura (Chile): one of the hydropower plant’s turbines, 1997

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It operated three hydropower plants (5 85 M W ), all situated on the same hy-draulic network around 2 5 0 km south of Santiago. GDF SUEZ bought C olbun with the backing of M atte, one of the most powerful and influential indus-trial groups in C hile.

In 19 9 7 , with power consumption gro-wing at an ever faster rate, especially in the north of the country, GDF SUEZ decided to strengthen its competitive commercial position by replacing the outdated ElectroA ndina thermal units by C C GT ones. H owever, to operate such units, the Group needed its own gas resources and therefore it decided to build another trans-A ndean gas pipeline.

In N ovember 19 9 7 , GDF SUEZ allied itself with a subsidiary of the US group Southern Energy to form a joint ven-ture called Gasoducto N orA ndino. This company began work straight away on the construction of a 1,000-km pipe-line connecting the gas fields of nor-thern A rgentina to the P acific coast of C hile. GDF SUEZ negotiated a long-term natural gas purchase contract with the A rgentine pipeline builder Techint.

In A ugust 2 000, GDF SUEZ increased its interest in ElectroA ndina from 2 1.6% to 3 3 .3 % . The Group also raised its stake in C olbun from 18.6% to 2 6% . A year later, in J uly 2 001, GDF SUEZ CH

ILE T

HE L

AND

OF C

OPPE

R

San Andres (Argentina): built through an aid programme for the upper Río Bermejo river region

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became C hile’s largest supplier for non-regulated industrial customers when it landed an eight-year contract to sup-ply electricity to other copper mines operated by C odelco.

In M arch 2 002 , GDF SUEZ further strengthened its presence in C hile byacquiring, in partnership with the cop-per company C odelco, an 82 % stake in Edelnor, one of its main competitors in the north of the country and its par-tner in Gasoducto N orA ndino.

Subsequently, the Group’s policy in C hile was to diversify both the types of primary energy used in its power stations and its natural gas supply

sources. This was owing to the crisis in A rgentina in 2 002 , when the price of imported fuels, oil and coal, had rocketed while that of local gas had been frozen. A s a result, local demand for gas had soared, forcing the govern-ment in Buenos A ires to drastically cut its exports. This meant that C hile was suddenly deprived of A rgentine gas. To prevent such a supply crisis from reoc-curring, in 2 007 -08 GDF SUEZ began building two 15 0-M W thermal power stations on behalf of various copper producers. M eanwhile, in M arch 2 008, the C hilean president M ichelle Bache-let lay the foundation stone of a gas terminal at M ejillones, where today GDF SUEZ has a 63 % shareholding,

Mejillones (Chile): President of the Republic, Michelle Bachelet (3rd from the left), lays the foundation stone of the LNG terminal, 24th March 2008

the other partner being the copper company C odelco. W ith a send-out capacity of 5 .5 million cubic metres (mcm) of gas per day, the terminal was capable of supplying cogeneration plants up to 1,100 M W .

In late 2 009 , GDF SUEZ merged the companies Edelnor, ElectroA ndina and Gasoducto N orA ndino as part of a financial and industrial streamlining effort. The Group’s single subsidiary in northern C hile now operates genera-tion facilities totalling 1,7 9 5 M W . It se-cured a market with supply contracts, in particular with distribution compa-ny Emel for the sale of 2 ,000 GW h a year between 2 012 and 2 02 6.

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PERUFOLLOWS THE CHILEAN MODEL

PERU

Peru, pipeline under construction between Camisea and Lima, 2003

For Peru, the 1980s were

a period of acute economic

and political crisis [...]

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[...] In the early 19 9 0s, P resident A lberto Fujimori (19 9 0-2 000) got the country back on its feet by imposing a policy of austerity and deregulation based lar-gely on the C hilean model.In 19 9 2 , the Electricity A ct laid down plans for the reorganisation of the elec-tricity sector, which would henceforth

be owned and operated on the basis of concessions awarded to the private sector. A t this time, 9 0% of P eru’s electricity was generated by hydro-power and demand for electricity was growing at a rate of 10-12 % a year. The authorities aimed to satisfy this demand by ‘ rebalancing’ their genera-

tion facilities, i.e., by encouraging the construction of thermal power stations.

In M ay 19 9 7 , GDF SUEZ began to expand in southern P eru, taking as its model the strategy pursued in northern C hile. It bought a 12 5 -M W diesel-fired power station, located at Ilo on the P acific coast, from the local copper producer Southern P eru C op-per C ompany (SP C C ), with the aim of expanding it and connecting it to the rest of the national grid. A t the time, this was one of the biggest foreign investments ever seen in P eru. In N ovember 19 9 7 , work began on ano-ther 14 2 -M W power station known as Ilo 2 .

In 2 002 , GDF SUEZ secured a 3 0-year gas distribution concession for the Lima area. W ith over 7 million inhabitants, the P eruvian capital accounted for 5 5 % of the country’s electricity consump-tion. A t the same time, GDF SUEZ became an 8% partner in the consor-tium Transportadora de Gas del P eru,

which held the general gas transmis-sion and distribution concession for the C amisea field. This consortium was building a 7 00-km gas pipeline between the C amisea field and the coast. The first deliveries of gas from C amisea arrived in Lima in 2 004 .

K een to further diversify its energy resources, in 2 004 EnerSur bought a 13 7 -M W hydroelectric plant at Y uncan, 3 4 0 km north of Lima. The following year, the company began work on the C hilcaUno thermal power station, 64 km south of Lima, the first power plant in P eru to run on natural gas alone.

A t the end of 2 010, GDF SUEZ announ-ced the construction and operation of a new 4 00-M W thermo-electric open cycle power plant (planned to come on stream in 2 013 ).

Today, GDF SUEZ is P eru’s second largest private electricity producer, operating power stations with a com-bined capacity of over 1,000 M W .

Lima (Peru): President Alejandro Toledo, 2nd from the left, opens the Greater Lima natural gas network in August 2004

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THE BRAZILIANCHALLENGE

GDF SUEZ attempted its fi rst

venture in Brazil in 1929-30, when

it vied to secure the electricity

concession for vast areas of terri-

tory near R io. Its acquisitions were

confi ned to the concessions of

Itaperuna and Carangola,

on the border between the states

of R io de Janeiro and Minas

Gerais. In 1931, the business

operated 108 km of high-voltage

lines and supplied around

2,000 customers, including some

100 industrial consumers. It was

nationalised in 1938 under the

government of Getulio Vargas. [...]

[...] O ver half a century later, in M ay 19 9 2 , it was announced that some of Braz il’s public utilities were to be pri-vatised. The country was in the midst of radical change. The first elected president, Fernando C ollor de M ello (19 9 0-9 2 ), faced major obstacles in his attempt to revive the economy,

including excessive public debt, hyper-inflation and a bloated public sector on the verge of bankruptcy. H is admi-nistration sought to push through a series of liberal reforms, freez ing prices and wages, introducing tem-porary fiscal measures to reduce the budget deficit, scrapping various pu-

blic bodies and reducing the number of civil servants.

For GDF SUEZ, Braz il was an attrac-tive potential market. Its infrastruc-ture requirements were considerable, with an additional 1,000-1,5 00 M W needed to be installed each year.

BRAZIL

Machadinho (Brazil): dam commissioned in 2002

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Some 2 0 power stations were under construction, but the public authorities lacked resources and little headway was being made on these projects. In A ugust 19 9 2 , GDF SUEZ began liai-sing with the local authorities, stating its interest in a possible privatisation. H owever, with Braz il’s economic situa-tion still uncertain and the promised measures slow in materialising, the time was not quite ripe to make a move.

The process gathered speed in 19 9 4 with the implementation of the R eal P lan, introduced by the M inister of Fi-nance and future president Fernando C ardoso. This imposed strict measures designed to balance the budget and stabilise the currency by pegging it to the dollar. Inflation plummeted from 2 ,2 9 4 % in 19 9 4 to 2 2 % in 19 9 5 , sending out a highly positive signal to foreign investors. C onsequently, the privati-sation programme launched in a bid to reduce the public debt attracted a great deal of interest.

In 19 9 5 , GDF SUEZ set about breaking down into the Braz ilian market in part-

In J une 19 9 8, the Braz ilian govern-ment offered for sale a 4 2 % stake in the generation company Gerasul, com-prising three hydropower plants (P asso Fundo, Salto Santiago and Salto O so-rio) and three fossil-fuel plants with a total installed capacity of 3 .7 GW – 7 % of the country’s overall capacity. Gerasul also had a number of power stations under construction (most no-tably the Ita and M achadinho hydro-power plants), which would bring its installed capacity to 6.7 GW . Its mar-ket covered the four states of southern Braz il, near to A rgentina and Uruguay – an area the size of France. Gerasul had guaranteed sales for five years, after which it would be gradually ex-posed to market risks. To make its bid, GDF SUEZ allied itself with the US company Southern Energy Inc., with which it was already collabora-ting on the construction of the trans-A ndean gas pipeline in C hile. The acquisition was considered attractive due to its size, generation mix and geographical location. “The region is

valuable on account of its dynamism

and the industrial mentality that exists

nership with the Spanish group Iber-drola and a company named N acional Energetica, an offshoot of a large pri-vate local bank called Banco N acional. In 19 9 6-9 7 , these groups tried unsuc-cessfully to buy the Serra de M esa hydropower plant in northern Braz il, followed by two distribution compa-nies in the state of R io Grande do Sul. C ompetition in Braz il was extremely fierce, with groups such as Endesa (C hile), EDF (France), and H ouston Industries and A ES (USA ) all vying for a share of the cake. Furthermore, these groups considered not only the projects’ profitability but also stra-tegic factors specific to themselves, such as the desire to acquire hydro-power expertise. In the end, the prices paid were disproportionately high (sometimes up to 7 0% above the mi-nimum price), in what the financial press dubbed the “ Braz ilian madness” . Undeterred, the local GDF SUEZ team put the experience to good use and continued to search for opportunities. W ith a little patience, prices were bound to come down to more reaso-nable levels.

Estreito (Brazil), hydroelectric dam to be inaugurated in 2011

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there. F urthermore, it is situated at the

crossroads between several M ercosur

countries and should therefore conti-

nue to grow at a faster rate than the

national average.” The region would also be the crossing point for two planned gas pipelines transporting gas from A rgentina and Bolivia. N atural gas only accounted for 2 % of the coun-try’s primary energy sources, but this was set to rise to 10% within five years in an effort to close the energy gap in regions without sufficient hydroelec-tric resources.

H owever, the emerging economies were shaken by the 19 9 7 A sian finan-cial crisis and the R ussian default of A ugust 19 9 8. The GDF SUEZ bid was submitted at a time when there was talk of an imminent devaluation of the Braz ilian real, leading to large outflows of capital from the country. Even the political situation was uncer-tain, with presidential elections due to take place in early O ctober 19 9 8… In spite of all this, GDF SUEZ decided to accept the risks on the grounds that this would be a long-term invest-ment. In the end, the Group was the

only party to submit a bid on Sep-tember 15 , for the minimum price of 9 4 0 million reals ($ 801 million). A ll the other candidates withdrew.

C onvinced of Gerasul’s strategic va-lue, GDF SUEZ increased its stake in the company to 5 1% in December 19 9 8 and then to 68% one month later. This new sign of confidence in Braz il’s future came at a time of uncertainty, with the Braz ilian C entral Bank an-nouncing in J anuary 19 9 9 that the Braz ilian currency would no longer be indexed to the US dollar. Fortuna-tely, this devaluation had the effect of boosting economic growth. By the end of 19 9 9 , Braz il’s debt had fallen to 4 8% of its gross domestic product (GDP ): the government was doing bet-ter than the IM F required of it.

Shortly before concluding the Gerasul contract, the Group had landed the concession for the C ana Brava hydro-power plant, a 4 5 0-M W complex to be built on the R io Tocantins, some 2 5 0 km north of Brasilia. The concession, awarded for a term of 3 5 years, was an ‘ independent producer’ contract,

Sao Salvador (Brazil): dam, opened in February 2009

THE BRAZILIANCHALLENGE

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meaning that the concession-holder was free to sell its output to any type of customers, whether businesses, dis-tribution companies, traders or even the spot market.

In the years that followed the start of work on C ana Brava and the ac-quisition of Gerasul, GDF SUEZ strength-ened its presence in Braz il. In J uly 2 000, it purchased the Braz ilian engi-neering company Leme Engenharia, employing several hundred staff in the energy, water and environmental tech-

nologies fields. In the same year, the Group increased its interest in Ita, a 1,4 5 0-M W hydroelectric dam scheme, from 3 9 to 69 % by buying half the shares of the company Itasa, which held 61% .

In 2 001, Braz il was hit by a serious energy crisis following extremely low rainfall. Underinvestment in the elec-tricity sector was also blamed: since 19 9 0, power consumption had risen by 68% while generation capacity had gone up by only 3 2 % . M illions of people

endured repeated power cuts. To avoid a reoccurrence of these problems, the government took steps to save energy and to rapidly expand generation in-frastructure. GDF SUEZ was involved in this drive. In 2 001 and 2 002 , it won concessions for two hydropower plants on the Tocantins R iver, in the north of the country: Sao Salvador (2 4 1 M W installed, g3 07 million invested, com-pleted in 2 008) and Estreito (1,086 M W installed, g1,2 00 million invested, com-pleted in 2 011). The Estreito project was undertaken in collaboration with a group of large, energy-intensive indus-trial consumers including the mining firm V ale do R io Doce and the alumi-nium producer A lcoa.

Both the Sao Salvador and Estrei-to plants benefited from favourable financing conditions under the Growth A cceleration P rogramme (P rograma de

The Gerasul poker gameA few days before the Gerasul tender deadline, the consortium comprising EDF and Total, one of several shortlisted candidates – abandoned its plans to sub-mit a bid after the French government opposed EDF’s involvement in the deal. H owever, GDF SUEZ representatives in Brazil feared a last-minute U-turn. They prepared two envelopes containing two different bids: one for the minimum price specified by the awarding authority and another higher one designed to trump the offer of a possible rival. O n 15 th September 19 9 8, the GDF SUEZ delegation arrived at the bidding venue to find, surprise, surprise, that EDF had indeed sent a representative. W as this a bluff or a genuine change of mind on the part of the French energy giant? The GDF SUEZ representatives plumped for the former. They waited until the last moment and handed over the envelope containing the minimum price. A n EDF representative then pretended to take out an envelope from his jacket “probably just to give us a heart attack”. H owever, it soon became clear that the gamble had paid off for the GDF SUEZ team.

Jirau (Brazil), artist’s impression of the future hydroelectric power station

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A celeraç ã o do C rescimento or P A C ). This was launched in 2 007 by P resident Lula with the aim of improving in-frastructure quality, which had been pinpointed as the main obstacle to economic expansion. During the buil-ding of the two power stations, 10-12 % of the construction budgets were allocated to social and environmental programmes designed to protect wild-life and build new homes and infras-tructure for the displaced populations.

In 2 004 , the Braz ilian government in-troduced a new system of regulation based on a distinction between ‘ old’ and ‘ new’ power, i.e., power generated

at existing plants and power generated at recently built plants or plants un-der construction. Long-term contracts (eight years for old power and 15 -3 0 years for new power) were awarded to the winning bidder, i.e., the pro-ducer that offered to sell its output at the lowest price. The system also distinguished between thermal power stations, where the auctioned product was generated power, and hydroelec-tric power stations, where the product sold was generation capacity. A t the first auctions in 2 004 -05 , GDF SUEZ had no trouble offloading the bulk of its old and new generation capacity by entering into long-term supply agree-

ments with various distribution compa-nies. H owever, at the same time, it also made sure to diversify its customer base by reserving part of its availabi-lity for freely negotiated agreements with large groups such as V olkswagen, A rcelor and M ichelin, these being eli-gible customers. W hereas none of its sales was to direct industrial custo-mers in 2 000, by 2 005 they accounted for 2 1% .

The Group’s involvement in Braz il increased year on year, keeping pace with the country’s growth and contri-buting to the security of its energy supply. In 2 008, GDF SUEZ won the

concession for a new 3 ,4 5 0-M W hy-dropower plant to be built at J irau, on the R io M adeira in northern Braz il. This was to be the country’s largest infrastructure project. A consortium comprising three local companies and GDF SUEZ signed a long-term con-tract with local electricity distributors, guaranteeing income of g9 .6 billion over 3 0 years, starting in 2 013 . 7 0% of the power generated by the dam was therefore pre-sold. The investment would exceed g3 .3 billion, with the Braz ilian Development Bank pledging 85 % of the funding for the project. The J irau power station is due to come on-line in J anuary 2 013 .

Jirau (Republic of Brazil): power plant building site in September 2010

Sao Salvador (Republic of Brazil): President of the Republic, Luiz Iná cio Lula da Silva, in the centre of the photo, and G”rard Mestrallet open the power plant in February 2009

THE

BRAZ

ILIA

NCH

ALLE

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THE NORTH AMERICAN GIANT

USA

CANADA

The United States have always been the world’s

biggest electricity market, which has developed

along original lines. In 1935, while Franklin

D. R oosevelt was president, Congress passed

the Public Utility Holding Company Act (PUHCA),

which, in order to protect consumers, introduced

numerous obstacles to merger/acquisition operations

and in effect prohibited the takeover of utilities

by institutional investors. Alongside the introduction

of the PUHCA, the individual states set up public

utilities to offset the shortage of private enterprise.

The federal government also got involved, fi nancing

the construction of new generation facilities

and establishing federal enterprises [...]

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[...] In 19 7 8, against the backdrop of the oil crisis, the US government passed the P ublic Utility R egulatory P olicies A ct, which is seen as the starting point for global deregulation of the electricity industry. It was believed that the legisla-tion in force since 19 3 5 had ossifi ed the US electricity landscape by hampering enterprise. The aim of the new A ct was to develop an economical method of ge-nerating power – cogeneration – and to promote the building of power stations of up to 3 0 M W (known as Q ualifying Facilities) that operated on renewable energies or exploited generation sources that had not previously had any com-mercial value (biomass, hydro, associa-ted gas, waste, etc.). The A ct required electricity companies to buy the power generated by these small independent producers at a price equivalent to the cost that the companies would have paid to generate the same amount of energy (the ‘ avoided cost’). This led to a prolife-ration of small power plants.A further development occurred in 19 9 2 with the Energy P olicy A ct (EP A C T).

This law extended the competitive market environment for power gene-ration by enabling third parties to access grids and creating a new cate-gory of producers, known as Exempt W holesale Generators, which were not subject to the P UH C A . This boosted the creation of independent power producers (IP P s), whose market share increased from 9 % in 19 9 2 to around 3 4 % in 2 002 .

From 19 88 onwards, GDF SUEZ star-ted to consider ways of exploiting this development in US legislation. H owever, A merica was a difficult mar-ket. The Group therefore decided to start small and gradually scale up its projects in the country, in order to feel its way into the market without staking too much in the way of invest-ment. In the first few years, between 19 9 1 and 19 9 3 , GDF SUEZ limited its involvement to the acquisition of five small power stations in the Bos-ton area, four of which were wood- or woodwaste-fired.

In 19 9 4 -9 6, it made its first real mark in N orth A merica with the develop-ment of a 103 -M W cogeneration plant in W indsor, O ntario (C anada), which would sell its electricity to O ntario H ydro and its steam to two neighbou-ring industrial customers.In M ay 19 9 5 , GDF SUEZ launched a friendly takeover bid for the Texan company C R SS Inc., a specialist in in-dustrial cogeneration operating a total of over 1,000 M W e. W ith the backing of its parent company, C R SS acqui-red a number of cogeneration units in P ennsylvania and C alifornia over the ensuing years, selling the electricity to utilities and the steam to industrial customers.

A lthough it had become one of the largest IP P s in the US with an ope-rating capacity of over 2 ,000 M W , GDF SUEZ remained a marginal player in a country whose installed capacity exceeded 800,000 M W . In the final years of the 2 0th century, the US market went into overdrive.

New England (USA): power plant operated by First Light, a company taken over by the Group in 2008

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A huge number of projects were laun-ched which would boost installed capa-city by a staggering 2 00 GW , or 2 5 % , between 19 9 9 and 2 004 . GDF SUEZ was keen not to be left behind: wit-hout waiting to find the ideal partner, it decided in 19 9 8 to develop greenfield power plants. Its first major project was the construction of a 4 4 0-M W lignite-fi-red power station in M ississippi, which began in 19 9 8. Its output would be sold in bulk to the Tennessee V alley A utho-rity, a corporation owned by the US go-vernment. In February 2 000, GDF SUEZ was also given the go-ahead to build a 3 4 0-M W gas-fired, combined-cycle power generating station in Ennis, Texas. This would be a “merchant plant”, meaning that it could sell the power it generated on the open market. The site was chosen based on the region’s rapid pace of growth and because it occupied a strategic posi-tion, close to natural gas deposits and to the high-voltage grid. A s a result of this and other acquisitions made around the same time, by J uly 2 001 the Group owned and/ or operated 4 7 power stations in N orth A merica with a combined capaci-

ty of 2 .1 GW . A further nine projects, to-talling 4 .2 GW , were under construction or at an advanced stage of development, including C hehalis (5 05 M W , W ashing-ton State, commissioned in 2 003 ), W ise C ounty (7 5 4 M W , Texas, 2 004 ), H ot Spring (7 5 4 M W , A rkansas, 2 005 ) and C hoctaw (7 5 4 M W , M ississippi, 2 006).

It was at this point, in 2 000-01, that the C alifornia power crisis struck, triggering price rises on the wholesale market, power cuts and massive government interven-tion. It also proved a major setback for market liberalisation. W hereas in 19 9 9 some 3 0 states had embarked on the process of opening up their markets to competition, by 2 003 that number had fallen to under 2 0, the others having suspended their planned reforms.

Even so, approximately 4 3 % of the US population (12 3 million out of 2 88 million citizens) were now living in states where end customers were free to change their elec-tricity supplier. In 2 003 , therefore, a Group subsidiary began electricity retail sales operations in various US states with dere-

gulated markets, namely M assachusetts, N ew Y ork, Texas and N ew J ersey, followed by P ennsylvania, O hio and C onnecti-cut. By the end of 2 003 , the Group was supplying around 3 ,000 customers with 1,4 88 M W of power and by 2 009 ranked as the second largest electricity provider for industrial and commercial customers.

Upstream, the Group was continually ex-panding its generation capacity, favouring locations in the eastern United States and taking care to nurture a balanced energy mix. In 2 008, the acquisition of FirstLight boosted the Group’s generating capacity on the East C oast (M assachusetts and C onnecticut) by over 1,5 00 M W . Its facilities included 15 generation sites, primarily pumped-storage and hydroelectric plants. In N ew Y ork, the Group acquired a 5 9 % stake in the A storia 1 gas-fired power station in two stages and at the end of 2 009 doubled the initial capacity to reach 1,15 0 M W (A storia 2 ). This capa-city was already largely accounted for, with major customers including the N ew Y ork M etropolitan Transportation A uthority and P ort A uthority.

THE NORTH AMERICAN GIANT

New York (USA): Astoria Energy CCGT

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[...] It was not until the 19 9 0s that the situation began to change. In 19 9 4 , M exico had a population of approxi-mately 9 5 million – making it Latin A merica’s second most populous coun-try after Braz il. In that year, M exico signed the N orth A merican Free Trade A greement (N A FTA ), thereby tying its economy to that of the United States. In 19 9 5 , the gas sector was opened up to competition, with the private sector

granted permission to build, operate and own natural gas transmission, sto-rage and distribution facilities – all activities previously monopolised by the state via P emex, the publicly-ow-ned oil company.

A lready active in the United States and C anada, GDF SUEZ felt that it was in its strategic interests to enter N A FTA ’s third market. It set itself

CENTRAL AMERICA:MEXICO, PANAMA

MEXICO, COSTA RICA, PANAMA

GDF SUEZ played an indirect but vital

role in the Mexican utilities sector

between 1923 and 1960. A Group

subsidiary, Mexican Light & Power,

held major concessions including

the lighting concession for Mexico City

and its suburbs, and for the city of

Pachuca, 80 km north of the capital.

GDF SUEZ carried out large-scale

infrastructure work during the interwar

period. This included developing

the Tepexic hydroelectric power plant

and building the N ononalco thermal

power station and the Tepuxtepec

hydropower plant. After 1940, against

a backdrop of rapid economic and

population growth but also of accelerated

infl ation, new thermal power stations

were built (Tacubaya and Lecheria)

to make the country less vulnerable

to fl uctuations in the weather. Around

1960, however, the Group pulled out of

Mexico, selling its share in Mexican Light

& Power to the Mexican government.

From then on, the state monopolised

Mexico’s power generation. [...]

Queretaro (Mexico): natural gas distribution concession, obtained in 1999

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the medium-term goal of becoming one of M exico’s top five electricity gene-ration and gas distribution companies and, in the longer term, of becoming a major electricity distribution player in the country. A t that time, M exico was undergoing a partial energy transition as it developed a new generation of gas-fired power stations to complement its old, more polluting oil-fired ones.

The Group made its fi rst breakthrough in the rapidly expanding gas distribution sector. V ia various entities GDF SUEZ secured a series of concessions: in 19 9 8 at M atamoros and at M exico C ity; in 19 9 9 at Q ueretaro and Tampico; and in 2 000 at P uebla Tlaxcala and Guadala-jara, M exico’s second largest city.

The M exican electricity market was also attractive because demand there

was growing three times faster than in the United States. H owever, private sector involvement in M exico was still confined to autoproduction, cogene-ration and small-scale generation acti-vities. The installed capacity of most independent producers was simply what they needed to meet their own needs. It was therefore in the cogeneration market that GDF SUEZ made its en-try into M exico. In 2 001, the Group bought a cogeneration plant under construction at M onterrey, a major industrial centre in the northeast of the country. A s this 2 4 5 -M W unit was to run on natural gas, it represented a valuable outlet for the Group’s gas distribution activities. Its output was not dependent on public distribution channels because its customer base consisted solely of large consumers in the cement, glass and steel sectors.

Today, the Group is a major player in the M exican energy sector, especially the gas industry where it operates six distribution concessions and supplies a total of 3 85 ,000 customers.GDF SUEZ has been present in P ana-ma since 2 007 , when it acquired a 5 1% holding in Bahia Las M inas, the largest

thermal power plant in the country (2 80 M W ). W ith the C ativa power plant, the Group has a 5 00 M W installed capa city and holds the second place in the market. GDF SUEZ also took part in various engineering and design mis-sions in the context of the P anama C anal extension project.

Monterrey (Mexico): CCGT power plant inaugurated in February 2003

CENT

RAL

AMER

ICA:

MEX

ICO,

PAN

AMA

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[...] Forty years later, the Group returned to the scene of these past achievements. The Thai market held considerable appeal, with a population of over 60 million. In addition, the country was undergoing rapid industrialisation, with an annual economic growth of 9 % .A gainst this backdrop, energy consump-tion was increasing steadily and the sector requi red major investment.In fact, GDF SUEZ had been doing busi-ness in Thailand even prior to the libe-

ralisation of its energy sector. In 19 87 , the P etroleum A uthority of Thailand had appointed the Group’s engineering department to study the medium-term development of the Thai natural gas network. Following on from this, the Group signed a contract for baseline studies of gas distribution networks in the Greater Bangkok area in 19 9 0. The following year, a pilot gas distri-bution network was commissioned in C honburi. M eanwhile, the engineering

department was appointed by V inythai, a joint venture between the Solvay che-micals group and the Thai company C haroen P okphand, to build a P V C plant on the M ap Ta P hut industrial estate on the Gulf of Thailand. H owever, on all of these jobs the Group was merely acting as a consulting engineer or sys-tems integrator.

In 19 9 6, the Group’s first investment in Thailand came when the P etroleum

Bangkok (Thailand): tram network in front of the Wat Chana Songkram temple, around 1930

FROM SIAM TO THAILANDTHAILAND

Several small European nations played an important role in Thailand’s history around the turn of the 20th century.

When King R ama V, who ruled Siam from 1868 to 1910, resolved to modernise his country’s administrative

and economic structures, he preferred not to seek assistance from any of the world’s major powers, fearing that this

might compromise Siam’s independence and result in colonisation. Belgian lawyers were therefore consulted to help

draw up Thailand’s constitution, while Danish engineers laid the fi rst tram lines in Bangkok in 1888 and founded the

fi rst electricity company a decade later. In 1912, these two businesses were bought and incorporated into GDF SUEZ.

At that time, the tram network covered 32 km and the power plant had an installed capacity of just 5 MW. Its boilers

were fuelled by rice husks – proof that using biomass to generate power is far from a novel concept! However,

the tram and electricity concessions terminated in 1949. GDF SUEZ proposed various solutions that would allow

it to remain involved in the company’s development, but in keeping with the nationalist tendencies of the time

the Thai authorities decided to take over the operations themselves. [...]

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A uthority of Thailand (P TT) received go-vernment approval for a joint venture to operate a gas network supplying industrial customers in Samut P rakan P rovince, on the outskirts of Bangkok. The aim was to encourage around 2 ,000 companies to switch from heavy fuel oil to gas in order to reduce air pollution. The P TT held a 4 9 % stake in the busi-ness, which was called P TT N atural Gas Distribution. GDF SUEZ acquired 2 7 % and British Gas 2 2 % . Gas supplies started in 19 9 7 . The network expanded in the years that followed and continues to do so.

In the electricity sector, too, the Thai authorities realised that foreign capi-tal would be needed in order to finance facilities capable of delivering smooth growth in generation. W ithout actually privatising the electricity industry, the authorities took measures to encou-rage the creation of IP P s that would deliver the bulk of their output to industrial complexes. In some cases, they authorised the creation of small, independent power plants (known as ‘ small power producers’ or SP P s), which

could supply industrial customers or sell their output to the Electricity Ge-nerating A uthority of Thailand (EGA T), a public body responsible for the gene-ration and distribution of electricity in Thailand. In 19 9 7 , the Group acquired a 4 5 % stake in a local company that had been given permission to build a 4 4 -M W cogeneration plant in Surathani to be fuelled by plant waste generated from palm-oil production.

In the same year (19 9 7 ), GDF SUEZ concluded a strategic agreement with the Thai group H emaraj Land and Development under which the two parties pledged to invest together in the Thai electricity sector and also, if the opportunity arose, in other coun-tries in Southeast A sia, more specifi-cally Laos and C ambodia. They would pool their collective investments in the joint venture H -P ower C o., which owned a 19 5 -M W , 13 0 tonnes of steam combined-cycle cogeneration plant un-der construction at an industrial site belonging to the H emaraj Group in M ap Ta P hut, as well as half of a 7 4 0-M W combined-cycle power plant

construction project at the Bowin in-dustrial estate on the east coast of the Gulf of Thailand. P art of the energy generated would be sold to EGA T; the rest would be sold directly to indus-trial customers, along with the steam or distilled water.

A s it transpired, these Group ventures could not have been undertaken at a worse time. In late 19 9 7 , a major finan-cial crisis shook the A sian economy and Thailand suffered the backlash. Its GDP slumped by 10% in 19 9 8 and many investors pulled out of the country. GDF SUEZ, however, held firm, considering itself to be “a lo-

cal, long-term player”. In fact, it even came to the rescue when its partners got cold feet. In 19 9 8, for example, H -P ower bought the 4 9 % stake in Bowin P ower held by the US firm In-tergen. In February 2 000, GDF SUEZ increased its interest in H -P ower to 7 5 % . A nd in A ugust of the same year, the Group acquired the 2 2 % stake held by British Gas in P TT N atural Gas Distribution, bringing its investment in the company to 4 9 % .

FROM SIAM TO THAILANDBangkok (Thailand): Bangkok Tramway & Electricity Company (Soci”t” des Tramways et Électricit” de Bangkok) share certifi cate, around 1920

Map Ta Phut (Thailand), Glow power plant, stages 3 and 4, showing hybrid cogeneration units installed between 1999 and 2005

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The Group’s steadfastness was greatly appreciated by the Thai authorities. In M arch 19 9 9 , P rime M inister C haun Leekpai attended in person the inau-guration of Industrial P ower’s first two cogeneration units (capacity: 12 0 M W ). Two months later, the P etroleum A u-thority of Thailand awarded GDF SUEZ a turnkey contract to build a gas conditioning complex at the R ayong gas terminal south of Bangkok.

In N ovember 2 000, the Group’s pres-ence in Thailand changed dimension once again when it acquired a 69 % stake in the Thai company C O C O (C o-generation P ublic C o. Ltd). A s with the acquisition of C abot and M onterrey, this deal involved taking over a busi-ness of importance to the country’s economic future from a struggling group. C O C O controlled three gene-ration units in M ap Ta P hut and two 12 6-M W units on the outskirts of Bangkok. In all, GDF SUEZ acquired an installed and immediately opera-tional capacity of 1,02 2 M W e, making it responsible for almost 10% of Thai-land’s power generation. This masters-troke secured a permanent and solid foundation for the Group in A sia. In 2 001, GDF SUEZ increased its interest in C O C O and, as required under Thai law, launched a takeover bid for the

remainder of the capital. O nce com-pleted, this transaction gave it a 9 7 % stake in C O C O , which was subsequent-ly renamed Glow Energy.

A t this point, the Group appeared to have achieved its objectives in Thailand. It was the leading private in-vestor in the country’s energy sector, with a customer base of 2 9 large com-panies, including a significant num-ber of petrochemical companies and plastics manufacturers. The Group’s next goal was to break into other Southeast A sian markets, in conjunc-tion with Thai partners if necessary. In September 2 001, GDF SUEZ and its Thai partner M LC announced that they had acquired 80% of the shares in the H ouay H o hydropower plant in Laos, which had been operating a 163 -M W unit for the past two years. The other 2 0% would remain in the hands of the state-owned electricity company É lectricité du Laos. This ac quisition allowed the Group to di-versify the type of power stations it operated in Southeast A sia, which had previously all been gas- or coal-fired. A ll of the output of the H ouay H o plant would go to EGA T. It would transit to Thailand via a high-voltage line crossing two-thirds of the distance between V ietnam and Thailand. In this

way, GDF SUEZ positioned itself at the heart of a nascent regional electri-city system spanning Thailand, Laos, V ietnam and C ambodia.

Between 2 002 and 2 004 , the Group reorganised its assets in Thailand by incorporating them into Glow Energy. W ith this process complete, it was decided to anchor the company natio-nally by launching an initial public offering for 3 0% of its capital. Glow Energy was floated on the Thai Stock Exchange in A pril 2 005 . In the same year, anticipating a planned increase in IP P s in Thailand, Glow entered into an agreement with H emaraj, a compa-ny specialising in industrial infrastruc-ture. Together, the two groups were awarded the contract for Gheco O ne, a 600-M W coal-fired power station in the industrial region of M ap Ta P hut, whose entire output will be sold to EGA T under a 2 5 -year power purchase agreement (P P A ). The plant will com-ply with the toughest C O

2 emissions standards.

Today, the Group has a generating capacity of over 1,800 M W e and 9 67 tonnes of steam per hour, making it Thailand’s third largest IP P . The Group also has 1,087 M W of electrical capacity under construction.

Samut Prakan (Thailand): PTT Natural Gas Distribution network, 2003

Thailand : Coco, production unit acquired in 2000 (Cogeneration Co.)82

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[...] The lighting network was inaugura-ted in J une 19 06 and proved immedia-tely popular with local people: hardly surprising since, before its intro duction, the fire insurance premiums for oil-lit houses were up to 12 % of the value of the property! The tram network was opened in 19 04 , with 4 0 motor coaches and 2 0 trailers. The system length was just 15 km in 1915 but service frequency was high, with 2 6 million passengers transported that year.

From 19 3 7 , the political and economic situation in C hina deteriorated. The Si-no-J apanese conflict and the devalua-tion of the dollar led to falls in revenues.

The company was placed under J a-panese military control in 19 4 1. The European staff were forced to keep the service operating until 19 4 3 and were then expelled or imprisoned. A fter the war, the C hinese authorities took possession of the infrastructure at Tientsin and began operating it themselves. Efforts to obtain compensa-tion were made between 19 4 6 and 19 4 9 but these failed and in 19 5 6 the Group’s company went into liquidation.

It was in the late 19 80s that the Group began looking for ways to re-establish itself in the Far East. In M arch 19 88, GDF SUEZ began talks with C hina

TIGERS DRAGONS AND OTHER EMERGING POWERS

CHINA The Boxer R ebellion (1900)

was one of the darkest episodes

in China’s relations with

the Western powers

and resulted in a surge

of European capital into China. It

was in this context that

the Tientsin tram and electric

lighting concession was awarded

to a number of Europeans

in 1901, before being transferred

to a GDF SUEZ company

three years later. [...]

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TIGE

RS D

RAGO

NSAN

D OT

HER

EMER

GING

POW

ERS

Light & P ower C o. in H ong K ong and took a small stake in the company.

A s for the P eople’s R epublic of C hina – which had a woeful lack of energy faci-lities – GDF SUEZ began studying in-vestment opportunities there in 19 9 3 . In M ay 19 9 6, a small coal-fired cogenera-

tion plant producing electricity and steam, with a capacity of around 3 0 M W , was developed in partnership with C hina C hang J iang Energy C orp. The scheme was put on hold for a long time following changes to C hinese le-gislation on cogeneration. A number of subsequent projects were envisaged,

but these came to nothing due to a lack of firm guarantees on electricity prices.

In Singapore, the Group’s investments were much more substantial. In A ugust 19 9 5 , GDF SUEZ became a 2 0% part-ner in a joint venture with SembC orp Utilities P te Ltd which built a complex supplying steam, demineralised water, cooling water and other services (liquid chemical storage, pipeline transporta-tion and wastewater treatment) to a raft of chemical companies that were moving into a new industrial develop-ment zone on the man-made island of P ulau Sakra. This facility was commis-sioned in J une 19 9 7 . In a second phase (19 9 7 -2 001) and again in collaboration with SembC orp, GDF SUEZ acquired a 3 0% stake in the project to build a 815 -M W cogeneration plant called Semb corp C ogen. This was Singapore’s first independent power plant: it gene-rated both electricity, which was sold to the Singapore Electricity P ool, and steam for sale to industrial customers on the island of J urong.

Following on from these projects, in 19 9 8 GDF SUEZ teamed up with Semb Gas

P te Ltd to form a third joint venture intended to import natural gas from the W est N atuna gas fields in Indone-sia via a 64 0-km sub-sea pipeline. In so doing, the Group helped to diversify Singapore’s gas resources, since until then the country had sourced all of its gas from M alaysia. SembGas also sup-plied the C ogen cogeneration unit and local petrochemical companies. Semb-Gas designed and built its own recei-ving terminal as well as a network of high-pressure gas pipelines. The first delivery of gas took place on 15 th J a-nuary 2 001.

H owever, the Group felt that it could not fulfil its traditional role of indus-trial operator on the basis of the mi-nority share it held in each of these joint ventures; it therefore withdrew from these partnerships at the end of 2 003 . GDF SUEZ did not return to the Singapore market until 2 008, when it led the consortium – including J a-panese group M arubeni – that acquired the largest local electricity producer Senoko. Senoko had generating facili-ties totalling 3 ,3 00 M W and produced 3 0% of Singapore’s electricity.

Shanghai (China): cooperation agreement between GDF SUEZ and the company in charge of the city’s electricity supply, October 2007

Tientsin (China): power plant in the 1930s

Singapore, power plant operated by Senoko, in which the Group acquired a holding in 200884

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THE GULF STATES

[...] In the early 19 9 0s, the Gulf market was a highly attractive prospect for GDF SUEZ. Its population and econo-my were growing rapidly and demand for water and electricity was increa-sing proportionately. The political risk was low, the energy and water markets were opening up to private enterprise and the region had huge potential in terms of oil and gas reserves. In addition, the Group had a number of strengths that were particularly suited to the region, such as its position at the forefront of seawater desalination and cogeneration technology.

GDF SUEZ made its first move in the region in 19 9 4 , when the O mani

authorities awarded it the contract to build the A l M anah power station and 2 00 km of high-voltage lines. Designed to replace a number of diesel-fired units, this gas-fired plant came online in O ctober 19 9 6 with a capacity of 9 0 M W , equivalent to 7 % of O man’s total power generation. This was in-creased to 2 89 M W in 2 000. W ith most of its output destined for air-condi-tioning units, the plant was expected to be 100% available during the five hottest months of the year and 4 0% available the rest of the time. The A l M anah power station was the first in the Gulf to be built, owned and ope-rated by an independent power pro-ducer. This set-up came to be seen

as a model and was widely copied by the other Gulf States. The project was a ‘ build, own, operate and trans-fer’ (BO O T) contract, under which the facilities would be handed over to the O mani government after 2 0 years of operation for the symbolic price of one franc. It was executed to the customer’s complete satisfaction, with the result that the GDF SUEZ Group landed several other deals in O man in the 2 000s, namely the construction of the Sohar (5 85 M W , 15 0,000 m3

of drinking water per day) and A l R usail (665 M W ) power stations and the expansion of the Barka power plant (67 8 M W , 12 0,000 m3 of water per day).

GDF SUEZ has been present in the Persian Gulf region since 1975,

when it landed a contract to build the Group’s first seawater

desalination plant there. [...]

SUCCESS IN THE SUN

THE GULF STATES

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Barka 2 (Oman). Overall view of the 680-MW power plant (2009)

Barka (Oman): seawater desalination plant in 2009

In A bu Dhabi, it was the GDF SUEZ engineering department that led the way, acting as industrial architect on the Taweelah B power plant project. The plant was to have a generating capacity of 7 3 2 M W and incorporate a seawater desalination facility produ-cing some 60,000 m3 of water an hour. In 19 9 8, the Group turned its attention to the emirate’s electricity privatisation process. It formed a consortium with the oil group Total and submitted a bid for an extension to the Taweelah plant to be built under an IP P (In-de pendant P ower P roducer) contract. A lthough GDF SUEZ-Total had long been considered the preferred bidder,

the Taweelah A 2 contract was won in the end by a consortium comprising the manufacturer Siemens and the US electricity company C M S. H owe-ver, the Group got even in 2 000 by securing a contract to rehabilitate the existing plant at Taweelah and ex-pand its generating capacity from 2 2 5 to 1,4 3 0 M W and from 13 0,000 to 3 85 ,000 m3 of water per day. The A bu Dhabi authorities retained a 60% share in the scheme, which was named Taweelah A 1. The complex was finished on time, in 2 003 : it was the region’s biggest independent power and water project to date and one of the largest cogeneration facilities in the world,

accounting for around 2 5 % of the emi-rate’s power and water production. In A bu Dhabi as in O man, customer sa-tisfaction led to positive spin-offs: five years later GDF SUEZ was chosen to build Shuweihat 2 , a 1,5 10-M W plant capable of desalinating 19 ,000 m3 of seawater per hour.

The Group turned its attention to Q atar in 2 000, both because it wished to diversify its facilities in the Gulf States and also because, since the dis-covery of the N orth Field (the world’s largest gas field), the emirate ranked third in the world in terms of the volume of its proven gas reserves,

SUCCESS IN THE SUN

THE GULF STATES

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SUCCESS IN THE SUN

THE GULF STATES

Construction site of the Barka 3 power station in Oman

just behind R ussia and Iran. H owever, it was not until 2 008 that the Group realised its ambitions by winning a contract to build a 2 ,7 3 0-M W power station, R as Laffan C , and a seawater desalination plant with a daily capa-city of 2 86,000 m3 . Q atar has since become one of the main sources of gas for the GDF SUEZ Group.

The Group entered the Bahraini mar-ket in 2 004 , when it landed a BO O contract for a 9 5 4 -M W power station on the A l Ez zel site. A s in O man, this made GDF SUEZ the first independent producer in Bahrain. Even before this plant was fully operational, the Group purchased the A l H idd power station in

partnership with International P ower and Sumitomo C orp. Under the deal, it acquired a number of units total-ling 9 3 8 M W and pledged to increase the seawater desalination capacity from 13 6,000 to 4 10,000 m3 per day. Lastly, in 2 008 GDF SUEZ won a BO O contract for a 1,2 3 3 -M W greenfield power plant to be built on the A l Dur site, combined with a daily water out-put of 2 18,000 m3 .

The fi fth Gulf State in which GDF SUEZ established itself was Saudi A rabia. In late 2 006, the Group secured the concession for the M arafiq power station, the largest combined power production and seawater desalination 88

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Sohar 1 (Oman): came into commercial operation on 27th May 2007

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project in the world. C ommissioned in 2 009 -10, the plant has a generation capacity of 2 ,7 5 0 M W and a seawater desalination capacity of 800,000 m3

per day.

In this way, the M iddle East has been an area of strategic and priority expan-sion for GDF SUEZ for the past decade. W ith 11 sites in five countries, the Group can exploit growing synergies for both the development and the ope-rational management of its facilities. R ecently, in M ay and J une 2 010, the Group won contracts to build two fur-ther power stations in O man (Barka 3 and Sohar 2 ), with a combined capa-city of 1,5 00 M W , and a second power station in Saudi A rabia, at R iyadh (1,7 3 0 M W ). GDF SUEZ is already the biggest private energy player in the Gulf, having a direct interest in almost 19 ,7 GW and a daily desali-

nation capacity of over 4 ,1 million m3 of water.C ompared with the rest of the world, M iddle Eastern markets retain some distinctive features. Every single me-gawatt is installed on the initiative of governments. It is they who organise calls for tender, allocate land for the siting of power stations and decide what type of fuel will be burnt and who will supply it. It is they, too, who will sell the energy and water pro-duced under long-term contracts, all of the provisions of which are agreed in advance between the parties ma-king up the consortium. W ithin these consortia, which are formed with local state partners, GDF SUEZ does not have a majority controlling interest. C onstruction work only begins once fi-nancing has been secured with backing from a large number of international banks present in the region.

SUCCESS IN THE SUN

THE GULF STATES

Marafi q (Saudi Arabia), cogeneration plant commissioned in 2009-2010

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From Constantinople to IstanbulThe Group’s presence in Turkey dates back to the early 2 0th century. It was active in Izmir from 19 09 , in both the electricity and tram businesses. In 19 11, it was part of a consortium set up to merge the existing gas, tram and electricity companies in C onstan-tinople (now Istanbul), electrify the tram network and build a power sta-tion in the city. By 19 14 , the network had 2 ,000 regular customers. A fter many ups and downs, the Turkish government finally took these enter-prises into public ownership at the end of the 19 3 0s.

H owever, like many other emerging economies, Turkey passed an Elec-tricity A ct in 2 001 introducing gra-dual deregulation of the gas and electricity markets. In the same year, GDF SUEZ purchased a 7 7 0-M W C C GT plant being built 4 0 km outside A nkara, having acquired a 4 5 % stake in Baymina, the company in charge of the project, from the British com-pany International P ower, and a fur-ther 5 0% from a Turkish consortium. This was one of five BO O projects for which the Turkish authorities had issued public calls for tender.

In 2 008, the Group won the tender for the privatisation of Izgaz , Turkey’s third largest natural gas distributor. Izgaz supplied 2 00,000 residential, tertiary and industrial customers in the K ocaeli region, 80 km east of Is-tanbul. It was a distribution network

that GDF SUEZ knew well, having built it itself in the mid-19 9 0s.

W ith a population of 7 1 million and a sustained economic growth, Turkey today offers the Group major potential for development.

Malikö y (Turkey) : Baymina power plant, opened in May 2004

Silightar (Turkey): power station, around 1925

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GROUP Nuclear

The rise of natural gas and LNGNatural gas exploration and production

Renewable energiesEnergy trading

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EXPERTISE DEPLOYED GLOBALLY

Thailand: cogeneration plant

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Mol (Belgium): The BR1 experimental natural uranium and graphite reactor, operational in May 1956

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NUCL

EAR

[...] Under a secret intergovernmental contract signed in 19 4 4 , in which Bel-gium agreed to supply all C ongolese uranium to the United States, the USA undertook to share their knowledge of the peaceful applications of nuclear energy with the Belgian industry. A s a result of this, continental Europe’s first pressurised water reactor (P W R ) nuclear power station was built at M ol, in the C ampine region of Belgium, with the assistance of the A merican group W estinghouse. It was connected to the Belgian electricity grid in O ctober 19 62 . France’s first P W R nuclear power station was commissioned at C hooz in 19 66; it too benefited from the assis-tance of W estinghouse, as well as the expertise acquired at M ol by GDF SUEZ engineers. This plant was built in par-tnership with EDF under Euratom, and General De Gaulle had to give EDF

express permission to operate outside what was then the nationalised French electricity industry.

In 19 68-69 , GDF SUEZ decided to build two large nuclear power stations in order to make Belgium energy self-suffi cient. O nce again in partnership with EDF, an 87 0-M W unit was built at Tihange on the R iver M euse. A nother – 100% Belgian-owned – unit was built at Doel near A ntwerp. By the end of 19 7 5 , nuclear electricity already accounted for 2 1.2 % of all power generated in Belgium. In 19 71, the Group was chosen as architect-engi-neer for two 9 3 0-M W units in R inghals, Sweden. From 19 7 2 onwards, Group engineering departments were involved in building the fast breeder reactor at K alkar, Germany, in collaboration with German and Dutch power compa-nies. They were also chosen to design

Chooz (France): loading the reactor at the PWR nuclear power plant, around 1967

The fi rst industrial revolution was driven by coal and steam.

After the Second World War, the rapid growth in energy needs

and the depletion of Europe’s coal resources forced GDF SUEZ to explore

other primary energy sources, namely nuclear and natural gas. [...]

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the extension of the Eurochemic spent nuclear fuel reprocessing plant in Dessel, Belgium, which operated between 19 66 and 19 74 .

The first oil crisis boosted the develop-ment of nuclear energy. In 19 7 4 , GDF SUEZ decided to embark on a massive upgrade programme at the Doel and Tihange power stations, entailing the construction of four additional 1,000-M W units. This move gave the Group a significant lead in the field of nuclear engineering. It also handled the preli-minary study and comparison of ten-ders for a 1,3 00-M W nuclear power sta-tion to be built in Luxemburg. O n 18th

O ctober 19 7 8, the Group and Belgo-N ucleaire established Belgatom with

the aim of exporting their nuclear engineering expertise. In 19 7 9 , this consortium landed its first contracts for the European Economic C ommu-nity (EEC ), mostly in South K orea. It went on to carry out nuclear studies in Taiwan, Spain and in the USA .

For the past 4 0 years, the nuclear power stations operated by GDF SUEZ in Belgium have been among the best-performing in the world, with load factors regularly exceeding 9 0% .

H owever, in 19 88, when the Belgian authorities decided to postpone inde-finitely the construction of an eighth nuclear unit at Doel – code-named N 8 – the future of nuclear engineering

seemed in doubt. A nd yet, as the head of the engineering department noted in 19 9 3 , “our loss of the N 8 design

was other people’s gain, since it inspi-

red the team behind the F ranco-German

European P ressurised R eactor (EP R )

project”.

To preserve the expertise it had built up, the Group turned its attention abroad, in particular to Eastern Eu-rope. The C hernobyl disaster had hi-ghlighted the major flaws in the safety system of Soviet R BM K nuclear power stations. In J uly 19 9 2 , the G7 mobilised the international community on the issue of nuclear safety in Eastern Eu-rope. The European C ommission took the decision to finance cooperation

programmes and know-how transfers on plant safety assessment and ope-rator training. H owever, the C ommis-sion lacked its own body of expertise. To fill this gap, GDF SUEZ joined forces with EDF to create the Twin-ning P rogramme Engineering Group (TP EG), an economic interest grouping, which quickly expanded to include seven European electricity producers. A mong other things, TP EG helped the European C ommission by preparing calls for tender for the rehabilitation of R ussian-style reactors and by selecting suppliers.

Independently of this expertise, the Group participated in a series of commercial projects via Belgatom. In

NUCL

EARTihange (Belgium): the three reactors were commissioned

in 1975, 1983 and 1985 respectively

Doel (Belgium): revision of the nuclear plant’s unit 3 in 2002

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J anuary 19 9 0, it was chosen to carry out an evaluation study on two proposed R ussian-style pressurised (V V ER ) nuclear power stations at Zarnowiec, P oland (4 60 M W each). The study, which was fi nanced by the P H A R E programme, led the P olish go-vernment to put the construction plans on hold. GDF SUEZ worked with the Finnish power company Ivo in Bulgaria and with Spanish and British engineering companies in R ussia. In collaboration with Iberdrola, the Group improved safety at two nuclear power stations, one in R ussia (K alinin, 15 0 km from M oscow), the other in Ukraine. Finally, the Group’s engineering depart-ment, in its capacity as consulting engi-neer to the C zech and Slovak R epublics, was appointed to compare the effi ciency of different nuclear designs.

In this debate, the GDF SUEZ Group believes that nuclear offers indisputable benefi ts, not only political (energy inde-pendence) but also economic and envi-ronmental (no C O

2 emissions, limited quantities of waste). It is therefore keen to put the experience it has acquired in this field to good use. Since 2 004 , the Group has shown a commitment to furthering a revival of nuclear energy worldwide. It has declared an interest in the deployment of third-generation nuclear plants, particularly in France. In the United K ingdom, GDF SUEZ joined forces with Iberdrola in 2 009 to buy a plot of land facing the Isle of M an, not far from the Sellafield nuclear power station. A few months later, in September 2 010, GDF SUEZ concluded

O utside Eastern Europe, the GDF SUEZ design and engineering department was chosen as architect-engineer for a nuclear power station in Lungmen, Taiwan, in par-tnership with the US company Ebasco. It was involved in drawing up specifi cations for the nuclear island tendering process. In the mid-2 000s, nuclear power slowly be-gan to emerge from its long period in the wilderness in the wake of C hernobyl. In Europe, however, there is ongoing debate between countries that have decided to halt their nuclear programmes, such as Germa-ny and Sweden, and those that are buil-ding new nuclear facilities. That said, the boundaries are shifting, with Belgium and the N etherlands no longer ruling out the nuclear option, despite retreating from it in the past.

a strategic partnership agreement with the Brazilian, government-owned electri-city company Eletrobras. Geographically, the agreement covers all countries in Latin A merica and A frica. It relates to project development in the fi elds of electricity generation and transmission, particularly renewable. H owever, it also encompasses nuclear-generated electricity.

A longside all this, GDF SUEZ has fo-cused on nurturing top-quality staff to ensure that it has the expertise needed to realise its ambitions. In O ctober 2 006, the Group launched the N uclear Trainee P rogrammes, allowing young engineers to develop their knowledge of nuclear power through classroom and on-the-job training.

Doel (Belgium): the fi rst two reactors of the power plant came online in 1975

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THE RISE OF NATURAL GAS AND LNG

GDF SUEZ was instrumental in brin-

ging natural gas to France and Bel-

gium. In France, the discovery of the

Lacq gas fi eld led to the fi rst natural

gas conversions in 1956, while the

fi rst cubic metres of Algerian gas

were unloaded at the Le Havre

liquefi ed natural gas (LN G) terminal

in 1965. [...]

[...] In Belgium, the gas revolution began with the discovery of substantial gas deposits at Slochteren, in the N ether-lands. The fi rst cubic metres of natural gas crossed the Dutch-Belgian border on 10th O ctober 19 66. W ithin fi ve years, the Belgian and French distribution networks had been almost completely conver-ted to natural gas. In the 19 7 0s, GDF SUEZ worked hard to diversify its supply sources. In 19 7 5 , it signed a long-term natural gas supply agreement with the Soviet M inistry of Gas Industry (which became Gazprom in 19 89 ). The Group also concluded supply contracts for gas from the Ekofi sk fi eld in the N orth Sea.

W hile GDF SUEZ built the LN G termi-nals of Fos-Tonkin (19 7 2 ) and M ontoir-de-Bretagne (19 80), its engineering depart-ment designed the one at Zeebrugge, which included a docking facility for LN G tankers and a regasifi cation line.

GDF SUEZ built up considerable exper-tise on these projects. In the 19 80s, it exported that expertise, helping to build the Inchon and A san Bay LN G terminals in K orea, for example, and providing technical assistance for the construction of storage facilities in A bu Dhabi. Its design and engineering department also drew up master plans for the natural gas transmission and distribution networks in Tunisia, Indonesia and Thailand, and in

so doing paved the way for the Group’s redeployment as an industrial operator in Thailand.

W hen nuclear development programmes were put on hold in the wake of the 19 86 C hernobyl disaster, electricity compa-nies around the world turned to a new and economical form of energy genera-tion, namely cogeneration (also known as ‘ combined heat and power’ (C H P ) gene-ration) and combined-cycle gas turbines (C C GT). This technology had enormous benefi ts: it was over 5 0% energy-effi cient, had a lower environmental impact and was very fl exible to install. The Group’s cogeneration expertise would help spearhead its international expansion in the 19 9 0s.

A s the market for natural gas as a power-station fuel expanded (today, natural gas-fi red power stations account for over half of the Group’s installed capacity and almost two-thirds of its plants under construction), demand for natural gas rocketed. M oreover, progress in gas lique-faction and LN G terminal construction techniques boosted the rise in consump-tion by substantially reducing the costs of transporting gas by sea.

The role of the Zeebrugge terminal as a European gas transit hub was streng-thened in 19 9 8 by the commissioning of

Gjø a (Norway), semi-submersible natural gas platform with a production capacity of 17 million cubic metres, inaugurated in 2011

Advertisement for town gas heating in the 1930s

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Gloucester (USA) : Neptune Deepwater Port, situated offshore

the Interconnector linking Bacton, in the UK , with Zeebrugge. By this time, Group-operated gas transmission networks were transporting 110 bcm of gas per year.

It was against this promising backdrop that in September 2 000 GDF SUEZ acquired C abot LN G, a company ac-tive in the liquefaction, purchase and cross-A tlantic transport of LN G. C abot operated the Everett LN G terminal in Boston, which was built in the 19 7 0s when the A tlantic LN G market fi rst took off. H owever, the economic crisis of the 19 80s confounded the optimistic forecasts of the terminal’s developers. Further-more, deregulation of the US gas market in 19 86 prompted a wave of geological stu-dies leading to the discovery of previously unknown gas reserves in the USA and its territorial waters. The terminal had

a storage capacity of 15 4 ,000 m3 of LN G and its supply sources were A lgeria and Trinidad. The transported gas was sold on in liquid or gas form in P uerto R ico and the markets of M assachusetts. The company owned its own LN G tanker, the M atthew, as well as a 10% interest in the company that operated the liquefac-tion facilities on the island of Trinidad, which had become the USA ’s biggest LN G supplier.

H aving thus established itself in the United States, GDF SUEZ now accounted for over 2 0% of the total volume of LN G transported across the A tlantic. In 2 001, the Group founded a new compa-ny, GDF SUEZ Global LN G, to coordi-nate its increasingly substantial interests on the global LN G markets. To secure the best purchase terms from oil industry

heavyweights, GDF SUEZ capitalised on its controlling stakes in all busine-sses upstream of production, including li quefaction, regasifi cation and storage facilities, LN G tankers, distribution con-cessions and natural gas-fi red power stations.

Thanks to its presence in the various geographical areas of the A tlantic mar-ket, the Group benefi ted from the steady rise in gas consumption during the fi rst decade of the 21st century. It further diversifi ed its supply sources, striking deals with Y emen LN G in 2 005 for the supply of Y emeni gas.

GDF SUEZ also expanded its fleet of LN G tankers, entering into long-term charter contracts, each adding two or three carriers to its fleet. In addition,

it made sure to safeguard its position at the terminals where it operated by means of long-term contracts. J ust as importantly, it sought to develop its own facilities, with planned termi-nals in M exico, in the Bahamas and in C hile. It entered into service in 2 010.

Today, the Group has interests in three liquefaction plants: Trinidad (since 19 9 9 ), Ikdu in Egypt (since 2 005 ) and M elkø ya in N orway (since 2 007 ). In A ugust 2 009 , GDF SUEZ signed a partnership agreement with the A us-tralian group Santos to build a floating liquefaction plant in A ustralia, with a capacity of 2 million tonnes of LN G per year. Downstream in the LN G value chain, GDF SUEZ aims to have a total regasification capacity of 4 4 bcm by 2 013 . The Group is currently

Melkoya (Norway), liquefaction plant operated by Statoil for six companies including GDF SUEZ, inaugurated in 2007

THE

RISE

OF

NAT

URA

L GA

SAN

D LN

G

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Europe’s second largest operator of LN G terminals, owning M ontoir-de-Bretagne and Fos-Tonkin in France and Everett in the United States, with regasification capacities of 7 , 10 and 6.9 bcm per year respectively. It has interests in other terminals in France (Fos C avaou, 7 0.2 % ) and India (10% stake in P etronet LN G Ltd, which owns

the Dahej terminal and is building ano-ther in K ochi).

In addition, the Group operates a fleet of no fewer than 18 vessels, two of which have on-board regasifica-tion systems allowing them to inject natural gas directly into the network at high pressure. In February 2 010, a

new regasification terminal was com-missioned in the United States. N amed N eptune Deepwater P ort, it is unusual in being located offshore – 10 miles from the coast of Gloucester, M assa-chusetts. It consists of two submerged buoys, which allow LN G tankers with LN G vaporisation capability to connect and discharge regasified LN G via an

underwater gas pipeline linked to the onshore transmission network.The security of supply of its customers is one of the Group’s key concerns. O ne of the ways it safeguards this is by diversifying its supply sources as much as possible. This policy was prompted in particular by the risk that decli-ning European gas fields would ulti-

THE

RISE

OF

NAT

URA

L GA

SAN

D LN

G

Fos-sur-Mer (France): Fos Tonkin LNG tanker in 2007

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mately make W estern Europe overly dependent on two major producers, namely R ussia and A lgeria. Today, the distribution of long-term sup-ply by country is as follows: N orway is the biggest supplier, with 2 3 % , fol-lowed by R ussia (2 1% ), A lgeria (13 % ) and the N etherlands (11% ). Supplies from Trinidad and Tobago, Egypt and the M iddle East account for 7 -8% each, while those from Libya make up 3 % . The long-term contracts signed with these various suppliers are for periods of around 2 0 years. A t the end of 2 009 , the average remaining term was 15 .6 years. LN G accounts for 18% of this portfolio.

The latest developments in this area mainly concern relations with the R us-sian producer Gazprom. These became closer recently with the signing of a memorandum relating to the supply

of an additional 1.5 bcm per year and to N ord Stream, a sub-sea gas pipe-line connecting R ussia to Germany on which construction work has just be-gun. M eanwhile, GDF SUEZ is keeping a close eye on other projects linking Europe to major gas fields, such as the EU-backed N abucco gas pipeline, which will connect the continent to gas fields in the C aspian region and the M iddle East.

Alexeï Miller (Gazprom) and G”rard Mestrallet (GDF SUEZ), in the presence of presidents Medvedev and Sarkozy, sign an agreement involving the French group in the future Nord Stream gas pipeline, March 2010

Storage facilities and transmission networksTo keep pace with the growth in natural gas markets, GDF SUEZ has invested over a long period in storage facilities that enhance its fl exibility of supply. This refl ects the fact that gas demand varies signifi cantly depending on weather conditions and problems with individual suppliers. The Group’s storage facilities in Europe are operated by a wholly-owned subsidiary, Storengy, which owns 13 sites in France (9 .7 bcm), 10 in Germany (1.5 bcm) and one in the UK (under development). GDF SUEZ also holds shares in underground storage companies in Slovakia (2 .1 bcm), the C zech R epublic (7 5 0 mcm) and R omania (3 5 0 mcm). O utside Europe, GDF SUEZ has hol-dings in C anada in two storage plants in Q uebec, with a total storage capacity of 12 0 million m3. GDF SUEZ has shareholdings in various major European transmission networks, including in Germany (1,088 km, operated since 19 76) and A ustria (2 85 km). In the N etherlands, it has been operator of the main Dutch sub-sea gas pipeline, N oordGas-Transport, since 2 000 and of the N ogat pipeline since 2 008. In Slovakia, GDF SUEZ controls the company SP P in a joint venture with E.O N ; SP P ’s transit network has a total annual transmission capacity of around 9 5 bcm. Thanks to its 12 .5 % interest in the M edgaz consortium, the Group is also a stakeholder in the project to develop an 8-bcm gas pipeline between A lgeria and Spain. Lastly, in M exico in 2 001, GDF SUEZ bought the natural gas pipelines M ayacan (1,000 km across the Y ucatan) and Baijo (2 5 0 km north of M exico C ity). 15

0 ye

ars

in w

orld

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NATURAL GAS EXPLORATION AND PRODUCTION

One of the most original aspects

of GDF SUEZ’ gas policy is its shift

towards the upstream segment

of the gas industry, namely

production. Following the closure

of its gasworks in the 1960s,

the Group ceased to be a gas

producer. However, from 1995

onwards, it began looking to invest

in the upstream segment of the oil

and gas industry in the interests

of security of supply; it also sought

to gain more control over prices by

becoming the co-owner

of a number of high-potential

fi elds. [...]

[...] The bulk of the Group’s own resour-ces are located in Europe. GDF SUEZ began its exploration and production activities in Germany in 19 9 4 , fol-lowed by the N orth Sea in 19 9 8 (El-gin-Franklin field), the N etherlands in 2 000 and N orway in 2 001 (Snø hvit and N jord fields, followed by Fram, Gudrun and Gjø a). M ilestones in the Group’s exploration and production activities include the 2 003 takeover of the German onshore assets of P reussag Energie GmbH and the acquisition in 2 008 of a series of oil and gas explo-ration, production and transport assets in the Dutch N orth Sea, which made it the biggest producer in that region.

In recent years, GDF SUEZ has consi-derably diversified the areas in which it carries on its gas exploration and pro-duction activities. It has acquired inte-rests in 18 fields in A lgeria, M auritania, Ivory C oast, Egypt, Libya, Indonesia, the Gulf of M exico and France. Four of these fields are in production. GDF

SUEZ is also present in the United States, Greenland, A zerbaijan, Q atar, A ustralia and K azakhstan.

In Egypt, the Group has interests in three fields, of which one is in produc-tion. In 2 005 , it signed a concession contract with the state-owned company EGA S for offshore exploration of the W est El Burullus block in the N ile Del-ta. A 5 0% stake was subsequently sold to Dana P etroleum. In 2 007 , the Group strengthened its presence in Egypt by acquiring 4 5 % of the licence for A lam El Shawish W est, with 2 0% then being sold back to Shell Egypt. In the same year, a deal was reached with Shell to acquire a 10% stake in its new explora-tion licence for N orth W est Damietta.

In A ustralia, GDF SUEZ acquired a 60% interest in three gas fields (P e-trel, Tem and Frigate) located in the Bonaparte Basin. The acquisition was accompanied by a project to develop a floating gas liquefaction unit, which

will allow GDF SUEZ to enter the A sia-P acific Basin market as an integrated LN G player.

Jean-Fran“ois Cirelli on a visit to Norway in 2006

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In K azakhstan, GDF SUEZ in part-nership with Total, signed a heads of agreement to acquire 2 5 % of the offshore K hvalinskoye exploration licence, loca-ted in the C aspian Sea near the border between R ussia and K azakhstan.In total, GDF SUEZ held 3 62 exploration and/ or production licences in 14 countries, of which it operated 5 7 % itself. O f the 17 exploration wells drilled in 2 010, 9 were successful. A s at 31st December 2 010, the Group had proven and probable reserves of 815 M boe, of which 76% were natural gas and 2 4 % liquid hydrocarbons. In 2 010, the Group’s hydrocarbon production totalled 51.2 M boe, of which three-quarters was natural gas. A lmost half of this gas output was delivered to Group subsidiaries; the rest was sold to third parties, including GasTerra in the N etherlands and E.O N and EGM in Germany. In the exploration and production segment, GDF SUEZ is one of the leading offshore producers in the N e-therlands and is Germany’s fourth-biggest producer, while in N orway the Group ranks among the top 8 production fi eld operators.

Netherlands : offshore drilling rig in the North Sea, 2008

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RENEWABLE ENERGIESR ational use of energy (R UE) has long been a concern

of the GDF SUEZ Group. As early as the interwar

period, the Group’s predecessor companies were

seeking to democratise electricity use by making

it cheaper. They did this by centralising generation

(power plants at this time tended to be dispersed,

leading to energy losses) and by using so-called

‘unavoidable’ (i.e., inherent to a process or product)

or ‘recovered’ energy, e.g., blast-furnace and

coke-oven gas, hydropower, coal-washer waste

and the heat given off by industrial furnaces.

These economic and social considerations (the desire

to generate power more cheaply and the desire

to make electricity universally accessible) were

complemented later on by a commitment to preserve

the environment. [...]

[...] A n awareness of the need to pro-tect the environment began in the 19 60s and reached its first peak in 19 7 1-7 2 , with among other things the publication of the M eadows report – The L imits to

Growth – commissioned by the C lub of R ome. This publication discussed such issues as the foreseeable shortage of fossil fuels. 19 7 2 also saw the launch of the United N ations Environment P ro-gramme (UN EP ) following the United N ations C onference on the H uman En-vironment held in Stockholm in J une of that year. In 19 88, UN EP sponsored the formation of the Intergovernmental P anel on C limate C hange (IP C C ). Ten years later, in 19 9 7 , the K yoto P rotocol was signed by the UN member countries as part of the Framework C onvention on C limate C hange. The P rotocol ente-red into force on 16th February 2 005 .

GDF SUEZ became conscious of these developments very early on. In the early 19 9 0s, it launched its principle of respect for the “ 3 Es” , meaning energy,

4 MWp photovoltaic farm in Saulce-sur-Rhône (France), inaugurated on May 28, 2010

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economic and ecological considera-tions. To its two existing objectives, supplying energy to its customers safely and reliably (principally through diver-sification of fuels and supply sources) and limiting and stabilising the price per kW h in the interests of consumers, the Group therefore added a third: reducing the consumption of primary energy in order to conserve energy re-serves and protect the environment. It worked hard to improve the efficiency of its existing conventional facilities and invested in new, R UE-compliant gene-rating units such as C C GT and coge-neration plants. P roducing steam and power simultaneously, the most sophis-ticated cogeneration units were around 85 % energy-efficient.

The Group’s R UE policy was put into practice in the years 19 9 5 -2 005 when many outdated power stations were decommissioned or retrofitted in the various countries where the Group ope-rated. This choice substantially under-pinned the safety of these installations and as a result, emissions of carbon dioxide (C O

2 ), sulphur dioxide (SO 2 ) and

nitrogen oxide (N O x) were reduced to levels lower than or equal to those pres-cribed by the relevant legislation.

In another noteworthy development, the Group’s international expansion led it to considerably enlarge its hy-droelectric portfolio by acquiring and building hydropower plants in Brazil, C hile, P eru, Laos and the United States. The Group is aware that the construc-tion of dams can affect the lives of communities living in areas earmarked for flooding; it therefore seeks to mini-mise this negative impact by choosing suitable sites and, in some cases, by using ‘ softer’ technologies such as run-of-the-river dams. M indful of its social responsibilities, it works with local authorities and communities to resettle displaced populations near to their for-mer villages and pays them compensa-tion for the damage incurred. This can amount to as much as 15 % of its total investment in the project.

A side from hydropower, the Group has shown an interest in virtually all forms of renewable energy. In 19 9 2 , it bought a

Idanha (Portugal): map showing the dam and irrigated land in 1948

Monte Redondo (Chile): wind farm, inaugurated in 2009

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number of biomass-fired power stations in the United States. Since then, the amount of power generated from bio-mass has risen considerably, thanks to co-fired power plants or biomass waste compression stations. The Group has become the European leader here, with major plants in Belgium, P oland and the N etherlands. In Brazil, the Group recently began studying the possibility of exploiting wave energy by building a wave power plant on the breakwaters of P orto de P ecém, in the state of C eará . In Germany, GDF SUEZ has just star ted supplying Berlin with biogas produced by methanising plant matter from local agriculture. M oreover, the Group has shown itself to be highly innovative, focusing on a range of areas including natural gas for vehicles and micro-thermal installation combined with gas supply.H owever, it is in the field of wind energy that the Group’s track record

is most impressive. In 2 002 , GDF SUEZ and the Spanish group Gamesa, the world’s third largest manufacturer of wind turbines and an operator in Spain, signed an agreement to develop four wind farms in P ortugal, with a total capacity of 2 14 M W . These farms, now owned by the Group, have been in ope ration since 2 008. W ith its windy climate, the Iberian P eninsula is one of Europe’s most favourable regions for wind power development. In 2 003 , the V ergã o 13 -M W farm in P ortugal was the first wind farm commissioned by Generg, a Group subsidiary with 11 farms in operation (4 3 6 M W installed capacity).

In France at the end of 2 010, the Group, as the leading producer of wind ener-gy, was already generating an output of 9 2 2 M W , with facilities capable of generating another 15 0 M W under construction.

Sao Salvador (Brazil): forum for negotiations with a local community before starting work on a hydroelectric dam, 2007

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RENE

WAB

LE E

NERG

IES

In C anada, GDF SUEZ acquired two wind farms under construction on the east coast from the V entus Group in 2 007 : W est C ape (9 9 M W ) and N orway (9 M W ). These were connected to the grid in 2 009 . In the same year, a third wind farm (9 9 M W ) was commissioned in N ew Brunswick.

In C hile, GDF SUEZ inaugurated the country’s largest wind farm (3 8 M W ) in O ctober 2 009 . The environmental benefits were substantial, with 5 4 ,000 tonnes of C O 2 eliminated. This allowed C hile to save on carbon credits.

C learly, therefore, GDF SUEZ has striven to develop an energy mix which is as environmentally friendly as pos-sible. It was in keeping with this ethos that it acquired Econergy International in 2 008. The company, founded in 19 9 4 ,

specialised in renewable energies and operated a total installed capacity of 2 66 M W in Latin A merica (Brazil, Boli-via, C osta R ica, C hile and M exico). Its generation facilities comprised small hydro units, wind farms and coalbed methane plants. In Brazil, Econergy opened a first 2 6-M W wind farm in Sep-tember 2 008 in the state of C eará , in the northeast of the country.

P ollutant emission standards are beco-ming increasingly stringent. In Europe, the C O

2 emissions trading scheme began operating at the start of 2 005 . W ith almost 5 0 power stations in eight coun-tries, the Group had quotas totalling 4 0 million tonnes of C O

2 . A lthough some transfers between production facilities have been made via P owernext C arbon, the Group mainly engages in internal operations based on the quotas it holds.

Prince Edward Island (Canada): convoy of rotor blades on its way to the Ventus-Norway wind farm

Fafe (Portugal): wind farm bought by GDF SUEZ in 2005

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ENERGY TRADINGFor a long time, European energy

producers traded energy via

a cooperative body called

the UCPTE (Union for the Co-

ordination of Production and

Transmission of Electricity).

However, under the monopolistic

system in force in the 1980s, these

transactions were only for small

volumes since individual countries

tried to ensure that they

had enough resources of their

own. The high-voltage connec-

tions between Western European

countries were important mainly

as a backup mechanism to safe-

guard continuity of service. [...]

[...] In 19 9 4 -9 5 , GDF SUEZ discovered a whole new dimension to energy trading, as practised in the United States. It gained its first insights during contacts with the US group En ron. It was when it acquired the US electricity producer C R SS in M ay 19 9 5 that GDF SUEZ truly discovered the emerging energy-trading sector. C R SS, together with some 2 5 other US firms, had entered the energy-trading business in 19 9 3 in the wake of market deregulation and the scheduled end of long-term monopolies. Deregulation of the sector meant increased risks for operators and the best way of countering that was to be present at the heart of the market. C ombining trading with gene-ration and distribution activities was a response to the erosion of profit mar-

Houston (USA) : trading room in 1997

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on a highly flexible market, with the aim of becoming a multi-fuel supplier to large industrial consumers and other public utilities.

GDF SUEZ therefore became the first European group to take this step in the US market, where some 10% of total electricity consumption was being traded at this time. This allowed the Group to acquire experience in a new area of business before the rest of Eu-rope discovered it. A year after it was set up, the Group’s trading subsidiary had become the 15 th largest energy trader in the United States.

H owever, the Group’s interest in tra-ding was not confined to N orth A meri-ca. It started trading on the A rgentine

market in 19 9 6 and the Thai market a year later. In the same year (19 9 7 ), looking ahead to the opening-up of the European energy market, GDF SUEZ turned its attention to the Scandina-vian power exchange, N ord P ool, es-tablished in 19 9 3 , which at that time comprised N orway and Sweden but which would soon expand to include Finland and Denmark. If GDF SUEZ wanted to be a driver of this change in its home market, it would be wise to acquire grounding in the business in all markets where power exchanges were opening. In A pril 19 9 8, therefore, it reached a deal with the shareholders of a small Scandinavian trading compa-ny called O slo K raft. GDF SUEZ took over the company and reorganised it un-der the name Scandic Energy. In J une,

the Group established two teams, one in O slo specialising in short-term posi-tions, the other in M almö dealing with medium- and long-term positions.

In December 19 9 8, GDF SUEZ also became the first foreign operator to be admitted to the Spanish power ex-change. A t around the same time, the Group established a trading depart-ment in Brussels and developed energy trading activities in Germany. In M ay 19 9 9 , it was also one of the three main founders of the A msterdam-based A P X exchange, whose market covered the N etherlands and western Germany. In J uly 2 001, a power exchange called P owernext was established in France with a capital of g10 million. The Group owned about 10% of the venture.

gins in an open market. By entering this business, electricity producers were seeking to maximise the margins bet-ween cost price and sale price of the primary fuels and energies supplied. From now on, the megawatt-hour would be considered as a raw material just like crude oil and foodstuffs. Its prices were published daily in the financial press, and varied according to the sup-ply area, weather conditions and avai-labilities at each type of power station.

In December 19 9 6, GDF SUEZ spun off its US trading business into a H ouston-based subsidiary. From the outset, that company had offices in Boston and M ontreal and operated in two regional US systems. Its 3 0 or so staff worked day-in day-out to establish positions

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Paris (France): trading room

In 2 001, GDF SUEZ set up Gaselys to provide its customers with a risk ma-nagement service for the energy sec-tor, through intervention in the natural gas, oil, electricity and carbon dioxide markets.Deregulation of the European market continued apace in the first years of the 2 1st century. In various countries, vir-tual electricity generation capacity was

auctioned by the historic operators in order to enhance competition. Such auctions were also a means for GDF SUEZ to expand its presence abroad. In late 2 008, for example, the Group bought 1,100 M W of virtual genera-tion capacity from the Italian company EN I.In 2 005 , a spot market for electricity, Belpex, was established in Belgium

with the involvement of the French and Dutch power exchanges P owernext and A P X . A round the same time, cross-border energy movements benefited from an upgrade of the lines connec-ting France and Belgium. In late 2 006, the three exchanges - Belpex, A P X and P owernext – were coupled, resulting in increasing price convergence on the so-called ‘ European copper plate’

spanning the markets of France, Be-nelux and western Germany. During 2 007 , prices on the three exchanges were identical two-thirds of the time. Since then, there has been a trend towards integration of European ex-changes, as evidenced by the merger between the German EEX and the French P owernext in 2 008, that bet-ween the Dutch A P X and the Belgian

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Endex in 2 009 , and the tie-up between A P X -Endex and Belpex in 2 010.

In 2 007 , the Group implemented a new development plan for trading activities in Europe with the aim of gaining (or strengthening) footholds in markets where it had no generation facilities, such as the United K ingdom, Scan-dinavia and some Eastern European countries. It also aimed to significantly increase the volume of Group transac-tions in a market whose value was set to grow by 5 0% in five years as well as to reinforce the Group’s presence in the coal, oil and C O

2 emission certifi-cate markets, among others.

O ver time, the GDF SUEZ Group has built up considerable expertise in tra-ding. Because weather conditions have a major day-to-day impact on the ener-gy market, GDF SUEZ works closely

with experienced meteorologists. H eat-waves, like the one in summer 2 006, have been known to trigger Europe-wide power shortages due to heavy use of air conditioning. W hen hurri-canes K atrina and R ita devastated coastal areas of the Gulf of M exico in 2 005 , gas and electricity prices rose considerably and the Group’s US trading arm saw its revenues increase. A s for wind and hydro power, they are naturally dependent on fluctuations in wind and rainfall. M any dam re-servoirs fill up when the snow melts, and the resulting abundance of cheap energy has an impact on the spring market.

W ith the full takeover of Gaselys assets in late 2 010, GDF SUEZ’ goal is to lead the European trading market with a presence throughout the entire energy chain.

ENERGY TRADINGBrussels (Belgium): trading room in 2009

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[...] N ational P ower, the forerunner of today’s International P ower, inherited 4 6% of the C EGB’s generation capa-city, i.e., 2 9 GW generated by around 4 0 power stations, most of them run-ning on fossil fuels (gas, oil and coal). A ll of these plants had been built in the 19 60s and 19 7 0s.

In 19 9 2 , N ational P ower began to invest in privatisation programmes overseas, capitalising on the skills, knowledge and financial strength acquired at the time of its own privatisation in the UK .

International investment quickly became a priority. In the space of a decade, the company built up a flourishing business spanning N orth A merica, Europe, the M iddle East, A ustralia and A sia.

The N ational P ower and GDF SUEZ groups then developed along similar lines. Both adapted very quickly to the new competitive environment and in 19 9 3 -9 4 launched themselves on the international markets to take advan-tage of privatisation programmes mush-rooming worldwide. Like GDF SUEZ,

In the late 1980s, the Central

Electricity Generating Board (CEGB)

had sole responsibility for electricity

generation and distribution in

the United Kingdom. However, that

was about to change following a

decision by the government

of Prime Minister Margaret

Thatcher to privatise the energy

sector. In 1990, the CEGB was split

into three large generation

companies (N ational Power,

Powergen and N uclear Electric)

and one high-voltage electricity

transmission company

(N ational Grid). [...]

N ational P ower relied heavily on ther-mal technology to drive its expansion. Inevitably, the two companies found themselves competing in some mar-kets, most notably in P ortugal but also in P akistan and A ustralia, where they sometimes bid against one another at auctions.

In 19 9 9 , the success of N ational P ower’s teams in world markets prompted its management to propose splitting up the British company. In O ctober 2 000, the company’s UK electricity busi-

INTERNATIONAL POWER HOW GDF SUEZ DOUBLED ITS

INTERNATIONAL PRESENCE

Massachusetts (USA): CCGT at Milford

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ness was spun off into a new company, which was sold to R W E in 2 001. N atio-nal P ower was renamed International P ower and floated on the London Stock Exchange. Following the spin-off, International P ower had power stations, operatio-nal and under construction, totalling 10,85 0 M W , as well as strong positions on the trading market. The company was particularly well established in the high-growth markets of the United States (4 ,4 15 M W ), the western M edi-terranean and Europe (2 ,64 9 M W ),

A ustralia (1,9 9 6 M W ), and A sia and the eastern M editerranean (1,7 9 0 M W ). In A sia, the Group had a strong footing in P akistan.

O ver the past decade, International P ower has continued to make progress in world markets. 2 004 was a particu-larly important year in this respect, with the acquisition of the electricity assets of Edison M ission Energy (EM E) in partnership with M itsui. EM E’s port-folio totalled 3 ,2 02 M W , with assets on four continents: N orth A merica, Europe,

A sia and A ustralia. The company has also established its credentials on the independent electricity generation and water desalination market in the M iddle East.

Today, the common experience of GDF SUEZ and International P ower will facilitate the integration of their teams worldwide. Both groups are also well-versed in devising original solutions to meet the requirements of a wide range of customers, whether it be in emerging economies, where

energy demand is burgeoning, or in mature markets.

By joining forces with International P ower, GDF SUEZ is breaking new ground in the international arena. In-ternational P ower’s electricity genera-tion capacity, set to become the focus of the GDF SUEZ Group’s generation business, will increase from 3 4 to 66 GW after the merger (not including 2 2 GW under construction). This will make the Group the largest private operator in the world.

Thailand: cogeneration plant

Victoria (Australia): thermal power plant at Hazelwood

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R ené Brion and J L M oreau: p. 12 , 15 , 16, 17 / 2 , 19 , 2 5 , 4 9 / 2 , 5 6, 7 9 , 84 / 3 , 9 9GDF SUEZ / O livier Douliery / A BA C A P R ESS: p. 2International P ower : pp. 3 , 9 2 , 9 3 , 114 , 115GDF SUEZ / M EY SSO N N IER A N TO IN E: p. 4GDF SUEZ / David P las photography: p. 5GDF SUEZ / K ofl er C airo: p. 2 0Ullstein Bild / R oger-V iollet: p. 2 2R oger V iollet: pp. 2 4 ; 5 5P eter J ordan / Time Life P ictures / Getty Images: p. 2 9C orbis (J acques Delors): p. 3 4K eystone / Getty Images (Lech W alesa): p. 5 0Electrabel / DA UW E Sophie: p. 51/ 1, p. 5 3Electrabel / M O SSIA T Didier: p. 51/ 2Electrabel / BEC K ER & BR EDEL: p. 5 2Electrabel / V A N DE BIEZEN Bram: p. 5 4 GDF SUEZ / Studio Fotografi co Filippi: p. 5 9GDF SUEZ / O P DE BEEC K Gerrit: p. 62 / 3 , 68GDF SUEZ / P IN O O C C A M P O C laudio: p. 63GDF SUEZ / A BA C A P R ESS / BIZZA R I GIUSEP P E: p. 7 0GDF SUEZ: p. 7 3GDF SUEZ / A BA C A P R ESS / FR IEDM A N R ick: p. 76GDF SUEZ / M A R TIN EZ FLO R ES J orge: p. 7 7, p. 7 8GDF SUEZ / A BA C A P R ESS / FER N A N DES H ER BER T: p. 88GDF SUEZ / A BA C A P R ESS / A LSA GA FF H ELM Y : p. 9 0Electrabel / P hoto Locus P romocité : p. 9 4Electrabel / BEC K ER S R af: pp. 9 6 / 1; 9 7 GDF SUEZ / IN TER LIN K S IM A GE / M O N LA U Laurent: pp. 101; 102 GDF SUEZ / A BA C A P R ESS / GO R A SSIN I Giancarlo: p. 103GDF SUEZ / H ELSLY C EDR IC : p. 104GDF SUEZ / IN TER LIN K S IM A GE / M A ITR E P ascal: p. 105GDF SUEZ / R O BER T J UA N : p. 106GDF SUEZ / P IER O T A lain: p. 109GDF SUEZ / IN TER LIN K S IM A GE / M O N LA U LA UR EN T: p. 112GDF SUEZ / DE BA R SE R udy: p. 9 6/ 2 , p. 113 GDF SUEZ: C overGasunie FotoServices: Back cover GDF SUEZ / M ehdi Benyezzar (Illustrations): pp. 8; 9 ; 4 4 ; 4 5

Unless otherwise mentioned, the photographs published in this document

are the property of the GDF SUEZ Group and their respective authors.

No copies, even partial, are authorised without the written permission of

the GDF SUEZ Group. The publisher has made all possible efforts to apply

statutory provisions on copyright, although was not able to trace the defi nite

source of all documents. Anyone wishing to assert their legal rights

is invited to contact the publisher.116

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In this publication, the term “GD F S U EZ ” is used to refer not only to the current Group but also

to all of its predecessor companies, in particular: C ompagnie pour l’É clairage et le C hauffage par

le Gaz, C ompagnie Financiè re de Suez, C ompagnie M utuelle de Tramways, C ompagnie Universelle

du C anal M aritime de Suez, É lectricité et Traction, Electrobel, GDF (Gaz de France), P owerfi n,

Socié té des C hemins de Fer É conomiques, Socié té Générale Belge d’Entreprises É lectriques,

Socié té Lyonnaise des Eaux et de l’É clairage (later Lyonnaise des Eaux), Sofi na (recovery of design

and engineering business goodwill), Suez-Lyonnaise des Eaux, Traction et É lectricité , Tractebel,

Tractionel, and Electrabel as well as any subsidiaries of these companies and other companies

that they may have acquired over the years.

Documentary research made by R”n” Brion and Jean-Louis Moreau, of AVAE (Association pour la Valorisation des Archives d’Entreprises).

PHILIPPE CHAUVEAU

35, quai André Citroën – 75015 Paris – France

Phone: +33 (0)1 42 73 60 60 – Fax: +33 (0)1 42 73 60 70

Graphic design and page layout: Daphnée Mendez

Editorial coordinator: Philippe Morineau

[email protected] – www.editionspc.com

Printed at Saint-Jean de Braye, France at the print works of the Imprimerie

Nouvelle, Groupe Jouve

This book was written based on information from before June 1, 2010.

PEFC/10-31-1381

Director of the Publication : Valérie Bernis

Coordination of the Publication : Guy Dellicour, Kristof Scheldeman

GDF SUEZ (G06B02)

Simon Bolivar Avenue 34 - 1000 Bruxelles - Belgium

Tel : 0032 2 510 79 26

www.gdfsuez.com

ECO-RESPONSIBLE PRINTING

This book has been printed by Imprimerie Nouvelle, 93, avenue Denis Papin,

45800 Saint-Jean-de-Braye which holds usage rights number registered under

PEFC/10-31-1381. With the exception of the recycled paper of the cover,

the papers used are PEFC certifi ed (BV-CoC-1778657).

PEFC CERTIFICATION

From forest to printed matter – a chain of checks for certifi cated commitment.

The international PEFC certifi cation attests that the fi bres used in the manu-

facturing of the papers come from timber thinning in sustainably-managed

forests (economically viable, respectful of the environment and benefi cial to

local populations). To this day, only about 100 printers out of a total of 6,000 in

France have obtained this certifi cation.

INKS

The offset inks used for this book are formulated using renewable raw materials

of vegetable origin. The process-printing range does not contain in its mixes any

components that represent a health hazard. The use of inks in cartridges means

less weight of waste to be treated using specially adapted procedures to limit

their impact on the environment.

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