LNG

Serbia, the Balkan state that was part of the former Yugoslavia and has been a candidate nation for 10 years to be a member of the European Union, has completed an interconnector pipeline to Bulgaria giving the Serbs supply options of regasified LNG from Greece or pipeline gas from Azerbaijan to replace Russian supplies.

Uniper, the German utility almost brought down by the stoppage of pipeline natural gas supplies from Russia’s Gazprom and which is now importing LNG at Germany’s North Sea port of Wilhelmshaven, has suffered another setback by having to pay €550 ($602M) to a European LNG player after an arbitration ruling.

The Düsseldorf-based company, which had to receive a stabilization package from the German Federal government in 2022 to survive and reported net losses of €19 billion ($20.4Bln) in its most recent annual earnings, said the ruling came from an arbitration court over a contract concluded prior to the group’s spin-off in 2016.

Uniper said that the arbitration proceedings, under the rules of the International Chamber of Commerce, began in early 2021 and related to the pricing provisions of a long-term LNG supply agreement with an undisclosed counter-party.

Proceedings

“Uniper has been notified on 24 November 2023 of an award against a subsidiary in arbitration proceedings under the rules of the ICC which began in early 2021,” said the Uniper statement.

“The proceedings between the Uniper subsidiary and a European energy company relate, inter alia, to the pricing provisions of a long-term agreement for the supply of liquified natural gas (LNG), concluded prior to the spin-off of Uniper in 2016 and which has since expired,” Uniper explained.

“A payment to the opposing party of an estimated €550 million related to the retroactive re-pricing of the long-term agreement would be due under the terms of the award,” it added.

“The additional payment will have a full impact on the annual result of Uniper. Uniper is currently analyzing the reasoning of the decision and reviewing all possible avenues of legal recourse against the award,” stated the company.  

The 2017 report of the International Group of LNG Importers (GIIGNL) showed a 15-year contract under which Italian energy company Eni agreed to supply Uniper with 650,000 tonnes of LNG per annum between 2007 and 2022.

However, Milan-based Eni has so far declined to comment on the issue.

Uniper said in October 2023 that it expected adjusted earnings before interest and tax of between €6 billion to €7Bln and adjusted net profit of €4Bln to €5Bln.

Gazprom issues

Uniper was spun from German utility E.ON in 2016 and has also been involved in lawsuits against Gazprom, the former supplier of pipeline natural gas to Germany. At the time Uniper was under the control of the new owner, the Finnish power company Fortum.

However, Uniper was then formally taken over from Fortum in December 2022 in a deal with the German State that had included clearances from the European Commission to save Uniper from collapse.

Uniper itself had launched legal proceedings in 2022 against Gazprom which first cut and later suspended deliveries, sending Uniper into crisis.

Uniper’s bad luck was compounded in 2022 as it was also a buyer of LNG cargoes from the US Freeport LNG plant in Texas closed for part of 2022 and early 2023 by the June 8 fire.

The Wilhelmshaven LNG terminal commenced regular operations in March 2023, using the floating storage and regasification unit, the “Höegh Esperanza”.

The facility was developed by Uniper in record time and became the first German LNG import terminal to start operations on December 21, 2022, initially in trials. 

The European Commission is paying Poland €3.85 billion ($4.04Bln) to support the initial aftermath of the shutdown of coal mines in five Polish regions as the nation increases LNG and pipeline natural gas imports as well as developming renewable energy sources.

The European Union was scheduled to hold an emergency energy council meeting in Brussels on September 30 to discuss the consequences of the two leaking Nord Stream I and Nord Stream II gas pipelines in the Baltic Sea that appear to have been sabotaged and to also address high energy prices.

LNG importer Poland has seen the inauguration of a new natural gas pipeline interconnector between Poland and Slovakia as European Union funding is helping to create a Polish gas hub supplying central and northeast EU countries.

The European Commission’s competition officials are preparing to block a $2 billion merger between two of the world's biggest shipbuilders Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering.

The European Commission, the executive arm of the 27-nation European Union, has issued a document containing the conditions for energy projects involving natural gas, LNG-for-power and nuclear power to be labelled as “green” and part of the energy transition.

The proposed text, debated for months and still provisional, was sent to the member states on December 31, shortly before midnight and the start of 2022.

The Commission paper sets the criteria for classifying as “sustainable” investments those made in natural gas, gas fired-power plants and nuclear facilities generating power.

The EU Brussels-based executive’s overall aim is to encourage the raising of “green” finance for these types of projects to ensure energy security, while also reducing greenhouse-gas emissions.

The Commission’s official energy transition document was demanded by France, which wishes to relaunch its nuclear industry, regarded by a majority of French people as a stable and carbon-free source of electricity.

The French were backed by central European countries such as Poland and the Czech Republic, which must replace their coal-fired power stations with cleaner gas-fired plants.

Cost reductions

“Such a classification allows a reduction in financing costs, which is crucial for the projects concerned and the states wishing to support them,” said an EU official.

Analysts note that environmental activists oppose the recognition of gas-fired power stations and nuclear power by the EU for the energy transition because of carbon-dioxide emissions from gas facilities, even as they are much less than from those using coal.

Germany in particular and its new Left-Green government opposes nuclear plants because of the production of radioactive waste, which has to be stored.

EU officials said that a small group of countries, led by Germany, fought and failed to exclude the “green” labelling of nuclear power from the Commission text.

The pro-natural gas and pro-nuclear nations have argued that while renewable energy such as wind and solar are laudable and necessary, they suffer intermittent production problems, are hugely subsidized by up to 25 percent and don’t provide full energy security.

The Commission proposal sets conditions for the inclusion of nuclear and gas, in particular a time limit.

The EU text shows that for the construction of new nuclear power plants the projects must have obtained a building permit before 2045.

“Concerning the works allowing to extend the life of the existing plants, they must have been authorized before 2040,” the document added.

“Guarantees in terms of waste treatment and dismantling of nuclear installations at the end of their life are also required,” the paper stated. 

European natural gas companies in the Balkans region have until mid-December 2018 to express market interest in the Greek Alexandroupolis LNG import terminal and gas hub proposed by Greek utility company Gastrade.

Anti-trust investigations by the European Commission into LNG agreements between Qatar and European energy companies has led Qatar Petroleum to say it gave the “highest importance” to compliance around the world and would cooperate with Brussels.

The European Commission, the executive arm of the 28-nation European Union, has opened an anti-trust investigation into liquefied natural gas agreements between Qatar Petroleum and European energy companies and utilities, at the likely instigation of Germany whose natural gas mostly comes from Russia by pipeline.