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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________________
CONSOLIDATED NATURAL GAS COMPANY : CERTIFICATE
Richmond, Virginia : of
: NOTIFICATION
CNG INTERNATIONAL CORPORATION : NO. 14
Reston, Virginia :
: TRANSACTIONS
: DURING PERIOD
:
: April 1, 2000
: through
: June 30, 2000
:
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 through March
31, 2001 (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).
____________
(1) All dollar amounts are in U.S. dollars unless otherwise indicated.
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The May 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 order dated November 19, 1996 (HCAR No. 26608), File No. 70-8759, the
SEC released jurisdiction over proposed investments of 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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MERGER OF CNG
On January 28, 2000, CNG ("Old CNG") was merged into a newly formed,
wholly-owned subsidiary ("New CNG") of Dominion Resources, Inc ("DRI"). New
CNG, located in Richmond, Virginia, was the surviving corporation and changed
its name to "Consolidated Natural Gas Company." Since New CNG substantially
succeeds to all the rights and obligations of Old CNG pursuant to the merger,
"CNG" as used further herein will refer to both Old CNG, for the period prior
to January 28, 2000, and New CNG, for the period beginning on such date. For
further information on the merger, reference is made to SEC orders dated
December 15, 1999, Release Nos. 35-27112 and 35-27113, and to the Registration
Statement on Form S-4, File No. 333-75669, filed by Dominion Resources, Inc.
and CNG under the Securities Act of 1933 on April 5, 1999. The authorization
expiration of the May Order was extended to January 28, 2003 pursuant to the
order in Release No. 35-27112. After the merger, CNG decided to sell CNGI in
furtherance of DRI's strategy to focus on the United States gas and oil markets
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EWGS AND FUCOS
The Latin America Energy and Electricity Fund I, L.P.
______________________________________________________
CNGI has invested approximately $10,000,000 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. The Fund
invested in a foreign pipeline in 1998.
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
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.
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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.
CNGI has entered into an agreement ("Agreement"), dated as of July 7,
2000, with Sempra Energy International ("Sempra') pursuant to which CNGI has
agreed to sell all of its interests in Sodigas, Sodigas Sur and Baeco to Sempra
for $145,000,000. Sempra Energy, the parent of Sempra, has guaranteed the
payments to be made to CNGI pursuant to the Agreement; and DRI, the indirect
parent of CNGI, has guaranteed the payments and share deliveries to be made by
CNGI to Sempra under the Agreement.
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OTHER FOREIGN INVESTMENTS
Australian Pipeline Projects
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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, as of June 30, 1999, were 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.
Allgas' 10% share in Epic was acquired indirectly in July 1999 by the
other shareholders through Epic Trust and its wholly-owned subsidiary, Epic
Energy Western Australia Investments Pty Ltd. CNGI's pro rata portion of the
purchase price for the additional interest in Epic was $6 million, which amount
is added to the $38.8 million originally invested under the November 19, 1996
order to increase the aggregate amount invested under the authorization to
$44.8 million.
The Australian Pipeline Projects' assets were 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
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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
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
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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, as of June 30, 1999, 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.
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 bears 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.
Epic Reorganization
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In June of 2000 a reorganization ("Reorganization") was undertaken for the
purpose of combining CNGI's pipeline ownership interests in eastern Australia
and in western Australia under DBNGP and to place the interests in eastern
Australia under the Epic Trust. The main business purpose of this realignment
of interests was to eliminate duplication of services, and the simplification
of management and future financing. The Reorganization was effected through
two steps. The first step consisted of transferring ownership of CNG Cayman
One Ltd. ("Cayman One") from CNGI to CNG Cayman Two Ltd. ("Cayman Two"). This
was accomplished by CNGI transferring all of the outstanding shares of common
stock of Cayman One to Cayman Two in return for additional shares of Cayman Two
common stock. This resulted in Cayman One becoming a wholly-owned subsidiary
of Cayman Two and an increase in CNGI's combined direct and indirect ownership
of Cayman Two from 50% to approximately 61.5%. Since Cayman One owns CNGI's
eastern Australia pipeline interests and Cayman Two owns its western
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Australia pipeline interests, all of CNGI's interests will now be held through
Cayman Two.
Epic Trust formed Epic Energy East Pipeline, Pty, Ltd. ("Epic Energy
East") as a wholly-owned subsidiary for the purpose of consolidating operations
of all Epic Energy pipelines in Australia. The second step involved the
transfer by Cayman Two of all of the outstanding common stock of Cayman One to
Epic Energy East in exchange for an interest bearing note which would
immediately be contributed to Epic Trust in exchange for loan stock (equity) of
the Epic Trust.
The transactions comprising the Reorganization are all internal within the
chain of ownership which CNGI has with respect to its Australian investments
and do not involve any net ownership change in such investments. Consequently
such transactions are deemed to have been executed pursuant to CNGI's
authorization to invest in foreign energy markets through intermediary
subsidiaries.
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FINANCING
Combined balance sheet as of, and income statement for the six months
ending, June 30, 2000 for CNGI, and its subsidiaries are filed separately as
part of this report under a claim for confidential treatment pursuant to Rule
104.
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.
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 $5,404,000 from, and made contributions of
$2,266,000 to, the Money Pool. CNGI's balance in the Money Pool on June 30,
2000 was a net borrowing of $16,217,000.
OTHER MATTERS
The business of CNGI was 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.
Quarterly financial statements of CNGI are filed under separate cover under
a claim for confidential treatment pursuant to Rule 104(b).
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SIGNATURE
The undersigned companies have duly caused this quarterly Rule 24
Certificate of Notification to be signed on their behalf by their attorney
subscribing below duly authorized pursuant to the Public Utility Holding
Company Act of 1935
CONSOLIDATED NATURAL GAS COMPANY
CNG INTERNATIONAL CORPORATION
By N. F. Chandler
Their Attorney
August 14, 2000
