The French company Total has burst in to the race launched in Spain by the oil companies to offer electricity and gas services to all kinds of clients, in direct competition with the big electricity and gas companies like Endesa, Iberdrola and Naturgy. Last week, the company has received a license to market natural gas, to go with the license it already has to offer electricity services.
In this way a new competitor from the oil sector has been added to the Spanish electricity sector. First there were CEPSA and Galp. On 28 June Repsol joined in (1.65 billion MW with the purchase of assets in Viesgo). Now Total is the latest to arrive.
There will be zero impact on Total’s financial results in the short or medium term. It is reasonable that the next step will be to enter the generation of electricity (vertical integration) through the purchase of combined cycle generators. This is the same strategy as Repsol is implementing. The final long term outcome will be to increase pressure on the electricity companies, and the winner will be the consumer. The increase in competition will put downward pressure on prices.
