The credit quality of Gas Natural SDG S.A. (Gas Natural) is underpinned by its: Dominant position in the Spanish natural gas supply markets and competitive supply contract portfolio; Ownership of almost all gas distribution networks in Spain, a source of stable regulated cash flow; Continued projected strong growth, with gas demand in Spain expected to double over the next five years; Strategic diversification into electricity; and Strong financial profile. The ratings are constrained by: A liberal regulatory environment and increasing competition expected from electric utilities; Standard&Poor's expectation that a greater share of revenues could be generated from higher-risk foreign energy markets (forecast by the company to represent 29% by 2005); and Political instability in Algeria, a principal source
