Bankinter | In 2013, Naturgy signed a gas supply contract with the Russian company Yamal. Purchases began five years later at a rate of 3.4 billion cubic metres per year, which, at current prices, amounts to around €1 billion. This agreement provides approximately 16% of Naturgy’s total gas supply
The contract has a 20-year term, until 2038, but will have to end earlier due to the EU ban on Russian gas imports. In an initiative presented this summer, the EC has banned Russian gas imports by 2027, even if they are linked to long-term contracts. The agreement with Yamal has take-or-pay clauses covering the entire supply period, under which Naturgy must pay annual amounts regardless of whether it takes the agreed gas or not. This is a very common clause in this type of long-term supply contract and makes them particularly sensitive, as the company may end up without gas and without money if it is prevented from importing it. The Council of the EU is close to adopting a text that will exempt companies that breach their agreements with Russia from liability. The proposal will be presented at the Energy Summit on 20 October.
Analysis team’s view: Good news. The EU Council seems willing to offer the necessary safeguards so that Naturgy and other European groups can comply without fear of reprisals with the obligation imposed on them by Brussels to break Russian contracts. The recent placement of 3.5% of treasury stock at a discount of around 4% earlier this week provides an attractive entry level. At current market prices, Naturgy is trading at a 2025 P/E ratio of 12.3x and a dividend yield of 6.5%.
