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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________________
CONSOLIDATED NATURAL GAS COMPANY : CERTIFICATE
Pittsburgh, Pennsylvania : of
: NOTIFICATION
CNG INTERNATIONAL CORPORATION : NO. 5
Reston, Virginia :
: TRANSACTIONS
: DURING PERIOD
:
: January 1, 1998
: through
: March 31, 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 ("Alinta
Pipeline") being privatized by the government of Western Australia.
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 March 31, 1998, CNGI had invested approximately $7.3 million 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 in Cataguatesan 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 at March 31, 1998, CNGI
owned 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 Sodiga
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.
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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 Brixbane,
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.
Alinta Project
______________
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 Alinta Pipeline. The partners in Epic Trust are
the same as the shareholders in Epic with the exception of Allgas, which
declined to invest in the Alinta Pipeline. Allgas' otherwise 10% share in Epic
Trust was acquired pro rata by those investing in the pipeline. The Alinta
Pipeline 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 will operate the Alinta Pipeline.
INTER-AFFILIATE TRANSACTIONS INCLUDING FINANCING
CNGI incorporated CNG Cayman One Ltd and CNG Cayman Two Ltd in the Cayman
Islands as wholly-owned intermediate subsidiaries to own all the stock of (i)
CNGI Australia Pty Ltd, which directly holds CNGI's 30% interest in Epic, and
(ii) CNG Labuan One Ltd., which directly holds CNGI's 33.3% interest in Epic
Trust. CNGI incorporated CNG Cayman Three Ltd. to directly own all the stock
acquired in connection with the acquisition of interests in the Argentine FUCOs
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described above. Combined balance sheet and income statement for the quarter
ending December 31, 1997 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.
On March 24, 1998, CNG purchased 3,000 shares of CNGI common stock, $10,000
par value per share for $30,000,000. On the same date, CNG loaned $15,150,000
to CNGI and in return therefor received a long-term note from CNGI. The note
carries an interest rate of 6.95% (substantially equal to the effective cost of
money to CNG), and matures on November 30, 2027. The proceeds from the stock
sale and borrowing was used by CNGI to acquire the additional interests in the
Argentine FUCOs as described above.
The maturity date on the $40,000,000 CNGI note disclosed in CNGI's Rule 24
report for the last quarter of 1997 was changed from December 30, 2027 to
November 30, 2027 to better coordinate with end-of-month accounting for inter-
affiliate financing transactions.
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 $191,672,000 from, and made contributions of
$123,695,000 to, the Money Pool. CNGI's balance in the Money Pool on March 31,
1998 was a net borrowing of $150,220,000.
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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
May 18, 199
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Balance Sheet
March 31, 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 726,710 0 0 0 0 0 726,710
Less Accum. Deprec. _ (207,500) 0 __________0 ___________ 0 0 (207,500)
Net property,
plant & equipment 519,210 0 0 0 0 0 519,210
Cash 219,067 0 0 0 43,735 0 262,802
Special deposits 614 0 0 0 0 0 614
Accounts Receivable 4,615 0 0 0 0 0 4,615
Accts. Rec.-Assoc. Cos. 1,314,473 33,250 0 0 448 (1,348,172) 0
Investments in Subs. 305,695,884 39,440,497 0 0 0 (345,136,381) 0
Other Investments 7,204,315 0 143,226,500 124,310,558 35,550,717 0 310,292,089
Deferred Charges 119,273 0 0 0 0 0 119,273
Deferred Income Taxes 264,250 0 _ 0 __________0 0 0 264,250
Total Assets 315,341,700 39,473,748 143,226,500 124,310,558 35,594,899 (346,484,553) 311,462,852
=========== ========== =========== =========== ========== ========== ===========
</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 115,550,000 38,731,500 0 68,000,000 38,731,500 (145,463,000) 115,550,000
Retained earnings (7,318,656) 708,997 0 0 (3,169,403) (1,417,994) (11,197,056)
Total stock-
holder's equity 108,231,344 39,440,497 0 68,000,000 35,562,097 (146,880,994) 104,352,944
Long-term notes
payable to parent
company 55,150,000 0 0 55,150,000 0 (55,150,000) 55,150,000
Total capitalization 163,381,344 39,440,497 0 123,150,000 35,562,097 (202,030,994) 159,502,944
Total curr. liabil. 151,929,356 33,250 143,226,500 1,160,558 32,802 (144,453,559) 151,928,908
Deferred credits 31,000 0 _ 0 0 0 0 31,000
Total stockholder's
equity and liabil. 315,341,700 39,473,748 143,226,500 124,310,558 35,594,899 (346,484,553) 311,462,852
=========== ========== =========== =========== ========== ========== ===========
(1) This balance sheet has not been audited by the Company's independent auditors.
</TABLE>
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Income Statement for the Three Months Ending
March 31, 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 10,230 0 0 0 0 0 10,230
Total operating expenses 775,973 0 0 0 0 0 775,973
_________ _______ ______ __________ _______ _________ _________
Net Operating Income (loss) (765,744) 0 0 0 0 0 (765,744)
Other income 942,780 734,311 0 0 721,568 (1,468,623) 930,036
Other income deductions 30,670 0 0 0 (12,744) 0 17,926
Interest charges 1,003,223 0 0 0 0 0 1,003,223
_________ _______ ______ __________ _______ _________ _________
Net income (loss) (856,857) 734,311 0 0 734,311 (1,468,623) (856,857)
========= ======= ====== ========== ======= ========= =========
(1) This income statement has not been audited by the Company's independent auditors.
</TABLE>
