Good morning, ladies and gentlemen. Welcome to the presentation of Enagás results for the first quarter of 2022. These results were released this morning before the opening of the markets and are available as usual at our website. Mr. Arturo Gonzalo, CEO of Enagás, will lead this conference. We expect this presentation to last about a half an hour, and then we will have a Q&A session that we will try to answer as fully as possible. Thank you for your attention. I will now give the floor to Mr. Arturo Gonzalo.
Good morning, ladies and gentlemen, and thank you very much for attending. I welcome you to the first quarter of 2022 results presentation in which I am accompanied by the following people: Secretary General, Rafael Piqueras, the Chief Financial Officer, Borja García-Alarcón, the Directors of the Investor Relations team, Antonio Velázquez and César García, Director General of Communication and Public Affairs, Felisa Martín, and the Legal and Regulatory Director, Diego Trillo. On the 22nd of February, coinciding with my joining Enagás, we presented the company's annual results. I would also like to remind you that on the 31st of March, we held our annual general meeting of shareholders, where all the resolutions presented were adopted by a vast majority.
Two days after our February results presentation, Russia invaded Ukraine, and this has led to a war with a brutal impact at all levels, which has shaken up the global scenario and also the European energy strategy. Only two months have gone by since then, and Europe has reacted by reordering its priorities to secure energy supply while also accelerating decarbonization targets. Enagás, as a European TSO, is working along the same lines as Europe, together with the Spanish government, to make a decisive contribution to these two priorities. The new context in which the company operates is evolving at breakneck speed. Since the presentation of our annual results in February, the European Commission has reformulated its roadmap, resulting in two key milestones in March, the REPowerEU plan and the conclusions of the European Council held that month.
REPowerEU is a turning point in the energy strategy of Europe, which can be viewed as the first outline of a common energy policy with one main objective, to increase the EU's energy security by boosting decarbonization and drastically reducing dependence on Russian gas. In addition to savings and efficiency initiatives, the European strategy is based on five key pillars, storage, interconnections, biomethane, renewable hydrogen, and partnerships with neighboring countries. The new European scenario reaffirms the essential role of gas infrastructures in securing supply and also the role that they will continue to play in the future in achieving the decarbonization objectives of Europe. This plan has important implications for the Spanish gas system and for Enagás. Firstly, we are very well positioned in this new context, in which the idea of a cooperative management of infrastructures is being reinforced in the gas sector.
Secondly, we are a key country for strengthening the resilience of the European energy system, essentially for two reasons. Firstly, because of our essential role in the diversification of gas supply, thanks to our regasification plants, which can contribute to replacing gas from Russia. Secondly, because of the great potential of Spain for the accelerated deployment of renewable hydrogen. This means, among other things, intensifying the development of the hydrogen network, both in the domestic market and also for exports to the rest of Europe through infrastructures such as the H2 or Hydrogen Southwest Corridor. In this respect, collaboration between neighboring countries and the improvement of interconnections between member states play a central role in REPowerEU.
Enagás is working in collaboration with the Spanish government to analyze new connections, both with France and Portugal, to strengthen the security of supply of natural gas today and hydrogen in the medium term. In addition, the European Hydrogen Backbone Initiative, in which we actively participate with other European TSOs in response to the plan launched by the European Union, has brought forward its vision to 2030, the year in which it proposes five large pan-European corridors for the supply and import of hydrogen. In short, REPowerEU marks the way forward. With its definitive approval that is expected at the European Council in May, the European Union will be sending a clear signal that we are looking at a new paradigm for energy in Europe.
Given that our environment has changed substantially, in the coming months before the summer, if the European framework is sufficiently well-defined, we will present an update of our strategy, which will reflect the company's adaptation to this new European context. In this strategy, we will be specific. We will share with you our investment plan for coming years, which will be linked to this double objective to contribute to the security of supply in Spain and Europe, while also contributing to the decarbonization process. These are two sides of the same coin and the essence of the purpose of our company. Therefore, 2022 is a year of transition for Enagás, in which we are going to adapt our strategy more than ever with a focus on Europe. We have a very solid foundation for this transformation, and we are well prepared to bring all our skills and experience.
Having contextualized the framework in which we are working, I shall now look at the main milestones for the first quarter. In this first quarter of 2022, we have continued to work very actively to secure optimum operation and supply of gas in Spain. I shall give you some data in this regard. The technical and commercial availability of gas infrastructures was 100%. Tanker offloading has increased by 69% compared to the first quarter of 2021. During the winter period, which runs from November to March, 134 tankers were offloaded compared to 86 last winter. Likewise, tanker loading was 170% higher. 81% more LNG has been re-gasified than in the first quarter of 2021. Storage began the winter at 82% full, two points above the target set by Europe for next winter.
The net balance of gas exports to Europe through interconnections with France was 135% higher than in the first quarter of 2021. It's significant that in recent weeks, these interconnections have been operating at full capacity. In the complex current context, and thanks to our flexibility and the measures we have taken to anticipate the economic situation through our infrastructures, we have contributed to Spain continuing to be a European benchmark in terms of diversification of supply. In this first quarter, we have received gas from nine different sources. The United States has become our main supplier with 37% of the total, followed by Algeria with 26%, and Nigeria with 23%. LNG has accounted for 70% of Spain's gas supply, compared to 48% a year ago.
This has obviously seen the impact of the ceasing of activity in the Maghreb-Europe Pipeline. We have also responded to the very positive trend in gas demand, which has grown by 11.5% compared to the first quarter of 2021. This increase is largely due to an increase of 118.1% in the demand for electricity generation. As I said at the beginning, 2022 is a transition year in which we will update our future strategy. At the same time, at the end of the first quarter, we are in a position to be able to confirm the targets we set for the year. I would like to comment on the results for the first three months of the year. We have achieved net income of EUR 69.3 million.
This figure is in line with our objective for the expected results by the end of the year. We have increased our operating cash flow by 16.6% to EUR 225.6 million. We have reduced our debt to EUR 4.143 billion and improved the financial cost, which has fallen to 1.6%. We have an excellent liquidity position, which totaled EUR 3.436 billion on the 31st of March. With regard to our affiliates, they have performed well, contributing EUR 44.2 million to Enagás. It should be noted that the first quarter of last year included a positive non-recurring result for Tallgrass. Our affiliates continue to contribute to the security of supply and the decarbonization of the countries in which we are present.
With regards to their activities, I would like to just comment on some significant milestones in this first quarter. In line with our asset rotation plan announced in our strategic plan, we have reached an agreement with EIG and Fluxys for the sale of our stake in GNL Quintero in Chile for $661 million. In Europe, the Trans Adriatic Pipeline continues to make an essential contribution to the security and safety of supply, reducing dependence on Russian gas, especially in Italy and Greece. With utilization rate of 91%, this pipeline delivered 2.4 BCMs of gas to Europe in the first quarter. We are working on different alternatives to boost its expansion, and in the current context, the planned date for the binding phase of the market test could be brought forward to 2022 if the market so requires.
In Greece, the demand for gas has increased by 6.18%, and our affiliate, DESFA, is working with the Hellenic government to ensure the security of gas supply, analyzing a possible expansion of the storage capacity of the Revithoussa plant. In the U.S., where we are present through Tallgrass Energy, we must highlight the good performance of the REX Pipeline, with higher than expected order intake in both the short and long term for all its services. As I've said, these first quarter results are in line with the achievement of our 2022 targets. With regards to the asset rotation plan that I have mentioned, we are awaiting authorization and the definitive finalization of the agreement to sell the 50% stake in the Morelos gas pipeline, which would generate a capital gain of approximately EUR 32 million.
The agreement for the entry of Clean H2 Infra Fund with a 30% stake in Enagás Renovable, which will generate a net capital gain of EUR 46.9 million. For the sale of 45.4% of GNL Quintero, we expect a cash inflow of EUR 565 million and net capital gains of approximately EUR 122 million. With the closing of these deals, the expected net profit by the end of 2022 would exceed the EUR 430 million that we announced at the beginning of the year. Excluding extraordinary capital gains, net profit would amount to EUR 360 million. For the second year in a row, thanks to solid cash generation, we will reduce debt.
Without doubt, the cash flows generated will allow us to maintain our commitment to a dividend of EUR 1.72 per share in 2022. Regarding our ESG commitment, I would like to highlight firstly, that during this quarter, we have published our annual report 2021, which complies with the most demanding standards of transparency, as you can see in the presentation. Secondly, we maintain our leading position in the main sustainability indices, including the Dow Jones Sustainability Index or the CDP Climate Change ranking, in which we have obtained the highest rating for the third consecutive year. Lastly, with regards to the environmental aspect of ESG, we continue to strengthen our commitment to decarbonization through the projects that we are promoting in Enagás Renovable, which has had notable milestones in the first quarter.
At the start of January, we joined SHYNE, the largest renewable hydrogen consortium in Spain, led by Repsol. In February, we joined the Project Catalina, another consortium to produce hydrogen on a large scale in Spain, together with Copenhagen Infrastructure Partners, Naturgy, Fertiberia, and Vestas. Also in February, we announced our participation in HyDeal Spain, which is a platform for the supply of renewable hydrogen for the production of green steel, green ammonia, green fertilizers, and other low-carbon industrial products together with ArcelorMittal, Fertiberia, and DH2. In March, the Vice President, Teresa Ribera inaugurated the first industrial renewable hydrogen plant in Spain in Mallorca as part of the Power to Green Hydrogen Mallorca project, which we lead together with ACCIONA and in which IDAE and Cemex collaborate.
These are more than 50 renewable gas projects in our portfolio, which are fully in line with the roadmap of the Ministry for Ecological Transition and the Demographic Challenge, which last January announced the first four calls for proposals for the PERTE Strategic Hydrogen projects and published the Biogas Roadmap in March. I shall end with five conclusions. Our vision is more than ever Spanish and European, focusing on the security of supply and decarbonization. For this reason, in the coming months, we will present a strategic update adapting to the new energy paradigm in Europe. In this scenario, there are key countries for our supplies, such as United States, where we are present through our affiliate, Tallgrass, and these countries play an enhanced role. 2022 is a pivotal year for the industry in Spain and in Europe, and is a transition year for Enagás.
Our company is a key player in many of the challenges that we are facing, and we'll continue to work intensely to make the most of the new opportunities that are appearing. Today, we are presenting first quarter results, which are in line with our budget, and which are on track in order to achieve the targets set out for 2022. We shall, of course, continue to make significant progress in all areas of our business, from the role of our affiliates to the development of our asset rotation process, not to mention our drive for decarbonization through renewable gases. Lastly, the company has a robust balance sheet and the technical and financial capacity that it requires to be able to face the investment plans for this new investment cycle, which are arising from the new European framework and the process of decarbonization.
Thank you very much, and we are available for any questions you may have.
If you wish to make a question, please press star button followed by one on your phone. If you want to take your question away, please press star button followed by two. When you are ready to ask your question, please make sure your phone is not silenced. First question comes from Alberto Gandolfi from Goldman Sachs. Please, Alberto, you've got the floor.
Hello, good morning, and thank you for answering my questions. I want to welcome Mr. Arturo Gonzalo. I've got three questions, please. First, on inflation. Please could you elaborate a bit on the extra costs in terms of OpEx and when those could be recovered? If you could also update your extraordinary costs and, well, if these costs are higher than expected.
If you could also mention briefly how it's going to work with CapEx, so you're not investing too much, but you will start investing more. If I'm not wrong, standard costs are adjusted every six years, right? With high single digit inflation in terms of commodities. It's a double digit growth. How can we feel safe, and know that investments are going to be within reality, precise cost. And second question, just for us to understand this guidance with asset sales. And you're talking about EUR 360 million net and over EUR 340 million, but in terms of capital gains.
But you were thinking about EUR 175 million of capital gains, right? So I don't really understand it fits EUR 360+ million or if it's EUR 340 million or a bit about EUR 340 million less, because EUR 360+ million gains would give a much higher figure, above EUR 500 million, so around EUR 530 million. And when you talk about asset sales, if you could please mention which is the dilution in terms of net benefit you expect for 2023 out of those sales? And third question, I know you're going to do a strategic update, so you cannot talk about capital allocation or investments right now. But can you tell us when CapEx could start increasing? And I guess there are feasibility studies and permits and authorizations you need to get, so is it reasonable to expect an increase of investments before 2024? And will you be able to maintain that dividend if CapEx increases?
Thank you.
Thank you, Alberto. Thank you for congratulating us. I will try to answer all of your questions. As far as inflation is concerned, our retribution model does. Well, it's not indexed to inflation as a whole, but we must remember that there's a very significant part of our operational costs. It has to do with audited expenses that are audited with a pass-through and include the effect of inflation fully. That's the case of power for electricity and CO2. But it's also true that there's part of our cost that does not include that cost. For 2022, that accounts for about EUR 5.5 million of actual cost. We believe it's an important figure, but we also believe that the company can probably balance out with other initiatives.
While we are focused on saving costs and efficiency, the effect of inflation would be taken into account when we carry out the calculations of retributions in the next period. If inflation have an impact on capital costs, that will have an impact on the average cost of WACC. There's no concern on CapEx, because CapEx on regulated assets and generation linked to the generation they generate, so we're not concerned about it. In terms of earnings before taxes, in early this year, we had set an objective of having above EUR 430 million, and today we want to keep the ordinary benefit, which is EUR 360 million.
If we are able to close the three transactions that are pending to be closed, the Morelos pipeline and the deal with Enagás Renovable, and selling GNL Quintero's plant, we will go to an EBITDA figure of above EUR 500 million. What I wanted to highlight is that with these transactions that haven't been closed, we are sure we're going to go beyond our target, which was EUR 430 million. In terms of the effect of asset sales and the contribution here for 2022, they will probably account for EUR 40 million, that's Quintero, and EUR 5 million from Morelos pipeline. In terms of when CapEx will start increasing, we'll probably shed some more light about it in the strategic update we will present.
If all the calendars are right, kind of all the calendars from the European Union are right, we'll be doing that by the end of June. I prefer to wait till that moment, also we can probably explain these things more clearly. I am able to say that the flows we have taken into account in the company today are fully compatible with the dividend policy we announced in the month of February.
Gracias.
Thank you. Next question comes from Javier Suarez from Mediobanca. Please, Javier, you've got the floor.
Yes. Good morning, everybody, and want to congratulate the new CEO. As far as your new business plan, of course, I'm sure there'll be some updates before the summer, but I would like to ask you if it would be right to see them in the following way. As a consequence of this new paradigm you were mentioning, the company could be facing a different financial structure in which we would have more CapEx, and we'll be focusing less in international investments and a more standardized dividend payment structure. Is that reasonable to assume? How does the new CEO see the company in this new context?
I found it interesting that in your speech you mentioned that the company's going to be more European than ever. Of course, there's a geopolitical strain that we can all see and, you know, a very important possible role for gas infrastructures in Spain. What's the role of Tallgrass here, and how do you see Tallgrass in a context in which the company might have a more European strategy looking forward? Third question's about the situation in Peru and your conversation with regulators. Could you please update us on the evolution of that situation in TgP and CSP? In your conversation with the regulators, if this means more for Spain. Actually, if you think we...
You're going to be able to open a conversation with the regulators and Spanish government on the need to carry out these adjustments due to inflation. Thank you.
Thank you, Javier, and thank you for congratulating as well. As far as the new business plan and, well, in the strategic update, we'll elaborate more about it, but I can give you two, share with you two main ideas. First, I believe that the present environment will open the possibility of a new investing cycle.
We must not forget that not only are we facing the scenario caused by the proposal expressed by the European Union to reduce and eliminate our dependence on Russian gas, but we also have a debate on the new decarbonization package coming from the European Commission in the month of December. They are starting to shape the investment effort that Europe is going to do to deploy renewable gases and especially hydrogen. That requires us to adapt our gas structure, and it will require the building of hydrogen infrastructures and new transportation and storage facilities.
We estimate that until 2030, the needs to be able to have the ready Spanish network for hydrogen deployment could be around EUR 2.5 billion or EUR 3 billion. Are we going to enter a new cycle with more CapEx? I believe that's right, because both our decarbonization objectives and the objective of replacing the 155 BCMs of Russian gas that the European Union is consuming today with other sources of gas will make us think that this new CapEx cycle is going to be required for all of us and also for Enagás, given that we have a key position in this scenario and we aspire to be one of the main European TSOs. In terms of our international business, we'll keep on betting on international diversification.
We'll be focusing on Europe now and the key countries for security of supply for Europe. We believe that there are going to be opportunities in Europe as well. Some of them are easier to identify, such as a possible growth for the Trans Adriatic Pipeline and some others that will be clarified in the next few months. You know, this is linked to the question you asked about the role of Tallgrass. As I mentioned, the United States has become the main supplier of gas for Spain and accounts for 36% in this quarter. Quite probably, this effect will keep on increasing in Spain and the European Union. The United States has committed itself to provide additional 15 BCMs to replace the Russian gas.
We believe that being part of a midstream company as Tallgrass, which is at the core of the gas system in the United States, has a huge strategic value. When I talk about security of supply in Spain and Europe, I included that vision, the role of our main sourcing areas, which are the United States and North Africa. In terms of the dividend policy, as I said, we believe that the flows we forecasted for the company and in the new strategic scenario are compatible with the present dividend policy. I'm not going to add anything else about that. In terms of Peru, there are no changes on the situation we showed in the annual reports in the past quarter.
We still believe that it will be able to recover the investment in GSP and the success in both arbitrations with Peru. In terms of conversation with the regulator, this dialogue should be focusing on the next regulatory period. Of course, we will get our proposals ready. We will focus on the aspects you mentioned, inflation and other aspects, but mainly on how to implement in Spain the new regulatory framework opened by the decarbonization package in terms of renewable gases and hydrogen. There are many important things mentioned in this package, such as the fact that hydrogen infrastructures will have to be operated by entities called Hydrogen Network Operators. TSOs, present TSOs could also be HNOs. We believe that Enagás has all the necessary elements to be one.
Well, now we are one of the main TSOs in Europe. We aspire to be one of the main HNOs in Europe, but that means that we need to set a framework, a regulatory framework in Spain that allows us to make the most of these new scenarios. In terms of the new regulatory framework and regulatory period, I, we work to make sure that Spain and Enagás are at the frontline of this accelerated deployment of hydrogen, renewable hydrogen in Europe. I must also highlight that in terms of hydrogen objectives that were published in December, compared to the ones that we know today after REPowerEU presented in March the 8th, the objective's been. It's fourfold, actually. We went from 5 million tons of green hydrogen in Europe in 2030 to 20 million tons.
Of course, we will focus on it because as we mentioned, security of supply and green hydrogen are two sides of the same coin. We believe that Enagás is at a perfect position to be relevant on both sides. Thank you, Javier.
Thank you. Next question comes from Manuel Palomo. Please, Manuel, you've got the floor.
Hello, good morning, and thank you for answering my questions. Of course, I want to welcome the new CEO. I would like to ask you three questions. First, about something you mentioned in your speech, which is the idea of pushing for more interconnections. I believe that idea has been there for years and hasn't been fruitful. When talk about. Well, to create interconnections, you need the agreement of at least two countries.
Do you think France's vision has changed around interconnections? Second question is more on the political side of things. The question is what's the impact or the future role of Enagás? Well, the relationship with Algeria, a relationship that has deteriorated in the past few months. Last, talking about the figures, I see debt has dropped and the cost of debt is quite low, 1.6%. I would like to know if you could tell us what you expect. Where you expect these figures to be by the end of this year. Thank you.
Thank you, Manuel, and thank you for congratulating me as well. On interconnections, it is true that this has been something that has been talked about in the past, well, in the past years.
As you mentioned, to be able to green light an interconnection, we need the agreement of at least two countries, and at least you're right about that, because in this European scenario, there are more actors and more players. These initiatives have to be supported by the European Commission and all TSOs, because I believe that we will increasingly see the European gas system as an integrated system, and the decisions made on one side of the continent will have an impact on the other side. For example, if we change the Trans Adriatic Pipeline, we will bring to the European gas system additional volumes from Azerbaijan. In Greece, and especially Italy, they might wanna reduce their urgency to find other energy sources.
I would like to highlight the idea here that we're going towards gas model and hydrogen model that's going to be integrated in all of Europe, and that's going to require a reinforced cooperation between member states, the commission, and TSOs. Answering your question, your specific question, more than saying if France has changed its mind, what I can say is that the context has changed. A few years ago, we could be questioning the commercial interest of this interconnection, but this interconnection was being thought for a different objective. We wanted to send gas from the north to the south, and now we're talking about something else. Now, Spain and Portugal, but especially Spain, I mean, we have an excess of regasification.
We have six regasification plants and depending on, you know, operational things, but it could be up to 100 BCMs a year. We could supply that to Europe, so it's not you know, a financial interest. Of course, Enagás wants to have profitable opportunities to make investments and get paid for these investments. Europe wants to get rid of 155 BCMs coming from Russia, and they can use other resources they've got. If in the Iberian Peninsula, we have regasification abilities that's optimal and allows us to bring gas from anywhere around the world.
We are forced to try to value this potential, and I believe that this view is shared by the Spanish government, and they have expressed it in well several times, always mentioning that these infrastructure has to be able to transport hydrogen to decarbonized Europe. Of course, it would make no sense for these infrastructure to be paid by Spanish consumers. It will have to be financed by well thinking about who are going to benefit from it, and it's going to be the gas systems from mainly Central Europe. Well, European institutions will have to check how that funding is going to be structured. I think that the Spanish government has also talked about it, and the French government that's you know going through some political changes have also expressed it.
Now we need governments and the European Commission to set the rules of the game for regulators. We are working closely with Teréga, the other TSO in the south of France, for this third interconnection between Spain and France, and we are working closely with them, with the Portuguese regulator on this third interconnection project with Portugal. We are doing this under the European framework. For this final document from REPowerEU, that's gonna be sent to the European Council. Something that's very relevant, what's different now? As I mentioned, for years, we saw these two interconnections with France, Irun and Larrau, you know, working north-south or south-north, but the balance was not very relevant. Since Ukraine was invaded, we have seen an increase of the flow from the south to the north.
For weeks now, both interconnections been working at full capacity. That's what has changed, and I hope we are able to use this new perspective to contribute to the objective of having safety of supply in Europe. I believe that's an objective we all share. In terms of Algeria, the Spanish government has said clearly that, well, the political and diplomatic situation of the past few weeks do not risk the gas supply we're getting from Algeria and the Algerian president has mentioned it recently. The pipeline's working, I mean, Enagás is working at full capacity with a fourth compressor that's fully operational right now. We believe that from a gas supply perspective in Spain, there's no concern.
In terms of your question about that, we hope that by the end of the year, if Quintero is sold, we'll be at around EUR 3.7 billion of net debt if we close that deal. In terms of the cost of debt, we believe we're still going to be at 1.6%, which is where we are right now. Thank you, Manuel.
Thank you. There are no further questions in Spanish. We will now start with the questions in English.
Thank you. Again, if you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, it's star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question today comes from Harry Wyburd of Bank of America. Your line is open. Please go ahead. Unfortunately, we're not able to hear you, Harry, so we'll move on to the other line. Harry, please go ahead.
Hi. Can you hear me now?
Yes, we can hear you.
Okay, great. All right. Morning everyone and welcome as well from you to the new CEO. I apologize if something a bit weird is going on with the line. This might have been asked already, so if it has, I'm sorry. I just wanted to ask about the underlying net income, so the EUR 360 million. Very specific question, is that on a 2021 perimeter? Does that include a contribution from Quintero and Morelos and the hydrogen assets? Therefore, do we need to adjust it when we deduct those once they're disposed of? Second one, very simple one, are the gains expected to be taxable? Thank you very much.
Thank you. Thank you very much, Harry, for your questions. Answering the first question, I confirm that these EUR 360 million represent the net income from the ordinary course of the business. The capital gains, as you said, include the taxes in the figures that have been stated. Yes. The answer is yes. Thank you, Harry.