Swiss-based energy company MET Group submitted a binding offer in April to LNG Croatia to book capacities in the Krk LNG terminal for a three-year period, thus increasing its presence in the Liquified Natural Gas market. At the same time, the company is keeping up with the latest technologies and innovations, entering the renewable market as well.
CEENERGYNEWS spoke with Benjamin Lakatos, CEO of MET Group, about the importance of energy diversification and the role that both natural gas and renewables will play in the company’s future.
“For the region, the Krk LNG terminal is a long-awaited project, a project that perhaps should have been implemented 20 years ago,” Mr Lakatos points out. “It is really important for any gas region to have direct links to the global LNG market, otherwise you are not really part of the global market.”
According to him, nowadays, having access to LNG is something like having access to the internet and, when it comes to Central and Eastern Europe, this access is partially given by Croatia.
“The LNG terminal represents a new supply point for the CEE region, bringing greater source diversification. Being a part of the global LNG market is a must.”
“The motto of MET is implementing innovation, therefore we like to drive future developments if we have the strength to do so,” he continues. “It was right for our company to join this project and book capacity. We already have a portfolio in Croatia and Hungary, therefore linking the two was an obvious step.”
In Croatia, we met some difficulties considering that the netback prices for LNG were negative, but the current economic downturn and the earlier oversupply from the United States have served to turn the supply mathematics positive.
“I believe in competition,” says Mr Lakatos. “I like it when more companies face each other at the same location because it makes everybody stronger.”
Indeed, after MET Group, MFGK Croatia, the subsidiary of the Hungarian state-owned energy group MVM, booked a further 6.75 billion cubic metres (bcm) equivalent of LNG capacity at the Krk terminal. And, before all the available capacity was allocated, a final offer was received from POWERGLOBE QATAR, which will deliver LNG cargoes mainly from Qatar and the US.
“I cannot exclude that this LNG capacity is going to be used only partially, but the important aspect now is the potential access,” stresses Mr Lakatos.
Now more than ever competition is everything, especially when it comes to the growing number of new and game-changing technologies and players.
“The competition in the traditional gas markets is not higher than it was before, it is actually more structured,” Mr Lakatos recognises. “I believe that natural gas will provide me with a job until my retirement. But in order to diversify, we also operate in the renewable business. Right now, we are lagging a bit behind other big companies operating in renewables, we are, however, already moving in the right direction.”
MET Group has entered the renewable generation market with two solar parks in Hungary. The company now has ambitious plans in renewable energy production in Central and Eastern Europe.
“There is an ongoing debate about energy transition, especially in regions that rely on natural gas,” adds Mr Lakatos. “Although I do not see a quick solution, my gut feeling tells me that the transition will be faster than we currently assume. In some countries, we could still operate in this environment for many years.”
“Companies must prepare for a world in which gas will be a shrinking part of the market. So, we have to prepare for the new world, but we have some time.”
However, things have slowed down over the past few months with the outbreak of the coronavirus pandemic, a shock for both the economy and the energy sector. MET Group had to weather a difficult situation being present in 14 European countries, with 1,600 permanent staff. But, as its CEO affirms, the company handled things quite well.
“Of course, it is always a challenge when people have to stay locked up too long in the same room, but during the lockdown period we had a lot of online activities (e-yoga, e-baking, e-birthdays),” he mentions. “We created an e-ecosystem and it brought people together. Still, it was a real challenge for the business. Sales were impacted, but on the trading side, we realised profits due to the high volatility levels rarely seen in energy markets. This is the advantage of being integrated: when one part of our value chain is squeezed, we can refocus on another part.”
Before the pandemic, another major transaction was completed, when Singapore-based company Keppel completed its acquisition of a 20 per cent stake in MET Group, entering into a strategic partnership to jointly explore investment opportunities focusing on European energy infrastructure assets.
“There are no changes in our plan and our strategy remains the same. We would like to be a leading player in the consolidation of the European energy market,” confirms Mr Lakatos.
“Of course, the frequency of meetings was not the same and we lost several months because of Covid-19,” he continues. “National lockdowns were different and not synchronised, which did not help. I hope we will be able to go back to business as usual in the first half of 2021. On the other hand, there are some exciting transactions happening right now. We stopped for several months and it was difficult to close deals, but we can already see new transactions lining up.”
“Keppel Corporation and MET have already discussed the types of assets that could be acquired in different countries, but no specific agreement has yet been reached,” reveals MET Group’s CEO. “Future investments are planned in areas related to the current activities of MET Group, especially where synergies can be created between existing positions and the target.”