FRANKFURT/PARIS GDF Suez (GSZ.PA), Europe's biggest utility, has scrapped the sale of a stake in its German gas storage unit, as bids came in too low, two people familiar with the matter said.
In a bid to cut debt, GDF last summer launched the sale of a minority stake in its Storengy Deutschland unit, which has been hurt by weak gas prices, and it was hoping to get offers of at least 500 million euros ($664 million), the sources added.
It had bought five gas storage facilities for roughly 1 billion euros from subsidiaries of Exxon (XOM.N) and Shell (RDSa.L) in 2011, taking the total number of facilities of Storengy Deutschland to seven.
GDF and Storengy declined to comment.
Operating gas storage has become less attractive as margins from buying cheap gas in summer and selling it for a premium in winter have come down following an erosion of gas prices.
In Germany, gas demand from power plants has shrunk as the fuel is being replaced by cheaper coal.
According to Storengy Deutschland, around 10 percent of Germany's annual gas consumption is held in storage facilities - either former gas fields or artificial caverns in salt beds - to compensate for seasonal fluctuations.
GDF Suez is battling to reduce its 46 billion euros of debt at a time when economic weakness is hitting demand for energy. Its debt pile grew when the group bought emerging markets-focused generation group International Power in a bid to reduce its exposure to Europe.
It has now announced asset sales and cost cuts to shore up its balance sheet.
In the past, GDF has sold minority stakes in units like the French gas grid and its exploration and production operations to financial investors.
GDF had advertised the stake in Storengy to infrastructure funds, pension funds and industrial players from Europe, Asia and America, but none were willing to pay its asking price, the sources said.
($1 = 0.7526 euros)
(Reporting by Arno Schuetze; additional reporting by Geert De Clercq; editing by Keiron Henderson)