LNG

Naturgy Energy, the power company with LNG operations from Puerto Rico to Europe and pipeline gas networks from Algeria to South America, is no longer being targeted for a takeover by a company from Abu Dhabi in the United Arab Emirates.

TAQA, a power and water utility founded in 2005, had been in negotiations to acquire Spain's largest gas company, together with contracts with Algeria and also a long-term contract to import some 2.25 million tonnes per annum Russian LNG.

Under its formal name, Abu Dhabi National Energy Company (TAQA), the UAE company was aiming to acquire the stakes of equity funds that own a large proportion of Naturgy shares.

The UAE company, which is itself listed on Abu Dhabi Securities Exchange (ADX), is an international energy and water operator with a presence in 11 countries.

Boardroom doubts

However, the board of Abu Dhabi's TAQA has decided to withdraw from negotiations that would have launched a joint takeover bid for Naturgy along with Spanish holding company Criteria Caixa

TAQA's decision to drop the joint bid with Spain’s Criteria Caixa was final, according to investment banks involved in the talks.

TAQA had initially said it was also in talks with two private equity firms CVC and GIP, each owning more than 20 percent of Naturgy, to acquire their stakes.

The Abu Dhabi company's talks with Criteria Caixa involved its ownership of a 26.7 percent stake in Naturgy and a possible partnership agreement between TAQA and Criteria Caixa.

Naturgy has a market value of €24.3 billion ($26.Bln), though the transaction was seen by analysts as complicated.

Naturgy posted net income for 2023 of €1.98Bln, which was an increase on the €1.64Bln logged in the previous year.

Gas portfolio

The Spanish company has widespread pipeline natural gas assets in Europe, South America and in North Africa, including the Medgaz Pipeline for natural gas connecting Algerian gas fields to Almeria in southeast Spain.

Naturgy holds a 49 percent stake in Medgaz while Algeria’s state oil and gas company Sonatrach owns 51 percent.

Other Naturgy divisions include thermal generation in Spain and with nuclear and gas-fired power.

Naturgy’s operations additionally include gas and power assets in Mexico, Panama and Argentina where demand has been increasing, as well as in the Dominican Republic and in the US Caribbean territory of Puerto Rico.

Baker Hughes, the US liquefied natural gas equipment-maker and energy services and technology company, has won a major contract from Brazil’s Petrobras.

The Turkish Petroleum Pipeline Corporation (BOTAŞ), the nation's main natural gas wholesaler and assets operator, and US energy major ExxonMobil Corp have signed a cooperation deal on liquefied natural gas trading.

The Turkish Minister of Energy and Natural Resources, Alparslan Bayraktar, who was in the US for talks, confirmed the accord in a statement after several months of negotiations.

“With this agreement, which is planned to be long-term, we will take another step in diversifying our resources,” stated Bayraktar.

“We are among the few countries in the world with ample LNG regasification capacity and we will continue to contribute to the energy supply security of both our country and our region,” the minister declared.

Value of deal

Minister Bayraktar had also mentioned last month in an interview that Turkey was in talks with ExxonMobil on a supply agreement worth more than $1 billion.

Bayraktar had said at the time that negotiations were ongoing with ExxonMobil for 2.5 million tonnes of LNG, valued at around $1.1Bln and lasting up to 10 years.

Turkey has varied LNG supply sources and has half a dozen natural gas pipelines bringing in Turkish supplies and traversing its territory to deliver volumes to other nations.

Russia is a big supplier of pipeline gas to Turkey, accounting for more than 40 percent of its consumption in 2023.

The Gazprom BlueStream gas pipeline to Turkey is 1,213 kilometres (754 miles) in length and with design capacity of 16 billion cubic metre per annum, while the Russian TurkStream gas pipeline is about 930km long and with capacity of 31.5 Bcm.

Turkey is additionally the main transit nation for the Trans-Adriatic Pipeline, the final leg of the 3,500km Southern Gas Corridor pipeline network for Azerbaijan gas, which came on stream in 2020 and supplies primarily Greece, the Balkans and Italy.

Main LNG suppliers

Turkey’s main LNG suppliers over the past years have included the US, Algeria and Egypt.

US LNG data shows that the Turks are currently the eighth-largest recipients of US LNG cargoes since 2016 and receive at least six shipments per month.

BOTAŞ, the signatory of the accord with ExxonMobil, builds and operates natural gas pipelines in Turkey and accounts for most of the nation’s wholesale market.

The company runs the Marmara Eregesli LNG import terminal as its main source of cargoes while several floating facilities also operate.

Turkey has received LNG since 1994, first from Algeria and later from countries like Qatar and Nigeria and then from the US as well.

ExxonMobil’s LNG portfolio is wide and varied from Qatar itself to Papua New Guinea.

It is additionally an upstream partner of QatarEnergy worldwide in addition to having supplies from Ras Laffan.

QatarEnergy is also the lead developer of the Golden Pass LNG export project in Texas that will come on stream in 2025 and in which ExxonMobil has a 30 percent stake.

Sonatrach, the Algerian state energy company and LNG producer, has signed an accord with French major TotalEnergies to expand cooperation in the exploration and production of natural gas and in the LNG business.

The Sonatrach-TotalEnergies memorandum of understanding outlines the realisation of a work programme for the appraisal and development of natural gas resources in the Northeast Timimoun region.

The accord includes synergies with existing processing facilities for production from the Timimoun field to reduce costs and emissions.

Sonatrach and TotalEnergies plan to “consolidate their partnership and expand their cooperation” in their gas resources and LNG business.

Sonatrach added that the accord “defines the framework of cooperation between the parties” with the objective of concluding a hydrocarbon contract in the identified area of ​​interest.

Interests

TotalEnergies is active in oil and gas exploration and production through its interests in the Tin Fouyé Tabankort (TFT) and Timimoun gas fields, the Berkine Basin oil fields (Blocks 404a and 208) and via LNG supply contracts with Sonatrach.

“Sonatrach and TotalEnergies operate, within the framework of association contracts, the contractual areas of TFT II, ​​TFT Sud, Timimoun and Berkine,” the statement noted.

These are among the largest gas fields Algeria and located in the prolific Illizi-Ghadames Basin.

Total and Sonatrach are also advancing with their petrochemical project development for Western Algeria.

“This memorandum of understanding reflects our shared willingness to expand our strategic partnership with Sonatrach,” explained Julien Pouget, Senior Vice President Middle East and North Africa, Exploration and Production at TotalEnergies.

Sonatrach and TotalEnergies earlier in 2023 extended their cooperation in the LNG sector with a new contract.

In 2025, Sonatrach will thus be delivering 2 million tonnes per annum of LNG to TotalEnergies at the LNG importer terminal at Fos-Cavaou, west of Marseille.

Energy security

“This will contribute directly to the security of energy supply in France and Europe,” the statement added.

Algerian LNG exports have been recovering from a low ebb and increased by almost 9 percent to 13.45 million tonnes in 2023 from 12.40MT in the previous year from the Arzew and Skikda liquefaction plants on the Mediterranean Coast.

Algeria is also a main pipeline natural gas supplier to Europe via Trans-Mediterranean pipelines supplying Italy as well as Spain and Portugal.

Sonatrach, the Algerian national energy company, has signed a supply contract for pipeline natural gas to be delivered to Germany via pipelines to southern European as the Germans now appear to be less enthusiastic about replacing Russian gas with LNG imports from the US and Qatar.

The pipeline gas agreement was signed during a visit to Algiers by German ministers and is with Leipzig-based VNG Handel & Vertrieb GmbH, a wholly owned subsidiary of VNG AG.

The VNG group is involved in energy trading and sales as well as natural gas and energy transportation by pipeline and gas storage. 

No details were released on the length of the supply contract nor on the volumes of natural gas Algeria would be delivering to Germany from its output of more than 100 billion cubic metres per annum.

Sonatrach, the national oil and gas company with two LNG export plants at Arzew and Skikda on the Mediterranean Coast as well as gas pipelines connected to Spain and Italy, said the deal was signed at a ceremony chaired by Algeria’s Minister of Energy and Mines Mohamed Arkab.

Green-backed gas deal

The signing of the VNG natural gas deal was also witnessed by the visiting German Vice-Chancellor and Federal Minister of Economic Affairs and Climate Action, Robert Habeck, who is a member of the left-wing Green Party in the three-party German coalition government.

Rachid Hachichi, the Chief Executive of Sonatrach and his VNG counterpart Ulf Heitmüller spoke at the signing ceremony.

“I must express my satisfaction with the strengthening of the energy partnership with Europe through this historic contract with the company VNG, which will lead to the start of natural gas deliveries to Germany,” stated Hachichi.

Ulf Heitmüller, the CEO of VNG, said he was delighted to have been able to conclude a medium-term gas supply contract with Sonatrach.

“VNG thus becomes the first German company to purchase gas via pipeline from Algeria,” Heitmüller added.

Energy partnership

“This contract lays the foundations for a relationship of trust in terms of supply, opens new perspectives and strengthens the German-Algerian energy partnership,” stated the VNG CEO.

VNG’s Heitmüller added that Algerian natural gas would now be “an essential part” of guaranteed energy security for Germany,

“The purchase of Algerian gas via pipeline to Germany constitutes an additional diversification of VNG's purchasing portfolio, thus strengthening its position as a reliable partner towards its customers and making the company an important contributor to security of supplies,” Heitmüller declared.

Occidental Petroleum, the Houston-based company with US oil and gas assets and Warren Buffett as a main shareholder as well as owning oil and natural gas stakes in Algeria, Oman and the United Arab Emirates, has agreed to buy US Permian Basin-focused energy producer CrownRock in a cash and stock deal valued at $12 billion including debt.

US investor Warren Buffett, whose Berkshire Hathaway group has a stake in the Cove Point LNG export plant in Maryland and a growing stake in US exploration and production company, Occidental Petroleum, revealed that he had stakes in Japan’s five main trading houses with their widespread energy assets and intended to buy more Japanese shares.

Sonelgaz, the national electricity and natural gas company of Algeria, has been put in charge by Minister of Energy and Mines Mohamed Arkab of helping to manage “a gradual and responsible” energy transition backed by gas while noting Sonelgaz has run renewable integrated energy projects since the 1980s.

During a speech at Algeria’s 27th Energy Day held on March 4 with an event at the National Polytechnic School of Algiers, the Minister outlined the North African nation’s approach to complement its domestic energy needs while exporting more LNG and pipeline gas to Europe.

“Algeria's energy policy aims to move forward resolutely towards the realization of a progressive and responsible energy transition,” said Arkab.

“This requires the adoption of a diversified energy mix taking into consideration all the energies available, the least expensive and the cleanest while benefiting from the achievements of improving energy capacity and working to control energy consumption and to preserve natural resources for future generations,” explained Arkab.

In this regard, Arkab recalled that Algeria has worked since the 1980s, through Sonelgaz, to integrate renewable energies, by supplying 20 villages with solar energy in the South of the country with the creation of solar power stations with a total power of 344 megawatts (MW) and the launch of hybrid projects with capacity of 50 MW.

Various roles

As part of the development of the use of electric vehicles in Algeria, the Minister said that Sonelgaz would carry out experimental projects with a view to setting up 1,000 charging stations for electric vehicles.

Arkab added that natural gas flaring in Algeria was targeted to reach zero and that was the responsibility of oil and gas company Sonatrach.

The Minister also explained that similarly, Sonatrach was working with the Algerian Space Agency and in collaboration with the World Bank to carry out scientific and technological research with a view to measuring and definitively limiting methane gas emissions.

The Minister said that Algeria’s Energy Day was an important opportunity to debate and exchange views between experts, economic operators and sectors concerned with energy, scientific research and the environment.

This was an opportunity for energy experts to lead several conferences, and engineering students to present presentations on themes related to energy resources and the project of an efficient energy model by 2035 and 2050. .

Sonatrach spending

Sonatrach already plans to invest more than $30 billion in the exploration and production of hydrocarbons and to upgrade facilities to improve its position in global markets for LNG as well as pipeline gas for Europe.

As part of Sonatrach's five-year investment plan (2023-2027) the sum of $40Bln has been set aside and more than $30Bln will be allocated to exploration and production with the objective of increasing production in the short and medium term.

Nearly $1Bln will be devoted to Sonatrach’s projects aimed at the company's contribution to the energy transition. These include flared gas recovery projects at production sites and the LNG plants at Skikda and Arzew.

Sonatrach signed a contract in 2022 with two Chinese engineering companies, Sinopec Luoyang Engineering and Sinopec International Petroleum Services Corp., for improvement work at the Skikda LNG plant.

The contracts include the dismantling of two 20-year-old storage tanks and the construction of a new tank of 150,000 cubic metres capacity and the modernization of the jetty and loading facilities to accommodate larger vessels.

Italian Prime Minister Giorgia Meloni, who has visited Algeria on her first foreign trip since taking office, signed four accords with the North African nation, including one on a new natural gas pipeline between Algeria and Italy.

Sonatrach, the Algerian national energy company, plans to invest more than $30 billion in the exploration and production of hydrocarbons, notably natural gas, and to upgrade facilities to improve its position in global markets for LNG as well as pipeline gas for Europe.