<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________________
CONSOLIDATED NATURAL GAS COMPANY : CERTIFICATE
Pittsburgh, Pennsylvania : of
: NOTIFICATION
CNG INTERNATIONAL CORPORATION : NO. 7
Reston, Virginia :
: TRANSACTIONS
: DURING PERIOD
:
: July 1, 1998
: through
: September 30, 1998
:
File No. 70-8759 :
:
(Public Utility Holding Company Act of 1935) :
____________________________________________ :
TO THE SECURITIES AND EXCHANGE COMMISSION:
AUTHORIZATIONS
By order dated May 30, 1996 (HCAR No. 26523), File No. 70-8759, ("May
Order") the Securities and Exchange Commission ("SEC") authorized (i) financing
by Consolidated Natural Gas Company ("CNG") of its wholly-owned subsidiary, CNG
International Corporation, ("CNGI"), (ii) CNGI to directly acquire, or through
intermediate subsidiaries indirectly acquire, securities or interests in exempt
wholesale generators ("EWGs") outside the United States and foreign utility
companies ("FUCOs"), as respectively defined in the Public Utility Holding
Company Act of 1935 ("the Act"), and (iii) CNG, CNGI and intermediate
subsidiaries to enter into guarantee arrangements, obtain letters of credit,
and otherwise provide credit support for the obligations of intermediate
subsidiaries and EWGs and FUCOs in which CNGI has a direct or indirect
interest, in amounts in the aggregate not to exceed $300 million(1). The May
____________
(1) All dollar amounts are in U.S. dollars unless otherwise indicated.
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Order reserved jurisdiction, pending completion of the record, over (i)
investments by CNG and CNGI, of up to $300 million in entities that would
engage in a variety of consulting and support services to nonassociates, as
well as certain other energy-related businesses in foreign countries, (ii) the
provision of credit support by CNG, CNGI and its subsidiaries, aggregating,
together with EWG/FUCO credit support, of up to $300 million with nonassociates
in connection with consulting, support and energy-related businesses in foreign
countries, and (iii) the issuance to nonassociates by CNGI and its subsidiaries
of securities that are not exempt from prior SEC review under sections 6(a) and
7 of the Act, among other things.
By orders dated October 25 1996 (HCAR No. 26595) and November 19, 1996
(HCAR No. 26608), File No. 70-8759, the SEC respectively released jurisdiction
over proposed investments of (i) up to $75 million in foreign gas pipeline
projects located in Bolivia and Uruguay ("South American Pipeline Projects")
and (ii) up to $75 million in three pipeline projects in Australia ("Australian
Pipeline Projects"). By order dated February 12, 1998 (HCAR No. 26824), the
SEC released jurisdiction over a proposed investment by CNGI of up to $165
million to acquire a one-third interest in the Alinta pipeline being privatized
by the government of Western Australia. The Alinta Pipeline is referred to
further herein as the Dampier-to-Bunbury Natural Gas Pipeline.
This Certificate is filed in accordance with Rule 24, as a notification
that of the various transactions authorized by the aforesaid orders, the
following have been carried out in accordance with the terms and conditions of
and for the purposes represented by the Application-Declaration and such
orders.
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EWGS AND FUCOS
The Latin America Energy and Electricity Fund I, L.P.
______________________________________________________
Through September 30, 1998, CNGI had invested approximately $9,122,000 in
The Latin America Energy and Electricity Fund I, L.P. ("Fund"). The Fund has
to date invested in three FUCOs: Empresa Distribuidora de Entre Rios, S.A. in
Argentina, Luz del Sur in Peru, and Companhia Forca e Luz Cataguazes-Leopoldina
in Brazil.
Camuzzi Gas Pampeana S.A.
Camuzzi Gas del Sur S.A.
Empresa Distribuidora de Energia Atlantica S.A.
_______________________________________________
Pursuant to a stock purchase agreement dated December 22, 1997, CNGI
acquired, for an aggregate of approximately $78 million, 12.5% of the voting
shares of Sodigas Pampeana S.A. ("Sodigas"), 12.5% of the voting shares of
Sodigas Sur S.A. ("Sodigas Sur") and 20% of the voting shares of Buenos Aires
Energy Company S.A. ("Baeco"). In March 1998, CNGI purchased, for an aggregate
of approximately $45 million, an additional 9.05% each in Sodigas and Sodigas
Sur, and an additional 5% interest in Baeco. Thus CNGI now owns 21.55% of each
of Sodigas and Sodigas Sur, and 25% of Baeco.
Camuzzi Argentina S.A. operates the largest gas distribution concession in
Argentina and owns 51% of both Sodigas and Sodigas Sur. Pacific Enterprises
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owns 21.55% of each of Sodigas and Sodigas Sur. The remaining 5.9% of Sodigas
and Sodigas Sur is owned by two international mutual funds, Global Environment
Fund and BEA Capital.
Sodigas owns 70% of the voting shares of Camuzzi Gas Pampeana S.A.
("Camuzzi Pampeana"). Sodigas Sur owns 90% of the voting shares of Camuzzi Gas
del Sur S.A. ("Camuzzi del Sur"). The Argentine government owns 20% of Camuzzi
Pampeana. The employees of Camuzzi Pampeana and Camuzzi del Sur each own 10%
of their respective companies.
Camuzzi Argentina S.A. owns 75% of BAECO. Baeco owns 55% of the voting
shares of Inversora Electria de Buenos Aires S.A. ("IEBA"), which in turn owns
90% of Empresa Distribiudora de Energia Atlantica S.A. ("EDEA"). United
Utilities International Limited, one of the largest electric distributors in
the United Kingdom, owns the remaining 45% of IBEA. The employees of EDEA own
the remaining 10% of EDEA.
Camuzzi Pampeana serves approximately 770,000 customers in Buenos Aires
province (but not in the city of Buenos Aires itself). Camuzzi del Sur serves
approximately 354,000 customers in Argentina to the south of Buenos Aires.
Camuzzi Pampeana and Camuzzi del Sur together sell approximately 335 bcf of
natural gas per year. EDEA serves approximately 398,000 electric customers in
the province of Buenos Aires, delivering about 1,800 gigawatt-hours a year.
At September 30, 1998, CNGI"s investment in these Argentine companies was
$120 million.
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OTHER FOREIGN INVESTMENTS
South American Pipeline Projects
________________________________
No investments have been made in the South American Pipeline Projects.
Pursuit of investment in the Bolivian pipeline has been abandoned.
Australian Pipeline Projects
____________________________
In December of 1996, CNGI acquired, through intermediate subsidiaries, a
30 percent interest in Epic Energy Pty. Ltd. ("Epic"), an Australian
corporation. The other shareholders in Epic are Venture Holdings Pty. Ltd., a
subsidiary of El Paso International Company (30%); Australian Mutual Provident
Society, an Australian insurance company and investment house (10%); Allgas
Pipelines Pty. Ltd. ("Allgas"), a gas distribution utility in Brisbane,
Queensland (10%); and SAS Trustee Corporation (Axion) and Utilities of
Australia Pty. Limited (Hastings), both Australian investment managers (10%
each). On December 19, 1996, Epic purchased the Australian Pipeline Projects'
assets, which it operates, maintains and manages.
The Australian Pipeline Projects' assets are valued at more than $500
million in Australian dollars. The assets include three major long-distance
natural gas pipeline systems accessing gas supplies in Australia's Cooper
Basin: (i) a 488 mile pipeline from Moomba (the central supply point of the
Cooper Basin) south to the city of Adelaide; (ii) a 44 mile pipeline from
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Katnook to markets in South Australia; and (iii) a recently completed, 470
mile pipeline from the Cooper/Eromonga Basin in Southwest Queensland to the
city of Wallumbilla, interconnecting with existing pipelines serving the
Brisbane and Gladstone markets.
Dampier-to-Bunbury Pipeline
___________________________
In March 1998, CNGI paid approximately $143 million to acquire its 33.3%
equity interest, through intermediate subsidiaries including Epic Energy
Australia Trust ("Epic Trust"), in the Dampier-to-Bunbury Natural Gas Pipeline
("DBNGP") from the Western Australia Government. The partners in Epic Trust
are the same as the shareholders in Epic with the exception of Allgas, which
declined to invest in DBNGP. Allgas' otherwise 10% share in Epic Trust was
acquired pro rata by those investing in the pipeline. DBNGP is a 925 mile
natural gas pipeline running from Dampier to Bunbury in Western Australia. It
transports natural gas from offshore and onshore fields in the northwest of
Western Australia, which holds Australia's largest reserves of natural gas.
Epic now operates the DBNGP. At September 30, 1998, CNGI's investment in DBNGP
totaled $144.9 million.
In connection with their investment in DBNGP, CNGI and a subsidiary of El
Paso Energy Corporation formed DBNGP Finance Company LLC ("DBNGP Finance");
DBNGP Finance is 50% owned by each of the parent companies. The equity
ownership interests in DBNGP held by the parent companies were transferred to
DBNGP Finance.
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On October 2, 1998, DBNGP Finance borrowed $250 million under a senior
term loan facility ("Term Loan"). The Term Loan matures October 2, 2001, can
be extended in one-year increments to October 2, 2003, and will bear interest
at a variable rate. Of the gross proceeds received by DBNGP Finance under the
Term Loan, $100 million was distributed to CNGI. In connection with the Term
Loan, CNGI entered into an equity contribution agreement with DBNGP Finance.
CNGI is contractually obligated to make equity contributions to DBNGP Finance
equal to the proceeds distributed to CNGI, plus interest on such proceeds. CNG
is contractually obligated to cause CNGI to make such equity contributions.
INTER-AFFILIATE TRANSACTIONS INCLUDING FINANCING
CNG Cayman One Ltd, CNG Cayman Two Ltd and CNG Cayman Three Ltd are each a
Cayman Islands corporation and a wholly-owned special purpose subsidiary of
CNGI. CNG Cayman One Ltd owns all the stock of CNGI Australia Pty Ltd, an
Australian corporation which directly holds CNGI's 30% interest in Epic. CNG
Cayman Two Ltd owns all the stock of CNG Labuan One Ltd., incorporated in the
Federal Territory of Labuan in Malaysia, which directly holds CNGI's 33.3%
interest in Epic Trust. CNG Cayman Three Ltd. owns all the stock in Argentine
companies acquired by CNGI in connection with the acquisition of its interests
in the Argentine FUCOs described above. Combined balance sheet and income
statement for the nine months ending September 30, 1998 for CNGI, and these
wholly-owned subsidiaries are attached as Exhibit A.
To date, no guarantees have been issued, by or for the account of CNGI or
any of its subsidiaries, with respect to any of the investments authorized in
this proceeding.
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By order dated July 18, 1997, HCAR No. 26742, CNGI was authorized to
participate in the CNG system money pool ("Money Pool"). During the reporting
period CNGI made withdrawals of $2,280,000 from, and made contributions of
$505,000 to, the Money Pool. CNGI's balance in the Money Pool on September 30,
1998 was a net borrowing of $56,286,000.
There were no transactions involving shares of CNGI common stock, $10,000
par value per share, during the reporting period.
OTHER MATTERS
The business of CNGI is to participate in selected projects in
international markets in transactions either authorized by Commission order in
this proceeding or as permitted by statutory exemption. The proceeds of the
above described transactions were used by CNGI in such business.
Each respective "past tense" opinion required by paragraph F(2) of the
instructions as to exhibits for Form U-1 will be filed when all transactions
authorized under the respective order have been consummated.
CONSOLIDATED NATURAL GAS COMPANY
CNG INTERNATIONAL CORPORATION
By N. F. Chandler
Their Attorney
November 16, 199
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Balance Sheet
September 30, 1998 (Unaudited) (1)
CAYMAN CAYMAN CAYMAN CNGI
CNGI 1 2* 3 AUSTRALIA ELIMIN. TOTALS
___________ __________ ___________ ___________ ___________ __________ __________
Assets
______
<S> <C> <C> <C> <C> <C> <C> <C>
Property, plant
& equipment
Total Investment 752,635 0 0 0 0 0 752,635
Less Accum. Deprec. (295,695) 0 0 0 0 0 (295,695)
___________ __________ ___________ ___________ ___________ ___________ __________
Net property,
plant & equipment 456,940 0 0 0 0 0 456,940
Cash 243,429 0 0 381,379 39,630 0 664,438
Special deposits 613 0 0 0 0 0 613
Accounts Receivable 2,932 0 0 0 0 0 2,932
Accts. Rec.-Assoc. Cos. 67,335 32,660 0 0 448 (100,443) 0
Investments in Subs. 277,673,289 39,819,116 0 0 0 (317,492,405) 0
Other Investments 42,480,197 0 144,903,907 91,516,010 33,976,250 0 312,876,364
Deferred Charges (64,650) 0 0 0 0 0 (64,650)
Deferred Income Taxes 401,750 0 1,088,000 0 0 0 1,489,750
___________ __________ ___________ ___________ __________ ___________ ___________
Total Assets 321,261,835 39,851,776 145,991,907 91,897,389 34,016,328 (317,592,848) 315,426,387
=========== ========== =========== =========== ========== =========== ===========
* Includes CNG Labuan One Limited, a wholly-owned subsidiary of Cayman Two Ltd.
formed to hold CNGI's interests in the Alinta Pipeline.
</TABLE>
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EXHIBIT A
<TABLE>
<CAPTION>
CAYMAN CAYMAN CAYMAN CNGI
CNGI 1 2* 3 AUSTRALIA ELIMIN. TOTALS
_________ __________ ___________ _________ _________ ___________ ______
Stockholders Equity
& Liabilities
___________________
<S> <C> <C> <C> <C> <C> <C> <C>
Capitalization
Common stock 215,550,000 38,731,500 143,226,500 90,947,282 38,731,500 (311,636,782) 215,550,000
Retained earnings (7,976,107) 1,087,616 2,756,610 923,782 (4,747,384) (5,855,624) (13,811,107)
___________ __________ ___________ __________ __________ ____________ ___________
Total stock-
holder's equity 207,573,893 39,819,116 145,983,110 91,871,064 33,984,116 (317,492,406) 201,738,893
Long-term notes
payable to parent
company 55,150,000 0 0 0 0 0 55,150,000
___________ __________ ___________ ___________ __________ ____________ ___________
Total capitalization 262,723,893 39,819,116 145,983,110 91,871,064 33,984,116 (317,492,406) 256,888,893
Total curr. liabil. 58,482,845 32,660 8,797 26,326 32,212 (100,443) 58,482,397
Deferred credits 55,098 0 0 0 0 0 55,098
___________ __________ ___________ ___________ __________ ___________ ___________
Total stockholder's
equity and liabil. 321,261,836 39,851,776 145,991,907 91,897,390 34,016,328 (317,592,849) 315,426,388
=========== ========== =========== =========== ========== =========== ===========
(1) This balance sheet has not been audited by the Company's independent auditors.
* Includes CNG Labuan One Limited, a wholly-owned subsidiary of Cayman Two Ltd.
formed to hold CNGI's interests in the Alinta Pipeline.
</TABLE>
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Income Statement for the Nine Months Ending
September 30, 1998 (Unaudited) (1)
CAYMAN CAYMAN CAYMAN CNGI
CNGI 1 2* 3 AUSTRALIA ELIMIN. TOTALS
__________ __________ __________ __________ __________ __________ __________
<S> <C> <C> <C> <C> <C> <C> <C>
Total operating revenues 108,424 0 0 0 0 0 108,424
Total operating expenses 977,852 0 (1,079,203) 26,326 4,069 0 (70,956)
__________ __________ __________ __________ __________ __________ __________
Net Operating Income (loss) (869,428) 0 1,079,203 (26,326) (4,069) 0 179,380
Other income 4,854,336 1,112,930 1,677,408 1,289,031 1,078,768 (5,906,252) 4,106,221
Other income deductions (155,342) 0 0 (338,923) 38,231 0 (456,034)
__________ __________ __________ __________ __________ __________ __________
Income before interest 3,829,566 1,112,930 2,756,611 923,782 1,112,930 (5,906,252) 3,829,567
Interest charges 5,343,874 0 0 0 0 0 5,343,874
__________ __________ __________ __________ __________ __________ __________
Net income (loss) (1,514,308) 1,112,930 2,756,611 923,782 1,112,930 (5,906,252) (1,514,307)
========== ========== ========== ========== ========== ========== ==========
(1) This income statement has not been audited by the Company's independent auditors.
* Includes CNG Labuan One Limited, a wholly-owned subsidiary of Cayman Two Ltd.
formed to hold CNGI's interests in the Alinta Pipeline.
</TABLE>
