The AES Corporation (AES) Q1 2021 Earnings Report, Transcript and Summary

Good morning and welcome to the AES Corporation Q1 2021 Financial Review Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I now like to turn the conference over to Ahmed Pasha, Chief Treasurer and Vice President of Investor Relations. Thank you and over to you.

Thank you, Operator. Good morning and welcome to our first quarter 2021 financial review call. Our press release, presentation and related financial information are available on our website at aes.com. Today, we will be making forward-looking statements during the call. There are many factors that may cause future results to differ materially from these statements, which are discussed in our most recent 10-K and 10-Q filed with the SEC. Reconciliations between GAAP and non-GAAP financial measures can also be found on our website along with the presentation. Joining me this morning are Andrés Gluski, our President and Chief Executive Officer; Gustavo Pimenta, our Chief Financial Officer and other senior members of our management team. With that, I will turn the call over to Andrés. Andrés? Andrés Gluski: Good morning, everyone, and thank you for joining our first quarter financial review call. Our first quarter results put us on track to achieve our 2021 guidance and 7% to 9% average annual growth through 2025. Gustavo will provide more color on our financial results later in the call. As we spoke about on our Investor Day in early March, we see a great opportunity for growth. Given the momentum is changes in our sector. And we are very well positioned to capitalize on the shift to low carbon sources of energy. Over the past five years we have transformed our company to be a leader in renewable and we have invested in innovative technologies that will give us a competitive advantage for many years to come. Although it has been less than two months since our Investor Day we had a number of significant achievements to announce, including a landmark deal with Google which I will describe in more detail later. A strategic collaboration to develop new battery technologies between Fluence and Northvolt the leading European supplier of sustainable battery systems and a significant increase in LNG sales in Central America and the Caribbean to support those economies in the transition away from heavy fuels. First let me lay out our strategic priorities for 2021 and the substantial progress that we have made year-to-date for the achieving those objectives. Turning to Slide, our five key goals for the year are one signed contracts for 4 gigawatts of renewables. Two, launch the 24-7 product for carbon free energy on an hourly basis. Three, further unlock the value of our technology platforms. Four, continue to improve our ESG positioning through the transformation of our portfolio. And five, monetize excess LNG capacity in Central America and the Caribbean. Turning to Slide 5 last year, we set and exceeded a goal of signing 2 to 3 gigawatts of PPAs for renewables and energy storage. This year we are increasing that goal by 60% to a target of 4 gigawatts. Today. I am pleased to report that year-to-date, we've already signed 1.1 gigawatt including a landmark deal with moving. As you can see on Slide 6, we have a backlog of 6.9 gigawatts of renewables consisting of projects already under construction or under signed power purchase agreements or PPAs. This equates to 20% growth in our total installed capacity and a 60% increase in our renewables capacity. Turning to Slide 7. We continue to increase our pipeline of projects to support our growth and now have a global pipeline of more than 30 gigawatts of renewable projects. What we, half of which is the United States. With increasing demand from corporate customers and a much more favorable policy environment, we expect the need for renewables to grow dramatically and we're taking steps to ensure a continued competitive advantage. Moving to Slide 8. Our second key goal for this year is to launch the first 24-7 energy product that matches a customer's load with carbon free energy on an hourly basis. To that end, earlier this week, we announced a landmark first of its kind agreement to supply Google's Virginia-based data centers with 24-7 carbon free energy source from a portfolio of 500 megawatts of renewables. Under this innovative structure AES will become the sole supplier of the datacenters energy needs. Ensuring that the energy supplied will meet carbon free targets when measured on an hourly basis for the next 10 years. The carbon free energy will come from an optimized portfolio of wind, solar, hydro and battery storage resources. This agreement has a new standard in carbon free energy for commercial and industrial customers who signed 23 gigawatts of PPAs in 2020. As we discussed at our Investor Day we almost 300 companies that make up the RE 100 will need more than 100 gigawatts of new renewables by 2030. This transaction with Google demonstrate that a higher sustainability standard is possible. And we expect a substantial portion of customers to pursue 24-7 carbon free objectives. Based on our leadership position, we are well placed to serve this growing market. And in fact, we've already seen significant interest from a number of large clients. Turning to Slide 9, our third key goal is to further unlock the value of our technology platforms. One of these platforms is Uplight and energy efficiency, software company that works directly with utility and has access to more than a 100 million households and businesses in the US. Uplight is at the forefront of the shift to low-carbon and digital solutions on the cloud. In March, we announced a capital raise with a consortium led by Schneider Electric valuing Uplight at 1.5 billion. Now to Slide 10. We are seeing increasing value in many of our other technology platforms as well. Fluence our joint venture with Siemens are a global leader in energy storage, which is a key component of the energy transition. This dynamic industry is expected to grow 40% annually and Fluence is well positioned to capitalize on this immense opportunity through its distinct competitive advantages including its AI enabled leading engine. Turning to Slide 11, as you may have seen last month Fluence announced a multi-year agreement with Northvolt the leading European battery developer and manufacturer for assured supply and to co-develop next-generation battery technology. This is an example of Fluence is continued innovation, which has been validated by the consistent rank as the number one utility scale energy storage technology company, according to guide house insight. Similarly, we see the rapid progress of our prefab solution 5B as you can see on Slide 12. This technology double the energy density and cuts construction time by 2/3. We now have 5G projects in Australia, Panama and Chile. We will be, including 5G technology in our business in Puerto Rico. Or it's proven resilience to Category 4 hurricane winds will provide greater energy security. Proving out the unique value proposition of 5G could significantly speed up the adoption of solar in cyclone prone areas. Lastly, we continue to work towards the approval of the first large-scale green hydrogen based ammonia plant in the Western Hemisphere in Chile. Moving to Slide 13 we have undergone one of the most dramatic transformations in our sector. Over the past five years, we have announced the retirement or sale of 10.7 gigawatts of coal or 70% of our coal capacity one of the largest reductions in our sector. We recognize that we have more work to do and have set a goal of reducing our generation from coal to less than 10% of total generation by 2025 furthermore, we expect to achieve net zero emissions from electricity by 2040 one of the most ambitious goals of any power company. As we achieve decarbonization targets and continuing our near-term growth in renewables. We anticipate being included in additional ESG oriented indices. Finally, turning to Slide 14 we see natural gas as a transition fuel that can lower emissions and reduce overall energy costs as markets work for the future with more renewable power. Last month, we reached an agreement to provide terminal services for an additional 34 tera BTUs of LNG throughput under a 20-year take-or-pay contract. This will bring our total contracted terminal capacity in Panama and the Dominican Republic to almost 80%. There are 45 tera BTUs of available capacity remaining. We expect to sign in the next couple of years. Our LNG business is focused on providing environmentally responsible LNG or Green LNG as soon as feasible which ensures the lowest levels of the missions throughout the entire supply chain. Now I would like to turn the call over to Gustavo Pimenta, our CFO.

Thanks Andrés and good morning everyone. As Andrés mentioned, we are off to a good start this year having already achieved significant milestones towards the strategic and financial objectives that we discussed on our Investor Day. We are also encouraged by the continued economic recovery across our markets with demand in line with pre-COVID levels. Turning to our financial results for the quarter. As you can see on Slide 16 adjusted pre-tax contribution or B2C was $247 million for the quarter which was very much in line with our expectations and similar to last year's performance. I'll discuss the key drivers of our first quarter results and outlook for the year in the following slides. Turning to Slide 17 adjusted EPS for the quarter was $0.28 versus $0.29 last year. With adjusted PTC essentially flat. The $0.01 decrease in adjusted EPS was the result of a slightly higher effective tax rate this quarter. In the US and utilities, the Strategic Business Units or SBU, PTC was down $27 million driven primarily by a lower contribution from our legacy units at Southland and higher spend in our clean energy business as we accelerate our development pipeline given the growing market opportunities. There is impacts were partially offset by the benefits from the commencement of PPAs at the Southland energy combined cycle gas turbines or CCGTs. At our South America SBU, B2C was down $31 million mostly driven by lower contributions from AES Andes [ph] formerly known as AES Hamer [ph], due to higher interest expense and lower equity earnings from the Guacolda plant in Chile. These impacts were partially offset by higher generation at the Chivor or hydro plant in Colombia. Lower PTC at our Mexico Central America and the Caribbean or MCC, as we primarily reflects outages at two facilities in Domenic Republic and Mexico with both already back online since April. Results also reflect the expiration of the 72 megawatt barge PPA in Panama. Finally in Eurasia higher PTC reflects improved operational performance and lower interest expense in our Bulgaria businesses. Now to Slide 22. With our first quarter results, we are on track to achieve our full-year 2021 adjusted EPS guidance range of $1.50 to $1.58 . Our expected 2021 quarterly earnings profile is consistent with the average of the last five years. Our typical quarterly earnings is more back-end weighted with roughly 40% of the earnings occurred in the first half of the year and the remaining in the second half. Growth in the year to go will be primarily driven by contributions from new businesses including a full years of operations of the Southland repowering project, 2.3 gigawatt of projects in our backlog coming online during the next nine months. Reduced interest expense, the benefits from cost savings and the Med normalization to pre-COVID levels. We are also reaffirming our expected 7% to 9% average annual growth target through 2025. Now turning to our credit profile on Slide 23, as discussed at our Investor Day, strong credit metrics remain one of our top priorities. In the last four years we obtained two to three notches of upgrades from the three credit rating agencies, including investment grade rating from Fitch and S&P. This action validates the strength of our business model and our commitment to improving our credit metrics. We expect the positive momentum in these metrics to continue enabling the strategic BBB flat credit metrics by 2025. Now to our 2021 parent capital allocation plan on the Slide 24. Consistent with the discussion at our Investor Day sources reflect approximately $2 billion of total discretionary cash including $800 million of parent-free cash flow and $100 million of proceeds from the sale of the table [ph] in the Dominican Republic which just closed in April. Sources also include the successful issuance of the $1 billion of equity units in March. Eliminating the need for any additional equity raise to fund our current growth plan through June, 25. Now to uses on the right hand side we'll be returning $350 million to shareholders this year. This consists of our common share dividend, including the 5% increase we announced in December and the coupon of the equity units. And we plan to invest approximately $1.4 billion to $1.5 billion in our subsidiaries, as we capitalize on attractive growth opportunities. Approximately 60% of investments are in global renewable, reflecting our success in renewables origination during 2020 and our expectations for 2021. About 25% of the investments are in our US utilities to fund rate base growth with a continued focus on grid and fleet modernization. In the first quarter, we invested approximately $450 million in renewables, which is roughly 1/3 of our expected investment for the year. In summary, 85% of our investments are going into the US utilities and global renewables helping us to achieve our goal of increasing the proportion of earnings from the US to more than half and from carbon for businesses to about 2/3 by 2025. The remaining 50% of our investments will go towards green LNG and other innovative opportunities that support and accelerate the energy transition. With that, I'll turn the call back over to Andrés. Andrés Gluski : Thank you, Gustavo. Before we take your questions let me summarize today's call. As I have noted we have made great progress on our 2021 and long-term strategic goals and we are reaffirming our 2021 guidance and expectations through 2025. We see a tremendous opportunity for growth and further increasing our technological leadership as the industry transition unfolds. From advancing our renewables to unlocking the value of our new technology businesses we have a competitive advantage that will continue to benefit our customers and investors. With that I would like to open up the call to your questions.

[Operator Instructions] The first question is from the line of Richard Sunderland from JP Morgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. Just wanted to start off on the North agreement and what it could be the Fluence and maybe the energy storage market more broadly and kind of curious on the development front itself is this more sort of iterative development work or further up the installment curve? Andrés Gluski : Yes, that's a great question. This is really a landmark agreement as we move to essentially have strategic relationships with battery manufacturers. So Northvolt is building a new plant in Sweden. And in Poland and we will have one train of the plant in Poland producing batteries for us. So as this market expands and as you have a real growth in demand this assures battery supply for one of our markets. And also I would say Europe, Middle East, Africa and in addition, we will not only have supply of batteries and again dedicated train to us, but we will also be working with Northvolt. So you have the new developments in battery. So in terms as battery technology develops as you have better chemistry, as we say fine-tune our cube stacked design. We will have joint development of additional improve batteries on multiple fronts. So this is a, I think, a very interesting development of getting a little bit more involved, that's a one-step prior to just being the integrator and providing the control softwares.

Got it, thank you for the color. And then, separately, thinking about this Google deal, you would have the ability to replicate that with other C&I customers, I know you mentioned some interest already. And I guess curious alongside that's some aspects around the agreement itself, whether you -- this is about having the right assets and the right location to procure or, you know, about the energy kind of management angle as well. Andrés Gluski: Or, you know, it's both in a sense, so let me take the second part first, explain a little bit what the product is. So the product really -- that the key point is that we're netting on an hourly basis, a, you know, carbon-free energy. So, this is -- you know, most contracts. Prior to this, virtually all, are really netting, you know, to be on a yearly basis could be, et cetera. So you have an excess purchases of renewables during certain hours, but you're actually using non-renewables during other hours, obviously, when you don't have the production of the renewables. This is actually saying, "You know, on an hourly basis, the energy that I'm getting is carbon free." So you ask -- you know the right question it's not just a question of, you know, having overbuild solar or overbuilt wind, it's really how do you manage these different sources of energy, you know, not only to ensure that it's carbon free, but to minimize the cost? So you know, when are you buying -- When are you using wind? When are you using solar? And the real key to make this happen is adding hydro -- small hydros and adding, of course, battery storage? So it's really how do you optimize multiple uses of -- multiple sources of renewable energy to provide the lowest cost guaranteed carbon-free energy netted on an hourly basis? So behind this offer, there's a lot of math, a lot of algorithms, a lot of risk management. And we think that, you know, this is a deal that with Google itself, you know, we had a $1 billion -- I sorry, one gigawatts agreement to the first 500 and we expect it to grow as demand in these data center grows. But, of course, there are other corporate clients that are interested in this. And you know, we've seen interest from. So as people, I would say up their environmental goals, and saying, well, we're going to be net zero carbon emissions on a global scale, and really having an hourly netting. This is really the only product on the market. So, of course, those companies that have the highest environmental standards are interested in this product. So it's a -- we think, a very interesting development, and one that we expect to replicate with multiple clients.

Great. Thank you for the time today.

Thank you. Next question comes from Durgesh Chopra from Evercore ISI. Please go ahead.

Hey. Good morning, team. Thanks for taking my question. Maybe just -- I wanted to start with the 0.21 target. You know, Analyst Day, you guys were targeting three to four gigawatts of PPAs this year. And now it sort of seems like it's 4 [ph]. I just want to make sure I'm understanding that correctly. Is that just because you had a strong start? And now you're expecting 4 instead of 24 [ph] at the Analyst Day? Andrés Gluski: But, yes, I mean, we did three in 2019 and 2020. We're seeing a strong start, you know, not only inside PPAs, but the deals we have in progress. So we feel sufficiently confident to say that, you know, we expect to be at the upper end of our initial guidance range of 3 or 4 [ph]. So we expect to be and four gigawatts of new renewable PPAs signed in 2021.

That's perfect. Thank you for clarifying that, Andrés. Maybe this -- can I get your thoughts on competition. And there's, obviously, there's all a lot of us, sort of domestic players in the market. You're seeing a lot of international competition. Maybe just any thoughts as you sort of compete with these PPAs, what's the competition like and sort of, you know, what's your competitive advantage? Andrés Gluski: All -- we do see, you know, a lot of competition out there in the market. Our strategy has been to offer more value to our clients. So we don't want to just compete for commoditized, you know, thus, far, renewable PPAs. So we have several competitive advantages. And, of course, with our knowledge of energy storage, you know, we have been really a leader in the new applications for energy storage, not only through influence in terms of the new design, but you know, A.I., bidding -- enabled bidding engines, and how do we combine them? So, the Google deal is a perfect example of how we brought together multiple energy sources -- renewable energy sources, and provided a unique product to a very demanding client. So that's our angle. Our angle is really you know, how we bring these things together? How we create more value for the client? And I think very importantly, is that we co-create with our clients. So this was a joint project with Google that, you know, reflects more than a year's work. It's just like what we did in Kauai, what was really sort of the first sort of 24/7 solar energy storage product offering. We co-developed it with the Kauai Island utility cooperative. So that's our unique angle. So again, we see more deals like this Google deal, and more ways of working with clients to provide more value, and just not a commoditized product. So, the other advantage we have is, we started working on our pipeline. So we have a pipeline of 30 gigawatts, globally. We have a pipeline of more than 15 gigawatts in the U.S. And, you know, pipeline is not an equally defined term across all players. What we mean a pipeline, these are projects that we can execute on. So we have a land bank, we've been buying land, we've been buying land rights, we've been getting interconnection rights, looking really at the overlay of like best solar irradiation, best interconnections with the grid. And in addition, you know, best wind sites. So you know, we feel very good. I mean, putting something together like we did for Google in Virginia, it's something that we can replicate in other markets, where we have big presence, whether it be New York, whether it be California, that we don't think other people can present. So I think we're very well situated. And we also have some other angles that people don't have, that are very new. One I'll mention is 5B, 5B allows us to double the energy density. So think about that if you need to locate 100 megawatts of energy, we can do it in a space, other people can do it in 15, we can build it in a third of the time. Now 5B, you know, the MAVERICK product is still early in its stage of development. We still have to massify to drive down costs and prove it out. But it has unique characteristics, not only the ones I've mentioned, but in Australia, it has been tested in actual life situations, like category four hurricane winds. And that's something that conventional solar cannot do. So we feel very optimistic of offering this suite of technologies, and also a unique way of bringing them together and also a unique way of working with clients.

That's great. Thank you for that color, Andrés. Lots of exciting talk. I'll jump back in the queue. Thanks for the time. Andrés Gluski: Thank you.

Thank you. The next question is from the mind of Stephen Byrd from Morgan Stanley. Please go ahead.

Hey, good morning. Andrés Gluski: Good morning, Steve.

Wanted to talk through supply chain stresses. We regularly get questions just throughout the whole renewables value chain about, you know, shortages, cost increases, et cetera, and I respect that sort of the Northvolt agreement is one example of many ways that you've, you know, ensure availability. But, I guess, broadly put across, you know, solar, across the balance of system class stores, et cetera. Are you seeing any stresses on supply chain for you all any impacts from that broadly? Andrés Gluski: No, that's a great question. And as you know, we've been, I think, always very concerned about this. You know, when we talk to, you know, beginning of last year, about COVID at the time, and we said look, you know, we were concerned about supply from Asia, and you know, the possible effects of COVID on the supply chain, even here in the States. So, you know, we've been on top of this. But right now we're not seeing any real supply constraints, whether it be on batteries, whether it be on solar panels, whether we see on wind turbines. However, if you look at the growth plans that are reflected in, for example, the Biden's renewable energy agenda. And you see what utilities are talking about, they're seeing a dramatic increase in demand. And we think that that could be a problem in the future. So we're getting out ahead of this. And, you know, I think, you know, it's not only the physical supplies that, you know, we're talking about. But it could be things like land, for example, you know, how many megawatts of readily available land is there to meet this great need. So right now, we're not seeing it safe. But we're on top of it. And that's what we're making the kind of strategic agreements like Northvolt. You know, expect more, I would say because that, we think, is a key element. And we expect this market to grow very rapidly. And we think you have to be thinking about that now, at all angles, whether it be people, you know, land interconnections? I don't see -- and I think we've spoken about it in the past, you know, energy storage, playing a role in eliminating transmission constraints. So that's an exciting new area that needs to be developed. And really, isn't that. So getting to your answer, we're not seeing it today. We're on top of it. I do expect there to be a pinch if sometime in the future, when I don't know, you know, going to be 12 months could be 18 months. But we're preparing for that possibility.

That's really helpful. And maybe shifting gears to 5B, you know, you've spoken about this before. You laid it out again today. And I'm just curious, your latest thoughts in terms of as you think about the growth of a 5B, whether that this is going to be is there a potential given just how beneficial this approach is that this is something that's similar to other technologies you develop that you can broadly monetize, broadly market and sell? Or is this something more for your own purposes over time? How like -- how broad could this be? And is this another candidate that could be monetized over time? Andrés Gluski: You know I love the question. So you know, we've had -- my counting four unicorns, you know, small companies, in fact with more than $1 billion valuation. I think our secret sauce has been to buy small companies. And then some of them we bought for, you know, $20 million, $30 million, initial investment, and now are worth more than $1 billion. And what's the secret sauce? The secret sauce really is -- one, we give them a platform for massive expansion; two, we work with them to create new applications. So we're not just a client, it's like we are co-developing and creating new uses for this technology. So we allow it to grow fast, we allow it to grow new areas. But equally important, we're able to keep the entrepreneurial spirit of these businesses. So in other words, even though we're a big company, we make a real effort not to smother them, you know, and let them run as much as possible on their own. Now, we made a philosophical decision years ago, that just to use it on our own platform, while that gives us a temporary advantage limits the growth of this new technology. And, quite frankly, a lot of this has to do with massive buying them to really drive down costs. You know, energy storage is a lot cheaper today, because we massified it. You know, we're in 29 countries, we have 5.6 gigawatts in 29 countries that we either built, or we're providing control systems, you know, bidding platforms. So, that's -- you know, that's quite large and allows us to learn from that. So with 5B, it's the same. You know, we will have certain kind of exclusivity in certain markets. But, no, this will be available to the broader market overtime. So what we're doing with 5B is again, massive, buying it, proving it out. And then eventually, we will, it will be available to other players as well. So for example, today in Australia, other people are using 5B technology. And I see it very similar to you know, our prior ventures, whether it be fluids, whether it be distributed energy that we have, whether it be up like [ph] that, you know, our philosophy is not just keep it to ourselves, just keep it to our own platform, but expand it more broadly. So, it's interesting; we make money but we make money for our shareholders in two ways. One is our platforms, which we are shifting from fossil fuels to renewables and there you can value us on cash flow, earnings per share et cetera. But at the same time we're creating value in these new technology companies, and those have a different valuation and the different value creation and that's why, selling to third parties is so important to maximize the value of them. Now the fact is that having the link between AES and these startups is key because as I said we mutually beneficial to create value. We help them grow. They help us to really be a leading-edge technology provider. If we didn't have the knowledge of batteries that we have, we wouldn't have done the budget deal. So there are two ways that we're creating value here with these new companies.

Really helpful. Thanks so much.

The next question is from the line of David Peters from Wolfe Research. Please go ahead.

Hey, good morning guys. I was just curious on the strategic alliance with Google, are you guys still working on similar agreements and locations beyond Virginia. I guess I'm just wondering how far you expect kind of the scope of that particular dealer Alliance to reach? Andrés Gluski : What I can say is really that we had an initial agreement, which we had talked about that we really the sort of RFP for one gigawatt that has, I would say developed if you willing to the deal that we have announced. We expect to expansion of that energy provided over time as their needs grow and again, we have this unique product that we will offer to then and other clients at this stage in time. So that's all I really can say at this stage of the game.

Okay. And then maybe just on some of the other products you have in the works. Is there been any updates on the hydrogen study in Chile or we're in Vietnam, the LNG and CCGT projects, I guess since Investor Day. Andrés Gluski : Look regarding first the green hydrogen really green ammonia project in Chile. We continue to work with our partner on the feasibility study. So where it goes on and as I said, we'll probably have news before the end of the year one way or the other. So it's really a matter of, can we get the cost down to be competitive with grey or blue hydrogen products. So I'm optimistic, we're working hard, stay tuned. Regarding Vietnam. It's the same thing. We continue to work towards a new LNG terminal, which would be 450 or so Terra BTUs. So, more than double what we have between Panama and the Dominican Republic, and there is an associated 0.2 gig watts of combined cycle gas plants. So not that progress continues on that were part of the government's plan realize at this facility will avoid the construction of many, many coal plants, and I also mentioned that we will be as soon as feasible moving towards, providing green hydrogen, which basically means that it certified that it doesn't, it has less a certain amount of leakage from production to delivery, and we think that's very important to really reap the climate advantages of natural gas versus say other heavy fossil fuels.

Great, thank you for your time.

Thank you. The next question is from the line of Charles Fishman from Morningstar. Please go ahead.

Good morning, Andreas. I wanted to follow up on that Vietnam questions first of all recent strength then crude oil prices help you in the development of that project in Vietnam. I would think. I appreciate there is some coal plants there but it is in a lot of the competition, or at least that you'd be replacing residual fuel for power generation in that region. And yes the strength of the crude oil price help in that? Andrés Gluski : Our RLNG business is really tolling in Central America and the Caribbean. So we get a tolling fee. We're not taking direct commodity risk now of course the bigger the spread between Henry Hub and world oil prices especially WTI, the more tolling will do at the margins in a lot of these take-or-pay agreements. So what we've announced is take or pay. So we're not so directly affect but all things being equal, a bigger spread between natural gas and oil is favorable, will do at the margin, some more. In Vietnam this is a project which is very much needed because they had been relying on offshore gas and that's running out, so this will, it has an immediate demand unlike say Dominican Republic and Panama, where we had to develop to demand [ph]. So you have to bring in gas to feed the existing combined cycles. So I really don't see it as much as directly as oil price gas play. Again at the margin, you could have more industries converter more transportation convert to compressed natural gas or other forms, but not really. These were tolling agreements and in Vietnam, the demand is there, it doesn't have to be created but again, as [indiscernible].

As I recall, the Vietnam project doesn't enter into the 7.9% through 2025 that's really 25 events and beyond correct? Andrés Gluski : That's correct?

Okay, thank you. That's all I have.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I would like turn the conference back to Ahmed Pasha for closing comments. Please go ahead.

Thank you everybody for joining us on today's call. As always, the IR team will be available to answer any follow-up questions you may have. Thanks again and have a great day.

Thank you very much, ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.