French energy group GDF Suez announced on August 10 an alliance with Chinese sovereign wealth fund CIC, which will invest 2.9 billion euros to help the company boost expansion in Asia-Pacific and China. GDF Suez confirmed the deal as it reported a 7.9 percent rise in sales to 45.68 billion euros in the first-half of the year and an 8.2 percent increase in operating profit to 8.9 billion.
A 23 percent drop in net profits was attributed to strong earnings in 2010 based on exceptional elements. The deal will see China Investment Corporation invest 2.3 billion euros in exchange for a 30-percent stake in the French company's exploration and production arm.
CIC will also take a 10-percent stake in a liquefaction plant in Trinidad and Tobago for 600 million euros, GDF Suez said in a statement. The energy giant said it was in "advanced talks" with CIC to complete the co-operation agreement which although centred on Asia-Pacific will extend across "multiple businesses and regions."
"This partnership ... will allow us to step up our development in Asia and China, regions which present the strongest rate of development and the greatest energy need in the coming years," GDF Suez chairman and chief executive Gerard Mestrallet said during a telephone conference. The head of the group, which employs 11,000 in Asia-Pacific, said the agreement would "also allow us to establish partnerships with other Chinese businesses." China, which mainly relies on coal energy, is beginning to turn towards gas and GDF Suez, whose production is currently anchored in the North Sea and the Maghreb, has major projects in the Asia-Pacific and Australia and in Indonesia in particular.
CIC was established in 2007 to invest some of China's huge foreign exchange reserves on the global financial markets. Announcing its first-half results on August 10, GDF Suez said it would meet its annual operating profit (EBITDA) target of between 17 and 17.5 billion euros, excluding the effects of bad weather at the start of the year.
"The unfavourable weather impact on the Group's domestic markets at the end of June was estimated at 465 million euros", the company said. The company also warned that any rate freeze in France would adversely affect revenue for the rest of the year.