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Good morning, ladies and gentlemen. And welcome to the conference call on Enagás' 2020 First Quarter Results Presentation. The results were released this morning before the opening bell and are available on our website at www.enagas.es. Mr. Antonio Llarden, Chairman of Enagás, will host this presentation. We expect this conference to last about half an hour. Afterwards, there will be a Q&A session, during which we will endeavor to answer any questions as fully as possible as usual. Today, the whole team is connected telematically but we expect everything to work properly as usual. Should any question remain unanswered at the end of this conference call, as you know, the Investor Relations department will answer such questions at any time later.So thank you very much. I now hand the floor to Mr. Llarden.
Good morning, ladies and gentlemen. I'm Antonio Llarden, Chairman of Enagás, and thank you for your attention at this conference call that we are holding in this tough and exceptional global situation. I would like, first of all, to share with you what Enagás' priorities are in relation to COVID-19. And also, I would like to explain to you the most significant aspects of the contingency plan that we have implemented at the company. Today, we pursue 3 clear-cut priorities: first, the safety, health and well-being of our professionals and their families; second, to continue providing an essential service such as the supply of natural gas as normal; and third, our commitment to contribute to the best of our abilities to mitigate the social impact of this pandemic. To this end, we have followed at all times the authorities' recommendations from the Ministry of Health to Spain's security forces. We are in permanent contact with the Ministry of Energy, that is the Ministry for Ecological Transition and Demographic Challenge. And we are also keeping a close eye on the situation in all the countries where we operate. So as I was saying, we have put in place a rigorous contingency plan that is proving to be highly effective, and thanks to which, the gas system is operating completely normally. After a follow-up since January, on the 24th of February, our first phase of all 3 contingency plan phases was activated. And on March 3, we activated the so-called emergency level that is Phase 3. On March 9, when the Ministry of Health activated the so-called reinforced containment stage, Enagás, right away, activated level 3 of the crisis level, considered to be the maximum level. We did that on March 10, before the emergency state was declared throughout the country.Some of the measures that we have adopted as part of this contingency plan include the following: We have implemented teleworking in all positions where this is possible. We work in parallel from our 2 control centers, which are physically separated, and people are also separated there in order to guarantee people's safety as well as the security of the system. We have reorganized the shifts and on-call personnel, all the facilities that Enagás has throughout Spain, including the regasification plants, underground storage facilities and transport centers, with the ultimate goal of minimizing the risk of infection among employees.We have also established a special system in all 3 main regasification plants in Spain, in Barcelona, Cartagena and Huelva, where we have decided to confine 2 shifts of operators for 15 days to avoid infections that could endanger their health and essential tasks that are carried out in these facilities. All of these, I should say, was possible, thanks to the collaboration by our professionals, who are responding exceptionally well to the situation.So at the moment, we activated the first phase of the plan in late January, early February. We have identified and acquired spare parts and critical material to get prepared in case of potential shortages. In addition, we have intensified cleaning and permanent disinfection of our facilities, and we have also coordinated our plans with those of the contingency plans of critical contractors.Why have we set out such a contingency plan? Well, the answer is pretty clear: because we are a company that pursues a very clear purpose. We are working to ensure the operational supply of natural gas. In Spain, the gas system is functioning normally. I would even say that it's working with full optimization of the infrastructures. The Spanish gas system that is operated by Enagás consists of 6 regasification plants, nearly 12,000 kilometers of high-pressure pipelines with 19 compressor stations, 3 gas underground storage facilities and international interconnections with Algeria, Morocco, Portugal and France.So let me provide you with some specific data. We are maintaining all planned ship supplies on deliveries concerning LNG. Also, the underground LNG storage facilities are fuller than as usual. Also these storage facilities are fuller than usual at this time. We are about to finish the winter season. Right now, we are standing at 72% of storage. All this enables us to rest assured in the current situation.Regarding our international business, all of our affiliates are operating normally. They are contributing to the supply security in their respective countries, and all of them have implemented contingency plans against COVID-19 in coordination with Enagás in order to ensure the business continuity. So in the presentation, you will find additional details of the situation in each country and subsidiary.And finally, and as I have said before, and -- other of our priorities in the face of the current situation is our social commitment. Our aim is to contribute as much as we can to mitigate, as far as possible, of course, the economic and social impact of COVID-19. We are concerned about people's health and safety as well as their well-being and peace of mind. For that reason and above all, we at Enagás remain firmly committed to employment, especially in situations that require top efficiency of our facilities as the ones we are showing right now. We are also keeping contracts and expediting payments to our suppliers of critical goods and services to contribute to maintaining our activity and employment as far as possible. In this complex situation, we are also intensifying the control plan and savings in general expenses, eliminating anything that is not essential to the business continuity and also to the maintenance of current and future activity and employment.We are also carrying out some solidarity initiatives with the essential aim of helping alleviate the negative effects of this health crisis on societies, especially on the most vulnerable groups. First off, we are collaborating with the public authorities on initiatives to tackle the situation. Specifically, we have made a donation that was approved by the Board of Directors and within the frank work of royal decree on the state of alert. So we're saying we made a donation of EUR 2 million to the state through the account specifically opened at the Bank of Spain in order to contribute directly to dealing with this public health emergency situation caused by COVID-19.Also, we have joined the emergency appeal called Red Cross response that was launched by the Spanish Red Cross to provide health products to families in a situation of vulnerability to coronavirus. We have also launched the urgent call for Positive Energy+ startups. This is a pioneer initiative in Spain that we have fostered together with other energy companies to mitigate the impact of COVID-19 through innovation. In forthcoming communications, we shall provide you with further information on this matter.We are also carrying out specific actions in regions and municipalities where we are present in accordance with our line of social action by implementing initiatives such as guaranteeing food to families who are extremely vulnerable. We are also providing mobile handsets to nursing homes to facilitate communication of senior people with their families. We're also donating computer equipment to help reduce the technology decline between schoolchildren. We're also donating personal protective equipment for use by the emergency service crews. And all this is done in coordination with city halls, with the regional government or with the relevant regional authorities in the regions where we are working. Likewise, the affiliates of Enagás have also launched initiatives to help and collaborate with public and health authorities in the countries where they are present.Now let me quickly summarize the highlights of Enagás' results during the first quarter of 2020. So the presentation with all the relevant information and figures are available to use in first thing this morning. I will refer to the highlights for the period plan.So the results of the first quarter are in line with the target set for the entire fiscal year. We reported, as you can see, an after-tax profit of EUR 119.1 million. There was an increase in profit, a 14.7%, due to the good performance of our EBITDA, in which we include, of course, the results of our affiliates or investees, and also to the fact that we had a nonrecurring positive result in the amount of EUR 18.4 million due to the positive exchange differences generated by the purchase of dollars for the acquisition of phase 2 of Tallgrass. We also have a high level of liquidity, and we keep a solid financial charter with no significant debt maturities until 2022. So at the closing of the quarter, the company's liquidity, that is our cash and undrawn credit lines, amounted to over EUR 3 billion, which gives us a solid and comfortable footprint in a highly complex environment. Let me also remind you that both Standard & Poor's and Fitch have confirmed Enagás' rating at BBB+ with a stable outlook, in line with other similar companies and with other European transformation system operators or TSOs.With regards to the development of our international investments, the news here is that the take-private transaction for Tallgrass Energy was proposed last week at the company's General Shareholders' Meeting, which was held on Thursday, the 16th. So this transaction, as planned and as we already informed you, Enagás has increased its indirect stake in Tallgrass Energy up to 30.2% with a total investment in this project amounting to $1.6 billion to $3 billion. Furthermore and despite the challenges posed by the current COVID-19 crisis, the Trans Adriatic Pipeline, TAP project as we call it, is now 94.1% complete. And we have also completed the laying of the underwater gas pipeline between Albania and Italy, which is critical for this project. This operation has already been successfully completed.With regards to South Peruvian pipeline, the open arbitration procedure at the International Center for Settlement of Investment Disputes is following the normal procedural course. As you were informed, Enagás filed the lawsuit on the 20th of January, and now it's up to the Peruvian state to submit the statement of defense.As for the evolution of natural gas demand in Spain during Q1 2020, total demand has come down by 2.4% at March 31. In the first week, since the state of alert was decreed on March 14, we observed a light effect on the demand for gas by businesses and SMEs, which are a significant portion of our market. So industrial demand has been affected mainly since March 30, when all nonessential activities ceased. So far this year, total demand in Spain has come down by 5.4% compared to the same period last year.Nevertheless, there's a specific piece of information. Last week, we observed for the first time since the onset of the state of alert an increase in the demand for industrial gas compared to the previous weeks. So most certainly, this is due to the fact that last Monday, the elimination or the repeal of the decree that obliged nonessential companies to work was rebuilt. So now we see many companies that are demanding more gas, and we will see that same turn in the upcoming weeks.So at Enagás, we believe that ecological transition continues to be a priority, a top priority, because it's going to be one of the bases for recovery. Why are we saying so? Well, because ecological transition is also a matter of public health as well evidenced right now. And there are many data that were published and that provide further evidence on this.Secondly, because promoting decarbonization realistically and firmly always guaranteeing energy security is going to be, no doubt, one of the European Union's pillars in order to walk out of this crisis stronger. At Enagás, we continue to be committed to renewable gases such as hydrogen and biomethane, which we promote through our subsidiary, called Enagás Renovable. This is a commitment that has also been undertaken by the Spanish government 2 weeks ago. The Ministry for Ecological Transition and Demographic Challenge, as a matter of fact, launched a preliminary public consultation for the drafting of the so-called renewable hydrogen road map, which is going to be a key tool for its deployment and development in Spain.And let me share this with you: We are now working on a very specific project that we have launched recently at our Cartagena regasification plant in the Mediterranean in order to produce renewable hydrogen and inject it into the internal network of the plant, mixing it with natural gas for self-consumption by the terminal, thus reducing the carbon footprint markedly. Based on the information we have, this is the first pilot project for injecting green hydrogen into a gas network in Spain.Thanks to our commitment to sustainability, so far this year, and this should be underscored, we have been recognized once again for our role in the energy transition. Enagás has been included in the CDP Climate Change A List, and we have obtained the highest rating in our subsector in this climate action index. As you know, however, we understand sustainability in a broad sense and our commitment goes far beyond decarbonization and environmental management. In this quarter, we have been included for the second year running in the Bloomberg Gender-Equality Index amongst the 325 global companies that are most committed to transparency in gender information and the promotion of equality. Likewise, we have obtained the Top Employer seal for the 10th consecutive year, which recognizes Enagás as one of the best companies to work for.Another important topic with regards to shareholder remuneration on the data presentation of these results, we maintain the dividend payout policy that we communicated to you in February when presenting the annual results for fiscal year 2019. Dividends are of utmost importance to our investors and therefore to the company. The cash flow generation that we expect in the forthcoming years and that you're aware of, including adverse stress test, allows us to uphold our commitment to the dividends announced in our last strategic presentation in February.And in summing up and by way of conclusion, let me share these 3 main points: Well, the results we are presenting for Q1 2020 are in line with expectations. Second, we are now in a situation, which our priorities are: first, the safety and health of people; second, to continue providing an essential service to society normally; and third, to contribute as high as possible to mitigating the economic and social impact of this health crisis. So this is what we are now working on. Third, we have conducted several internal stress tests, both technical and financial, and the data available to us today confirms that we can meet all of our commitments. The company is technically and financially sound, and it also has solvency and liquidity, all of which allows us to face the situation somewhat calmly, [ rigorously ] but also with peace of mind.
Thank you for your attention. And now I would like to invite you to ask any questions you may deem suitable. We said before that we are all connected telematically. We are not physically in the same place. If due to time reasons or for connection reasons, any questions remain unanswered during this conference call, the Investors Relations department is at your disposal today and at any time in order to address any inquiries you may have. As usual, we will try to answer your questions with as much detail as possible. Thank you very much.
[Operator Instructions] The first question is by Fernando Lafuente, Alantra Equities.
I have 3 questions, very quick questions. The Chairman has given quite a lot of information about the gas system performance. Could you please tell us the impact that you foresee since the outbreak of COVID-19? I'm talking about its impact on the performance of the gas system. Do you think the regasification plants have to take special measures, especially those that are working at full blast?Second, I have a question about the impact on nonrecurrent profit. What do you think about RCS this year and variable rates in the gasification system?And third, I would like to ask you a question about Tallgrass. After the impact of oil prices in the United States, I would like to know whether you expect any operational impact in the company, given Tallgrass' operating outlook.
Well, thank you very much for your question, Fernando Lafuente. If you could allow us a couple of minutes, we will get back to you with the answer.Okay. Thank you, Fernando Lafuente from Alantra, for your question. Let me answer quickly to all 3 questions. First of all, with regards to the contingency plan, its impact on operations has been [ null ]. Of course, we had to implement a number of technical measures as well as other measures that I did not have time to elaborate on, and that's reason behind that. But our high-pressure gas network is working fully, the same as all 6 regasification plants. They are working at full blast at this point right now.Because of the global market condition, we are receiving 2/3 of the gas that Spain requires in terms of LNG, and another 1/3 is being received through gas pipelines. So all international networks are working properly. The first 3 months of this year, we reexported gas to France and Portugal. We have flows both ways usually, but we are talking about 2,000 more gigawatts net that we transported from Spain. Now that came into Spain through gas pipelines and then was exported. So the impact on operations, fortunately, is [ null ]. This is very important because let us remember that our income scheme means that we have to place all of our infrastructure to the disposal of our clients. And then the price of gas can go up or down, but actually, we are particularly affected by the fact that all of our facilities must be fully operational.From the supply security standpoint, we are also maintaining our underground storage levels. We are keeping high gas storage levels, which enables us to rest assured if in the upcoming months outside of Spain, we find any disruption in the gas production and transmission network. So that's the answer to the first question.As to the impact of demand on regulated services in Spain, the impact is small. As you may remember, we have some payment schemes that are tied to demand. But about 1% or less than 1% of annualized demand can account for a net impact of about [ part of millions ] less, all in all. So if demand goes down by 5%, 8% or 10% in the entire year, that could have an impact of a couple of millions of euros, EUR 2 million approximately, but you can see objectively that its impact of the company's overall results and profit would not be significant.On the other hand, we should not forget, as I mentioned during my presentation, that we are making specific efforts of -- right now in order to reduce as far as possible our general expenses, those that are not essential to our activity in order to reach a balance or in order to offset any negative impact. From this viewpoint, demand, therefore, it's not a significant negative factor.As for Tallgrass, a resident of that in the United States and globally, there has been a sharp drop in oil prices as a result of the outbreak of coronavirus and also due to low demand for products in some other parts of the world and also due to some supply reasons for technical factors. At Tallgrass Energy, more than 70% of all the contracts held by the company are take-or-pay. They -- these contracts are set by specific prices, and therefore, they do not pose any significant impact.On the other hand, the company's senior management carried out a number of stress tests for this fiscal year, and they came to the conclusion that they have enough liquidity. We, therefore, understand that the company can keep its results without much of a problem.We should also keep in mind, especially we are, of course, impacted by news from the previous day. In this case, we are talking about a reduction in the number of forward contracts. And also, we are seeing some storage issues. However, all the data we have and according to the market consensus and according to analyst data, especially the data published by Bloomberg about 10 or 12 days ago, with an outlook for this year and the first quarter of 2021, refer to a gradual recovery of markets and the prices of gas and oil, mainly in the United States. Therefore, from this perspective, we believe that impact on Tallgrass' financial statements will be small. And therefore, we do not believe that if we have a significant impact on the medium or long term, even with regards to 2020 annual results based on the data, analyzed at the last Board meeting last week. We believe that this company can actually endure this impact well.Perhaps I'm taking too long in answering your question. But let me remind you that Tallgrass is geographically located, given the characteristics of its business, is one of the most profitable basins that can best endure the oil and gas prices in the United States. Therefore, this provides you with specific information showing that Tallgrass stands out when compared to other PS in the sector.Thank you very much, Fernando. And now let's give the floor to other questions.
The next question is by Javier Suarez from Mediobanca.
I have a couple of questions after Fernando's questions. In connection with Tallgrass, you mentioned the company has contracts set specific prices. Should we expect any impact on the 30% of volumes that are not under contract?Actually, my question -- let me rephrase my question. The question is what about the breaking point of the basins where Tallgrass operates, in order to understand how this price scenario can have an impact on your business because this is quite a strange scenario.On the other hand, how could Enagás endure a scenario where Tallgrass could face more difficulties? That is, could you describe the stress test that you conducted? You said that you have a discretionary CapEx of EUR 1.6 billion or EUR 1.625 billion as part of your CapEx. Could you please tell us how much of your discretionary CapEx could actually resist that impact? So that's the first question.The second question is the following: Mr. Chairman, could you provide us with your best estimates as for the evolution of gas in 2020, given the current situation characterized by COVID-19?And the third question with regards to GSP, I believe that the arbitration procedural calendar is being followed, but I would like to hear more about their -- how that is evolving.
Okay. Thank you, Javier, for your question. Again, we will come back to you in a couple of minutes after we discuss the question internally.Thank you, Javier Suarez, from Mediobanca for your question. I would like to answer all 3 questions. As for the first question, you asked about the pay for pay of about 70% of our contracts and what would happen with the remaining 30%. Okay, let me throw more light at this. Well, in principle, the 30% that is not pay for pay are contracts that last for about 3 or 4 years on average. These contracts in the upcoming months or years will fold here naturally. And therefore, the senior management of Tallgrass expects that they will be renewed. We will have to see under which terms and conditions. But we should not expect an immediate impact in May or June. We will have to wait and see.During the latest Board meeting, Tallgrass, the senior management, presented some outlooks for the end of the fiscal year. And they believe that, all in all, they will be able to maintain the company's 2020 targets. This is connected to another question made by Javier Suarez as for the average breakeven with regards to the basins where Tallgrass works. We're talking about USD 27 or USD 28 approximately of breakeven. So if the Brent price that we are using as the measurement standard, these basins are under good conditions to keep on operating. Let us not lose sight of the fact that if prices go down, that causes new projects that could be performed in the geographical environment where Tallgrass operates, could entail some competition today are at a full hold. Therefore, it is true that the situation enables Tallgrass to operate by contrast with other companies in other geographical locations.So the conclusion is that, at this point, we understand -- and let me therefore answer the second part of your first question. We believe that we are ready to face any fluctuations in Tallgrass' results with no significant impact on our accounts. So I'm talking about fiscal year 2020. And then we'll have to see what happens in forthcoming months how the oil and gas sector evolve in the United States in 2021 and 2022. But as for this year's data, they are maintained.As for fiscal 2021, I believe that I mentioned that during my presentation, the market consensus published by Bloomberg reports Brent prices or the price of gas on a BTU basis that are correct from our accounts perspective.The second question has to do with estimates of demand in Spain. Okay. I can say the following. Usually, we are quite accurate on our estimates as analysts. We expect the demand of gas this year, and this is -- was a conservative approach. We thought that it was going to be flat because last year, there was an increase of 14%. And therefore, we saw that this year, actually, it was going to remain at the same level. The impact of coronavirus is, well, quite significant in March and April. But let us not forget that about 2/3 of Spanish demand and even a bit more industrial demand, which accounts for 60% of demand, and then what we call domestic and commercial demand, contains a portion of demand by small-, medium-sized companies. All in all, we can say that industrial demand in Spain accounts for 2/3 of gas demand. Therefore, this is perhaps the highest in a European country, and this is explained by our geographical location, the country's surface and number of inhabitants. In Italy, perhaps, this goes above 50%. In our country, for good or worse, it's 20% at most. So those 1/3 of industrial demand is being quite sensitive to all the measures that have been adopted in all countries or lockdown measures.So as far as these lockdown measures are somehow eased, we will notice an increase of demand for industrial gas. Perhaps, there will not be a significant increase in household demand. And as for the demand of gas for electricity, you know that electricity here does not depend so much on gas. Rather, it depends on other factors such as rain, wind or solar energy. We believe therefore that before year-end, demand will go down slightly, but we do not expect such -- for it to be too significant.Having said that, let me finish this part of the question. The gas demand per se does not affect us much. There are also some other advantages arising from this fall in demand. Right now, spot prices in Spain are the cheapest in history. Yesterday, we hit a historical low of EUR 6.9 per megawatt hour. As system operators, we can therefore store gas in our storage facilities at a very good price. This situation was never observed before. So there are always pros and cons. The upside of this situation is that gas is reaching Spain at good price conditions. We are storing gas at good price conditions.And all this leads me to think and, of course, sorry for the aside, we are actually making a forecast without knowing exactly the health repercussions that COVID will have in all countries. But today's data show that there has been a slight improvement in figures. There are 3 major figures to be highlighted. There are not many infected people actually. We should keep in mind the number of people under the intensive care, the number of dead people and the number of people who have overcome COVID-19. Right now, we have about 50,000 -- or 60,000 people who have already been cured. If we take into account hospitalization and intensive care rate, we see that they are going down. Therefore, we can be somewhat optimistic for the forthcoming months. And we can say that industrial demand might rally in the forthcoming months. We can't say exactly when, but it seems that things will move in that direction.And as for the third question, CSP. Well, Enagás presented all of its allegations in January and other states. The Peruvian government is preparing the statement of defense, which should be filed in the forthcoming weeks. We have to wait until that time. However, the procedure that has been approved by the World Bank, by ICSID, I believe that this happened at the beginning of September. There is also a right of -- by the state of Peru to provide another statement of defense.So we shall keep you informed as things evolve. But right now, we do not have any additional data as to this procedure. As we know, is that all countries at this point or virtually all countries are under lockdown situations, all schools and government. Agencies are right now closed, and that's why there has not been any news in this regard in the past weeks. And I believe, Javier, that I have answered all of your questions.
The next question is by Alberto Gandolfi from Goldman Sachs.
I have 3 specific questions about some topics that have already been discussed. As for the dividend payout policy, could you please describe better the stress test you conducted on volumes and dividends? We see it from international subsidiaries or industries. How can we quantify the soundness of such dividends? Because in your statement, you were saying that the dividend payout policy should be maintained. However, Mr. Chairman, you stated that you are going to keep the overall dividend as well as the overall dividend payout policy. Could you please shine more light on this to, well, see how solid the dividend is?In terms of volume, in Spain, do you think that we may run the risk of a new tariff deficit? And should that be the case, which regulatory mechanisms would make it possible to offset the situation? And with regards to Tallgrass, it's quite clear that only 30% -- or that every year, 25% or 30% of the business must carry out some renegotiation in this regard, but we expect a drop of 10% of volumes and USD 10 in oil barrels because I believe that 30% is concerned with crude oil. Is that right?
Well, thank you very much, Alberto, for your questions, and we will get back to you in a couple of minutes. Thank you.Well, thank you very much, Alberto Gandolfi from Goldman Sachs. Let me answer all your questions. As for the first question concerning the dividend payout policy, well, the truth is that after having conducted very tough financial and technical stress tests, and now I'm not going to elaborate on this though, we believe that the cash flow, global stability of our company will enable us to maintain our dividend payout policy, which on the other hand, was based on a prudent approach for the fiscal period we are analyzing today. We do not believe that all the latest developments will significantly affect our company. We should take into account that as a TSO, we have our income scheme that is closely tied to specific standards. We, for example, place a priority on keeping the system operational. So supply and demand are somehow away from having a strong impact on our P&L account. We believe therefore that we can keep our dividend payout policy without a problem.As for a potential tariff deficit in the Spanish gas system, I should highlight the following. For the past 1 year or 2 years, the system as such has delivered excellence results, excellent income, resulting in certain capital gains. Therefore, this is being used to offset the tariff deficit in the amount of EUR 1.2 billion that we had. As of March 31, we can say that this tariff deficit, pursuant to the law I just mentioned, should have been eliminated by 2030. However, given the current pace, it has -- it will be eliminated between 2022 and '23. What I'm trying to say is that if, as a result of coronavirus impacts, a delay in paying some customer costs, should there be an increase in such deficit given our current performance, it will be absolutely possible to repay that deficit, not by 2022 but in 9 more years. Therefore, we could keep the system tool at rates. Even though this does not depend fully on us, this is quite evident because it depends on a legal provision, we believe that the gas system's balance in the future is under control and that any surplus profit coming from the system vis-à-vis cost was actually enabling us to repay debt in the best case scenario. The worst case scenario will just keep the initial calendar that we started in 2015, that is to say, 2031. We therefore believe that this will not affect tools, and as a result, the profit derived from the transmission or distribution system.As for Tallgrass, let me give you some relevant data. First of all, as Alberto asked us, this affects oil. We are talking about less than 50% or about less than 40% of the company's business. On the other hand, as shareholders, we already considered in our 2020 scheme a conservative approach to the data that the senior management provided us with timely. We took therefore into account oil and the possibility of this raising some competition. Therefore, we decided to increase our prudent approach, taking into account this potential effect. That's what the senior management decided to do.Therefore, we do not expect this 4-year contract renewal, about 7% each year, will have too strong an impact. In this case, we are not talking about a short-term contract that could be affected by daily price. But rather, we are talking about a 4- or 3-year contract for transmission services, for -- prices and costs of these prices will be more tied to a future forecast relevant to daily developments. On the other hand, we transport gas, I'm talking about gas. We transport gas associated to oil, but then we also have what we call dry gas or gas coming from other fields that have nothing to do with oil. This gas, which has the greatest portion in Tallgrass contracts, is not affected by oil price evolution.All in all, therefore, we believe that Tallgrass, with regards to these contracts, can in the short -- medium term, maintain the renewal of contracts based on the general guidelines put forward by the senior management based on a prudent approach. We believe that this is a greater, even guaranteed coefficient. So we can say that today, and not taking into account the short term but rather in view of how the market will evolve before year-end in the United States especially before 2021, we have certain peace of mind with regards to this potential evolution. So I believe that I have thus answered all 3 questions.
I believe that we have just one final question, sir, here. Yes, this is the last question by José Ruiz from Barclays.
I have some quick questions. During your discussions with the CMC with regards to regulations on gas in the long term, have you heard about any force majeure clauses or have you discussed any such clauses? If we are in a force majeure situation, are we -- are you safeguarded against any -- against the potential evolution of RCS?On the other hand, I would like to have further details about the Cartagena plant. Is this a pilot project with industrial clients, or are we talking about a steady investment? And the third question is the following. Do you have any estimates as to the working capital you will be financing before year-end?
Okay. Thank you, José Javier, for your question. Again, we will get back to you in a few minutes.Yes, José Ruiz from Barclays. Thank you very much for your questions. As for the first question concerning our approved regulations enforced for the next 7 years, same principle. There are no force majeure clauses or potential force majeure provisions. Should that be the case, we would have to explain which such force majeure clauses are. However, I should say that the first royal decree that about a month ago referred to a potential deferral of payment of tools by certain end customers or the potential entitlement to reduce their use commitments. It was expressly stated that this potential lack of income by the gas system would be offset through the state's general budget. So in conclusion, there's no provision whatsoever in our regulations in this regard.However, should -- or since the federal government realized that they could have an impact on the system's income and therefore, they decided that this should be charged to the state's general budget. Therefore, the overall systems, not only Enagás, are reasonably well-protected, taking into account that we are going through a force majeure situation or a lockdown situation where many businesses and companies are not operating. The state therefore understands that these measures are per se temporary.As for the Cartagena plant, we are not talking about sending hydrogen gas to our industrial clients. As part of our pilot project, we intend to produce synthetic gas that, I should say, hydrogen produced through electrolysis processes in order to mix it with our own gas for the gas consumed by plants by way of power in order to operate. This is already up and running. This is a scheme that is already up and running, with an investment scheme that is absolutely viable because we're not talking about large figures. Our intent is to extend this to all of our regasification plants so that at each plant, CO2 impact can be neutral or nil. This is very important because based on our industrial and engineering experience, in order to meet CO2 zero effects, we have to set neutral impact targets on a facility-by-facility basis. Therefore, our goal in the coming years is to extend what we are already doing successfully at the Cartagena plant to all other plants.And in closing, your question, this means that perhaps 10% of the gas that is self-consumed by the plant will not be CH4 but rather is going to be hydrogen produced on site. If we are able, and I believe we will, to extend this to our regasification plants in Spain, this will have a very good positive impact on Enagás' CO2 output as a company.As for our estimates with regards to the working capital, in our cash flow, or in our budget, we have a working capital fluctuation of about EUR 80 million, this being a positive figure. I believe that I thus answered your question. And again, thank you very much, José Ruiz, for your question.
Okay. Thank you very much, Mr. Chairman. So I believe that there are no further questions.
Is that right?
In fact, there are no further questions in the Spanish room.
Okay. Thank you very much, Antonio.Antonio, yes, you have the floor now.
If there are no further questions, Mr. Chairman, we thus formally close this conference call. Should there be any additional questions, please remember that you can contact the Investor Relations department. Thank you very much for joining us today.[Statements in English on this transcript were spoken by an interpreter present on the live call.]